Inter-American Development Bank

Summary of Inter-American Development Bank

A multinational development bank established in 1959 to promote economic and social development in Latin American member countries.

The bank is owned by its forty-three member countries, of which twenty-seven are regional, i.e., Western Hemisphere nations; the sixteen non- regional members were admitted in 1976. The bank’s charter provides that the Latin American nations shall as a group be preserved as majority shareholders.

During the 1961-80 period, the bank channeled $66 billion to aid development projects. The principal vehicles used by the bank to aid Latin American development are direct loans to specific development projects; the financing of industrial and agricultural credit programs; and equity financing through loans to permit capital participation in Latin American enterprises.

In addition to conventional financing activities, the bank operates the Fund for Special Operations which makes long-term, concessional loans to needier countries for such fundamental needs as potable water, sanitation, and rural health projects. As of 1980, this fund had extended loans for $7.2 billion.

In 1961 the Social Progress Trust Fund was established to administer $525 million advanced by the United States to promote low-cost housing, land use, and sewage treatment. In 1975 the Venezuelan Trust Fund was established to administer $500 million advanced by Venezuela to promote development of nonrenewable natural resources and hydroelectric energy. Similar special-purpose trusts have been administered over the years.

Bank financing is available to member states in Latin America, political subdivisions of such states, and private enterprise; where a private entity receives financing, a governmental entity must serve as guarantor.

The bank is governed by a board of governors; one governor and an alternate are chosen by each member state. The board elects a president, who administers the affairs of the bank.

The bank was capitalized originally with $1 billion; this capital was augmented, or replenished, in 1964, 1967, 1970, 1976, and 1980; a sixth replenishment, covering the years 1983-86, totalling $15.7 billion, was adopted in 1983.

(Main Author: William J. Miller)