What Is the Inter-American Development Bank (IDB)?
Let me explain what the Inter-American Development Bank, or IDB, really is. It's a cooperative development bank that got started back in 1959, aimed directly at speeding up the economic and social progress in its member countries across Latin America and the Caribbean. You should know it's owned by 48 member countries in total, which includes the United States and even some European nations. What the bank does is provide financing through loans and grants to make all this happen.
Key Takeaways
- The Inter-American Development Bank (IDB) functions as a cooperative bank dedicated to supporting economic and social development in Latin America and Caribbean countries.
- The IDB encompasses 48 countries, including the U.S., and in 2021, it financed $13.6 billion across 94 projects.
- Funds lent by the Inter-American Development Bank to its member countries come from the bond market.
- The U.S. holds the position as the IDB’s largest shareholder with a 30% stake.
Understanding the Inter-American Development Bank (IDB)
Here's how the IDB operates in more detail. It helps Latin American and Caribbean countries by assisting them in creating development policies, and it offers financing along with technical assistance. The goal is to achieve economic growth that's environmentally sustainable, boost competitiveness, improve social equity, combat poverty, modernize government structures, and promote free trade and regional integration. In 2021, the IDB backed 94 projects and lent out $13.6 billion.
You need to understand where the money comes from—the funds that the Inter-American Development Bank lends to its member countries are raised right in the bond market. These bonds are backed by the loans the IDB issues, and they carry guarantees from the capital pledged by the bank's non-borrowing members. They're rated triple-A and issued at market rates, which keeps borrowing costs low for the member countries. As I mentioned, the U.S. is the biggest shareholder with a 30.01% stake. Brazil and Argentina each have 11.35%, Mexico holds 7.3%, and Japan has 5%.
Special Considerations
As of October 2022, the Inter-American Development Bank is handling 601 projects with financing totaling $56.1 billion. Some projects completed in 2022 focused on reforming and modernizing the state in places like Suriname, Guyana, Jamaica, and Barbados; others dealt with social investment in Ecuador, energy in Mexico, and the environment in Colombia and Barbados. Right now, the bank's priorities are social inclusion, economic integration, and innovation, plus addressing climate change, gender issues, and diversity.
When Luis Alberto Moreno was president of the IDB, he emphasized that the bank's focus includes tackling inequality and improving public services for the countries it serves. He pointed out that change is essential, especially given the protests in the region during 2019. Moreno highlighted the lack of growth in Latin America since 2014, after the commodity boom ended, noting that the region has seen the world's worst economic performance since then.
In September 2020, Mauricio J. Claver-Carone was elected as President of the Inter-American Development Bank during an electronic meeting of the Bank’s Board of Governors. He started his five-year term on October 1, 2020. Before that, Claver-Carone served as Deputy Assistant to former U.S. President Donald Trump and as Senior Director for Western Hemisphere Affairs at the U.S. National Security Council. He also worked as Senior Advisor to the Under Secretary for International Affairs at the U.S. Department of the Treasury.
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