Source:
Multiple Organizations
Thu Feb 18 2010
This week, more than 100 civil society organizations from 18 countries stepped up pressure on Inter-American Development Bank (IDB), sending a letter urging its governors to explain how the Bank’s failing grades in transparency, sustainability, and accountability will be repaired before approving management’s request for a significant capital increase.
The public letter was directed at a number of IDB governors, who are usually the finance and planning ministers from member countries and are reviewing the 9th General Capital Increase (GCI-9) proposal in advance of the vote expected at the Annual Meeting of the Board of Governors slated for March 19-23 in Cancun, Mexico. Initially touted by the IDB to be over $180 billion, heavy criticism has reportedly pushed the Bank’s request much lower.
In the letter, civil society organizations (CSOs) continue to question the IDB’s eligibility for a capital increase. Pointing to a failed consultation process around the replenishment, CSOs challenged the bank’s refusal to provide civil society adequate evidence that greater public debt is merited to recapitalize the IDB. The IDB has long refused to share a current draft of its recapitalization proposal or to provide responses to recommended reform.
Civil society groups urged the Bank’s governors to require concrete prior actions for implementing a set of recommendations that insist on stronger commitments to sustainability and results instead of just rubber stamping management’s GCI request.
"During the replenishment process, IDB management has consistently shown a lack of candor and seriousness about learning from the past or about incorporating valid civil society concerns," said Vince McElhinny of Bank Information Center, a Washington D.C. based non-governmental organization. "Before they vote on the replenishment, we are asking the governors tell us where they stand on our proposals for reform and how they are representing the interests of member countries."
Given that legislatures in each country would have to eventually approve their share of the capital increase commitment as public debt, the coalition of civil society groups has sounded the alarm on the Bank’s glaring lack of accountability within member countries to boost leverage for crucial reforms.
Proposed reforms include verifiable linkage of staff compensation to evidence-based development outcome; a more comprehensive climate change strategy that recognizes the differential responsibilities codified by the UNFCCC, phases out of fossil fuel lending, reduces deforestation and protects indigenous rights, among others.
"Despite its 'better bank' rhetoric, the IDB ranks lowest among multilateral banks, lower even than the World Bank, on issues of sustainability, poverty alleviation, and accountability," said Valeria Enriquez of Mexican NGO, FUNDAR, "The governors should account for this sad reality before they indebt their societies further to recapitalize the IDB."
Background on the GCI-9
During the IDB’s Annual Meeting in Medellin in March 2009, the Bank’s Board of Governors adopted a Resolution authorizing the immediate initiation of a review of the need for a General Capital Increase (GCI) of the Ordinary Capital and replenishment of the Fund for Special Operations. Since then, the Inter-American Development Bank began developing a proposal for its own historic global capital increase – the first since 1994. During the Medellin events, the IDB reported a $180 billion capital increase request, which represented teh largest by far in the IDB’s fifty year history – more than four times any prior GCI. However, heavy criticism has apparently pushed this initially request to a much lower amount. In addition, this massive capital increase proposal came on the heels of embarrassing losses of nearly $1.9 billion in 2008, due in large part to the high risk bets that crippled the financial industry and triggered the global crisis.
After significant criticism and pressure from civil society organizations and following the first extraordinary meeting of the Board of Governors on the GCI, held in Santiago, Chile, on July 2, 2009, Management proposes to launch a public consultation process to support the review of the need for a GCI. However, to date the Bank has not made public any draft proposals about the GCI-9 Proposal nor an updated version of the Results Framework, much less other documents about the requested 9th Capital Increase. In the absence of a formal reply from the Bank, in addition to no access to the requested documents, is impossible for civil society and the stakeholders of the Bank to evaluate whether or not their concerns and recommendations were heard. At any extent, this represents an unacceptable violation of the minimum standards of any consultation and transparency process.
In this context, several civil society organizations submitted recommendations on leadership steps the IDB should take in several critical areas before qualifying for any capital increase. Less than two months from the Assembly of Governors in Cancun, at which supposedly a proposal for the GCI-9 will be approved, the Bank has not responded in a formal manner to the different proposals submitted in recent months by civil society organizations.
* Read CSO letter to IDB Board of Governors. Feb 17, 2010 (pdf)
Additional signatures from other organizations supporting the letter will be collected until the IDB Annual Meetings in Cancun, Mexico. If you would like to sign on, please write to ifis@item.org.uy
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