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NGOs Demand Transparency, Reforms in IDB
 Emilio Godoy - Inter Press Service
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March 19, 2010
Mexico City - Dozens of civil society organisations in the Americas are demanding greater transparency and accountability as well as structural reforms in the Inter-American Development Bank (IDB), ahead of the multilateral lender's annual meeting of governors that starts Friday in the Mexican resort of Cancún.
"We want the IDB to commit to evaluating financing based on the assessment of its projects and to demonstrate that civil society input is taken into account," Valeria Enríquez, a Mexican researcher with the non-governmental Centre for Analysis and Research (FUNDAR), told IPS. "We are also calling for a greater commitment to fighting climate change."
FUNDAR is one of the main organisations behind a February letter sent to the Washington-based IDB by more than 100 organisations from 18 countries.
Civil society representatives will meet with IDB head Luís Alberto Moreno and a group of Bank managers in charge of designing the new institutional strategy of the international lender, which has 48 members: 26 borrowing countries in Latin America and the Caribbean and 22 lending member countries - Canada, China, Israel, Japan, South Korea, the United States and 16 European countries.
The United States is the single largest shareholder, with approximately 30 percent of the voting power, while the Latin American and Caribbean borrowing countries control 50.02 percent of the IDB’s shares.
"The different civil society initiatives play a complementary role towards the same aim: to keep a bank that has been an accomplice to 50 years of inequality and poverty in Latin America - and which has not yet set forth a different vision - from continuing to do business as usual," Vince McElhinny of the Bank Information Centre (BIC), a Washington-based NGO, remarked to IPS.
At the Mar. 19-23 assembly of IDB governors, finance and planning ministers, central bank presidents and other senior officials from member countries will discuss a new increase in the Bank's capital, initially set at 180 billion dollars, although wide criticism has driven down the amount requested.
In their February letter to the IDB board of governors, the NGOs questioned the Bank's eligibility for a capital increase and criticised the multilateral lender's public consultation process on the proposed recapitalisation, held from October 2009 to January 2010.
The NGOs complained that the IDB has refused to share a draft of its replenishment proposal and has failed to provide responses to recommendations for reforms.
The capital increase would be the first since 1994 and the biggest by far since the IDB was founded in 1959.
At their annual meeting in Medellín, Colombia in March 2009, the IDB board of governors authorised the start of a review of the need for replenishment of its capital, which currently stands at 101 billion dollars. And a special governors' meeting in Santiago, Chile in July 2009 decided to launch a public consultation process to complement the review.
Last year, the IDB loaned Latin America more than 15.5 billion dollars, including 3.1 billion to Mexico, 2.9 billion to Brazil and 1.6 billion to Argentina, according to figures from Mexico's finance ministry.
Since 1959, Mexico has received more than 25 billion dollars from the IDB, and between 3 and 4 billion dollars more in loans are in the pipeline for this year.
The international financial institution, created to promote development and reduce poverty in the region, is preparing a new strategy focused on sustainability, the fight against climate change and the promotion of clean energy sources.
The NGOs suggested initiating a public consultation on a "more comprehensive" climate change strategy, while they recommended the phasing out of fossil fuel lending and the adoption of a strategy focused on protection of indigenous peoples' rights and a reduction in deforestation.
"I haven't seen any evidence justifying an increase in capital," said McElhinny, who will be in Cancún along with Enríquez. "I haven't seen a response to a series of concerns we have raised since last June. The financial crisis as an argument to boost capital is simply not sustainable."
In Medellín, U.S. Treasury Secretary Timothy Geithner outlined six performance evaluation principles for a hike in IDB capital: a sufficient focus on the poor, achieve results and show innovation, governance and risk management, flexibility in balance sheets, cogent, defensible demand-side analysis, and a clear division of labour with other multilateral lenders.
Of the six, the IDB only satisfied one, needs improvement on two and failed on three, according to "A Serious Crisis Should Never Go to Waste", a press release issued by the BIC in October.
"Despite half a century of lending and a stated commitment to combating inequality, the IDB has been largely ineffective in reducing inequality. Income inequality for Latin America as a region has not improved since the 1990s and in some countries has actually worsened," the statement added.
"Governments and the IDB should commit themselves to producing better results for civil society. We want a say in the agenda," said Enríquez.
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