Capitalization plan to allow IDB to lend US$12bn annually through 2022

Monday, January 10, 2011

The capital increase approved by IDB governors in Cancun, Mexico, last March will allow the multilateral to lend US$12bn on average annually through 2022, Koldo Echebarria, who heads the development bank's strategic planning department, told BNamericas.

According to the terms of the capital increase, which must be ratified by all member countries, IDB's borrowing capital will increase to US$171bn from US$101bn over the next five years.

"This is a year of transition for the bank, since by year-end we will receive the first funds coming from the capital increase, and starting in 2012 we will have all the resources available to expand our lending capacity," Echebarria said in a phone interview from Washington.

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IDB has said it expects to have ended 2010 at around US$10.9bn in lending, below the exceptional US$12bn in disbursements of 2009, when the bank expanded its lending in the face of the global financial crisis. According to Echebarria, IDB's disbursements for this year will be around US$11.2bn.

The capital increase also calls for a reassessment of the bank's priorities. Loans aimed at combating poverty and inequality will have to make up 59% of annual disbursements starting this year, up from 46% before.

Disbursements related to climate change will see the biggest increase, as they will double to 47%. Many loans fall under multiple categories, which explains the overlap, Echebarria said.


IDB approved financing of a record 170 projects in 2010, totaling an estimated US$12.9bn, up from 165 projects totaling US$15.9bn in 2009.

Echebarria said the reason behind the lower US dollar value of approvals was the lower average value of individual lending project approvals, as IDB increases its focus on lending more to smaller economies.

Around a third of IDB's loan approvals in 2010 were for the region's 19 smallest economies. This number will grow to 40% in 2011, the IDB official said.

IDB expects to finance 175 projects in 2011, with annual approvals reaching US$10.5bn, he said.

IDB has seen a strong increase in borrowing demand from its members over the past decade. The average has risen to nearly US$11bn for 2006-10, from US$6.2bn in 2001-05.

IDB will hold its annual meeting in Calgary, Canada, from March 25-28.