IDB Rush to Increase Capital Fails G-20 Stress Tests
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WASHINGTON, Oct. 6 /PRNewswire-USNewswire/ -- As the Inter-American Development Bank (IDB) Board of Governors prepares to meet in Madrid on October 8 to debate the need for a 9th Capital Increase, a new and exhaustive report by Vince McElhinny of Bank Information Center (BIC) finds that the Bank fails a stress test based on principles outlined by U.S. Treasury Secretary Timothy Geithner at the IDB's 50th Anniversary meeting in March.
The BIC report, "A Serious Crisis Should Never Go To Waste: IDB Rush to Increase Capital Fails G-20 Stress Test," shows that the IDB has consistently failed to comply with four of six performance evaluation principles outlined by the Bank's member countries as well as the five central principles necessary for U.S. support outlined by U.S. Secretary of Treasury Timothy Geithner.
"If the Geithner Principles were applied as the stress test for multilateral banks, the IDB would fail," stated Vince McElhinny, IDB expert for the Bank Information Center. McElhinny points to a series of evaluation reports that underscore the Bank's conflation of effort and achievement. "Our analysis shows that the IDB fails such a stress test, calling attention to the risks associated with a replenishment that is not preceded by demonstrable, meaningful reforms."
The reported $180 billion General Capital Increase (GCI) request is the ninth and largest in the IDB's fifty year history and comes on the heels of embarrassing losses of nearly $1.9 billion in 2008.
The IDB continues to measure its performance based on the volume and speed of annual lending rather than quality and outcomes, the report argues. Despite half a century of lending and a stated commitment to combating inequality, the IDB has been largely ineffective in reducing inequality.
"The IDB has failed to be accountable to past replenishment conditions. It ranks the lowest among multilateral banks on issues of sustainability, poverty alleviation, and transparency. The U.S. and other donor countries need to insist on meaningful reforms before approving new monies," said Atossa Soltani, Executive Director of Amazon Watch.
The Madrid meeting is the second major discussion about the proposed replenishment following the IDB's 50th anniversary meeting in Medellin. The Bank's Board of Governors will meet in Cancun in March of 2010; replenishment proposals will then need to be approved by legislatures in each of the Bank's donor counties.
The report is available at http://www.bicusa.org/en/Article.11509.aspx. For background information, see http://www.bicusa.org/en/Institution.4.aspx and www.bicusa.org/en/Article.11274.aspx.
SOURCE Amazon Watch; Bank Information Center
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