IDB shareholders are moving decisively towards approving a
capital increase, at least in principle, at the governors
meeting on Monday.
Objections to an increase among large shareholders including
the US and Brazil have largely been overcome, diplomatic and
political sources confirmed yesterday in Cancun.
A source close to the discussions said last night that the
IDBs biggest shareholder, the US, is seeking a 60%
increase in the institutions capital base, but the vast
majority of governors are pushing for a $80 billion or
The source added that although a declaration will be
signed in Cancun, there will probably be some work
to be done over 60 days before we reach a full
Colombias finance minister Oscar Zuluaga told
reporters last night that a plan for a $80 billion
capitalization had been widely accepted. Paid-in capital would
be around 4% of that, based on earlier capitalizations.
Countries would have around five years to pay in what is
eventually approved. We are preparing a final proposal
and will have it ready for Sunday to achieve consensus,
Consensus is building, but we still have a way to
go, Canadian foreign affairs minister Peter Kent told
We are confident that we will reach an agreement in
principle, if not an absolute agreement, by the end of the
meeting, he said.
Kent said that delegates might agree only in principle on
the capitalization but that a deal had to be in place before
the March 31 Haiti donors meeting in New York.
Consensus seems to have narrowed on the proposal
which includes the overall capitalization, replenishing the
Fund for Special Operations and specific provisions for
rebuilding Haiti to 80% of the banks capital, i.e.
$80 billion in callable capital.
Opposition to capitalization by the US, the IDBs
largest shareholder, appears to have softened. In a telephone
briefing, senior US Treasury officials said that the
specific numbers on the capital increase remain to be
negotiated this weekend, but we see as a very positive outcome
one that supports a very substantial increase in loan volumes
compared to pre-crisis levels.
This is a shift from statements made earlier this year, when
US officials said reform of the IDB was an essential
prerequisite to an increase.
A key selling point of capitalization is the tragic legacy
of the earthquake in Haiti, since the IDB is positioned to take
a lead on reconstruction. The US officials said: We want
to work on extinguishing Haitis debt to the IDB, which
means that we have to consult with donors on financing the cost
of that debt.
An Argentine official said his country supports the
capital increase. [...] We need to put our money where our
Mexican Finance Minister Ernesto Cordero said that
disagreements on the amount of an increase are narrowing.
We started at extreme opposites but in the last meeting
in Washington [March 2] we managed to reduce the range of
discussion. A Brazilian official who took part in
negotiations said that everybody agrees about a minimum
requirement of $12 billion to be released every year.