Latin America Development Bank Gets Boost from Key U.S. Senators
Latin America Development Bank Gets Boost from Key U.S. Senators
(Bloomberg) -- Two key U.S. senators are set to back a capital increase for the top Latin America development bank, seeking to build momentum for a lending boost to fight Covid-19 and climate change in the hard-hit region.
Democrat Bob Menendez and Republican Marco Rubio’s planned bill would send $600 million to the Inter-American Development Bank over the next five years and authorize $23.4 billion in backup capital, according to a draft seen by Bloomberg News. The measure would also urge the IDB to create an environment fund for disaster preparedness, sustainability and conservation.
The U.S. is the bank’s largest shareholder, responsible for 30% of its resources. The U.S. contribution would be part of the senators’ broader call for the bank’s 48 member countries to agree on a total increase of $80 billion in capital stock. It would be the Washington-based IDB’s first such capital increase since a 2010 accord.
These types of authorization bills are often attached to larger legislative packages, but with defense and appropriations measures far along in their debate, the IDB funding is unlikely to pass before the current Congress concludes at the end of the year.
Rather, the proposal is aimed more at laying down a marker for future discussions starting in January, according to a Senate aide with knowledge of the bill’s prospects, who asked not to be identified.
The capital increase would allow the IDB to increase its annual lending capacity to $20 billion a year, according to a summary of the bill, from about $13 billion currently.
The proposal could face obstacles. Capitalizations of multilateral institutions normally require years of lobbying and support-building. The IDB also became more politicized in recent months, with many Democrats upset because President Donald Trump nominated adviser Mauricio Claver-Carone to lead the bank, breaking a six-decade precedent where the lender’s chief came from a Latin American nation.
New Jersey’s Menendez, the ranking Democratic member on the Senate Foreign Relations Committee, and Florida’s Rubio, the chairman of the Western Hemisphere subcommittee that deals with Latin America, have both known Claver-Carone for years and supported his candidacy.
While Claver-Carone’s predecessor, Luis Alberto Moreno, also had called for a capital increase to fund infrastructure spending, the global pandemic and climate disasters have increased the broader need and urgency for financing.
“This legislation will guarantee that the IDB has the resources it needs to support our partners in Latin America and the Caribbean,” Menendez, of New Jersey, said in an emailed statement.
Claver-Carone, in a statement, also voiced his support for a capital increase.
“We look forward to working with all of our shareholders to seize this opportunity,” he said.
Latin America has 8% of the world’s population and 30% of its Covid-19 deaths. Most nations are experiencing one of their worst economic contractions on record, millions have lost jobs or fallen into poverty, and the International Monetary Fund sees a lost decade, with per capita income in 2025 less than in 2015.
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