What Is the Inter-American Development Bank (IDB)?

The Inter-American Development Bank (IDB) is a cooperative development bank founded in 1959 to accelerate the economic and social development of its Latin American and Caribbean member countries. It is owned by a total of 48 member countries, including the U.S. and some European nations. The bank provides financing in the form of loans and grants.

Key Takeaways

  • Inter-American Development Bank (IDB) is a cooperative bank to help support the economic and social development of Latin America and Caribbean countries. 
  • The IBD includes 48 countries, including the U.S., with $13.5 billion in approved lending. 
  • The funds that the Inter-American Development Bank lends to its member countries are raised in the bond market.
  • The U.S. is the IDB’s largest shareholder with a 30% stake.

Understanding the Inter-American Development Bank (IDB)

The IDB assists Latin American and Caribbean countries in formulating development policies and provides financing and technical assistance to achieve environmentally sustainable economic growth, increase competitiveness, enhance social equity, fight poverty, modernize the state, and foster free trade and regional integration. The IBD has $13.5 billion in lending capacity as of 2018. 

The funds that the Inter-American Development Bank lends to its member countries are raised in the bond market. The bonds are backed by the loans the IDB makes, which carry the guarantee of capital pledged by the bank's non-borrowing members. The bonds are triple-A rated and issued at market rates. The triple-A rating helps to keep borrowing costs for the member countries low. The U.S. is the IDB’s largest shareholder with a 30% stake. Brazil and Argentina each own 11%. Mexico comes in third with a 7.2% stake. 

Special Considerations

The Inter-American Development Bank has 370 projects. Past projects that have been completed include those with Daycoval, Banco Industrial do Brasil, Banco Industrial, Exchange of Experiences in State Budget Management and Banco Internacional de Costa Rica S.A. (BICSA). The bank’s current goals include focusing on social inclusion, economic integration, and innovation. As well, it’s interested in climate change, gender issues, and diversity.  

Outgoing president (as of March 2020) of the IAB, Luis Alberto Moreno, said the current focus of the IBD includes tackling inequality and improving public services for the countries it serves. Change is needed, said Moreno, pointing to the various protests in the streets within the region during 2019. Moreno pointed out the lack of growth in Latin America since 2014 (end of the commodity boom), where the region has experienced the worst economic growth in the world.

As of March 2020, the bank is in the process of finding a new president. Brazil and Argentina are both vying for candidates for the position. Argentina's candidate is the country's secretary for strategic affairs, Gustavo Beliz. He has the backing of the Mexican government as well. 

Meanwhile, the U.S. is hoping to install a member as the no. 2 at the bank. U.S. President Donald Trump has nominated the senior director of the National Security Council for Western Hemisphere Affairs.