During the Istanbul Annual Meetings, World Bank President Robert Zoellick outlined a capital increase request for between $4 and $11 billion in paid-in capital. The primary rationale is that lending $100 billion between FY09-11 (as encouraged by G-20) will stretch the balance sheet to the limit. Projected new commitments by IBRD between FY09-12 total $136 billion, or about $34 billion per year or 2-3 times average IBRD lending. Not having a General Capital Increase (GCI) would limit IBRD lending to about $10 billion in the coming years, compared to historical annual average of about $19 billion. The demand analysis on which the Bank’s GCI is based is a minimum post-crisis capacity to lending $15 billion per year.
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On November 4 and 5, the Interamerican Development Bank (IDB) celebrates in Guadalajara a consultation with civil society to evaluate the Bank’s capital increase request. The Global Capital Increase (GCI) proposal for $US 180 billion is the ninth and by far the largest in IDB history –more than four times the volume of any prior GCI. Based on actual lending trends, the proposed GCI would triple the level of annual IDB lending to Latin America. This massive capital increase proposal follows an embarrassing loss of almost $1.9 billion in 2008.
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The Permanent Secretariat of the Latin American and Caribbean Economic System (SELA) has recently launched the report “Experiences of monetary and financial cooperation in Latin America and the Caribbean. Critical appraisal and proposal for action at regional level.” This paper aims to examine the experiences of monetary and financial cooperation at regional level and to identify international and regional conditions to advance cooperation in this area in order to move towards the establishment of a regional financial architecture in Latin America and the Caribbean.
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In September, the Ministry for Coordination of Economic Policy and the Technical Committee for the creation of a New Financial Architecture of the Ecuadorian Presidency organized the "Latin American Summit on Mechanisms for Cooperation and Trade, Financial and Monetary Integration" in Quito. The meeting was attended by the different actors from civil society and academia in South America, including the HAS – Hemispheric Social Alliance, to discuss the effects of the financial crisis in the region and establish a dialogue between the concerned countries of UNASUR.
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The current crisis has evidenced the urgency of deep reforms to the international financial architecture and regulatory and supervisory systems so as to ensure greater global stability, said Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC). In her presentation, titled "In search of solutions to the financial crisis: measures taken and future challenges", Bárcena stated that the effects of the current financial crisis will not be only circumstantial, but will also prompt a dynamic of growth and articulation of economic, financial and commercial relations towards what has recently begun to be called the "new normality" in the world economy.
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From 12 to 18 October organizations from more than fifty countries of the South-North campaign on illegitimate debt carried out several actions in the framework of the Global Week of Action against Debt and the Multilateral Financial Institutions (MFIs). One of the goals of this year’s mobilization is to draw attention to the false solutions that have been identified as ways out of the current global crisis. The decisions announced at the annual meeting of the IMF and the World Bank, on 6-7 October in Turkey, reinforce this concern to the extent that the proposals agreed upon, now with more complicity from Brazil, are aimed at a return of the MFIs’ intervention in national economies and a new cycle of illegitimate debt in the South.
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