20 July 2009
After months of internal planning and vibrant debate over how to best position the Bank to garner an unprecedented capital increase, IDB President Luis Alberto Moreno acknowledged the receipt of a ten page civil society proposal of needed reforms, but failed to respond in any detail to any of the substantive arguments. Instead, the President delegated External Relations to outline a delayed and ambiguous consultation process that the Bank Board is expected to endorse in the coming weeks
In April at the IDB's 50th annual meeting in Medellín, Colombia, an advisory group led by former Peruvian prime minister Pedro Pablo Kuczynski presented a capitalization plan that included lifting IDB's capital by as much as US$175bn. After three full months, the IDB has not released the Kuczynski paper, stating that it is still being edited for public disclosure despite widespread citations in April and a press conference to emphaize the unsubstantiated figure of $175 billion in Medellin.
In early July, IDB member countries met in Chilean capital Santiago for the first round of talks to discuss the ongoing capitalization plan. At the meeting, IDB management presented a technical document to start the discussion process for what would be the bank's ninth capitalization since its creation 50 years ago.
The IDB board of governors president and Colombian finance minister Oscar Iván Zuluaga told press the development bank expects by year-end to finish discussions of a capitalization plan that could more than double the multilateral's current US$101bn capital base. A recent response by Colombian Treasury Minister, Oscar Zuluaga Escobar to Senator Jorge Enrique Robledo Castillo's request for information regardng IDB Capital Increase process (June 3, 2009) reflects the IDB's reluctance to inform the public about sweeping decision making processes that are moving quickly at the Bank with little oversight.
The IDB management has reportedly proposed a capitalization plan that is based on increasing annual Bank lending from an average of $US6.5 billion since the last replenishment (1994-2009) to a projected $US16-19 billion.
In late June, 10 civil society groups issued a set of recommendations urging donor countries, in particular the U.S. Government, to insist on stronger commitments to sustainability and evidence-based results before considering the Bank’s request.
The civil society observations and recommendations were developed by nine organizations in four countries that monitor the Bank. Key observations include the Bank’s lack of transparency and adequate poverty reduction strategy, and lack of a comprehensive strategy that effectively integrates environment into its operations. The Bank is criticized for lagging behind other multi-lateral development banks in many areas including delivering results and giving proper attention to climate change issues.
The observations and recommendations were developed by the following organizations: Amazon Watch, Bank Information Center, Both Ends, Center for International Environmental Law, Centro de Derechos Abmientales, Environmental Defense, M'Bigua Ciudadanía y Justicia Ambiental, Instituto Latinoamericano de Servicios Legales Alternativos, and Oxfam America.
GCI-9 Consultation process pending
Rather than respond directly to the substance of the civil society arguments, Bank management deflected the criticism to an announced consultation phase - outlined only vaguely in the letter. The External Relations department responded to the letter addressed to President Moreno and the IDB Board of Directors, highlighting disagreement with the critique of the Bank's current and past performance, but invited signing organizations to participate in a consultation and information sharing process for the GCI-9. While such a consultation was "consistently contemplated," over half a year of intense internal negotiation and analysis has passed before the Bank has responded repeated calls for a consultation mechanism.
To read the IDB response to civil society's GCI-9 reform proposal, see:
IDB Response to Civil Society GCI Reform Proposal - Inter-American Development Bank to Civil Society Organizations, July 13, 2009, (PDF, 342KB)
Questions abound regarding the scope about coherence of the GCI-9 consultation process. Not only has the IDB been slow to propose a means for public participation in the single most important funding decision in the Bank's 50 year history, it has apparently not considered how to integrate several different policy reviews underway that lack adequate transparency and accountability. The Bank is scheduled to conduct a formal review of its Environmental Safeguard Policy, but has not moved quickly enough for such a review to be complete and therefore have the results integrated into the GCI-9 deliberations (scheduled to be complete by end of 2009). Additionally, the Bank is preparing a climate policy in a parallel, non-transparent process, which also appears to be disconnected to the proposed GCI-9 consultation process. Finally, the IDB has signalled that it will not be able to the civil society advisory councils, which were mandated by President Moreno in 2007, to organize the GCI-9 consultation due to the relative disfunction and disarray of the CASCs in nearly half of the Bank's 26 borrowing countries.
Civil society organizations (CSOs) concerned with IDB accountability, participation and transparency should contact their executive directors and relevant legislative representatives (PDF, 98KB) to request more information about the capital replenishment process. Because each member country will have to pay for the capital increase, public participation is required in this unprecedented endowment of the IDB without the apparent systemic reform of the Bank's role in contributing to persistent poverty, inequality and environmental vulnerability in Latin America.
IDB Executive Directors Contact info 2009 - Bank Information Center, (PDF 33 KB)