With the worst of the crisis over, why is the IDB seeking a capital increase?
The IDB is seeking a capital increase to meet the long-term development needs of Latin America and the Caribbean and to replenish its Fund for Special Operations, which supports the poorest countries in the region. The IDB has been able to meet this rising demand by using its unused lending capacity and with short-term measures I mentioned before, such as temporary increase in Canada’s callable capital contribution. The Bank has brought forward several projects to support the region during the crisis since 2008. As a result, we are reaching our maximum lending capacity earlier than expected and we now face a dramatic fall off in lending starting 2011. The crisis has brought forward a discussion for a capital increase. In addition, I’d note that demand for our loans started rising before the crisis hit, particularly to new clients, such as the private sector and municipalities. For instance, loans to governments with sovereign guarantees almost doubled over the past five years. But our
