IADB gets capital raise boost from key US Senators

Two key US senators are set to back a capital increase for the Inter-American 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. The measure would also urge the IADB to create an environment fund for disaster preparedness, sustainability and conservation. The capital increase would allow the IADB to increase its annual lending capacity to $20 billion a year, according to a summary of the bill, from about $13 billion currently. 

The US is the bank’s largest shareholder, responsible for 30% of its resources. The US 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 IADB’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 IADB 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 proposal could face obstacles. Capitalizations of multilateral institutions normally require years of lobbying and support-building. The IADB 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.