Inter American Development Bank and the Oas

COOPERATION PROFILE

COOPERATION BETWEEN THE

INTER AMERICAN DEVELOPMENT BANK AND THE OAS

This note presents a brief profile of the Inter-American Development Bank(IADB)and highlights the different areas and programs of cooperation that exist between the IADB and the Organization of American States (OAS). Its purpose is to provide greater knowledge of the range of cooperation that takes place between the two institutions and to promote and facilitate continued cooperative activities.

The Section on Institutional Relations of the Department of International Affairs / Secretariat for External Relations prepared this document. The website of the Department of International Affairs is find other Cooperation Profiles on the OAS and its main partner institutions, please consult the website at:

Name, address, and date of establishment

Name: INTER AMERICAN DEVELOPMENT BANK

Address:IADB Headquarters1300 New York Avenue, N.W.
Washington, D.C.20577, USA[1]

Phone:(202) 623 - 1000 Website:

Establishment: December 30th, 1959

Cooperation Agreement

The Organization of the American States, the Inter American Development Bank and the Economic Commission for Latin America and the Caribbean adopted a Cooperation Agreement on December 7th, 1960 by exchange of letters. The Cooperation Agreement includes the commitments of the three organizations to work on matters of common interest, especially on the formulation of programs for economic development and the accomplishment of periodic analyses regarding the economic situation of Latin America and the Caribbean.

There is no general cooperation agreement that has since replaced the one signed in 1960. However, the OAS and the IDB signed several other agreements in specific areas which have supplemented and strengthened the original 1960 cooperation agreement. (see Annex I)

COOPERATION AGREEMENT BETWEEN OAS, THE INTER AMERICAN DEVELOPMENT BANK AND THE ECONOMIC COMISSION FOR LATIN AMERICA AND THE CARIBBEAN[2]
December 7th, 1960

Background

The Inter-American Development Bank (IADB) is the main source of multilateral financing for Latin America and the Caribbean. It is a non-profit international organization established in 1959 by a decision of Members of the Organization of American States (OAS) who drafted the articles of the Agreement Establishing the Inter-American Development Bank, with the purpose of supporting the process of economic and social development in Latin America and in the Caribbean.The Bank is part of the Inter-American System.Currently, the IADB Group is composed by the Bank itself, the Inter-American Investment Corporation (IIC), and the Multilateral Investment Fund (MIF).

The IADB currently has 48 member countries, separated into two different blocks: 26 Borrowing Countries[3] and the 22 Non-Borrowing Countries[4], group composed by 20 non-American countries. The first category was subdivided in two groups (Groups I and II) in 1999, based on their GNP per capita calculated in 1997.On the basis of their lower per capita income, the Bank channels 35 percent of its lending volume to the Group II countries: Belize, Bolivia, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Panama, Paraguay, Peru and Suriname. Approximately 65 percent of its lending volume is channeled to the Group I countries: Argentina, the Bahamas, Barbados, Brazil, Chile, Mexico, Trinidad and Tobago, Uruguay and Venezuela.

In order to promote economic and social development in Latin America and the Caribbean, the IADB is mandated to devote at least 50 percent of its operations and 40 percent of its resources to programs that promote social equity and reduce poverty. Ithas accordingly identified priority areas for its actions and launched initiatives in the areas below aimed at addressing the challenges facing the region:

• Inpoverty reduction, it strengthens social safetynetworks.
• Inenergy and climate change, it seeks to develop renewable energy sourcesand responses to the challenges posed by climate change.
• Ininfrastructure,it promotesinvestmentin better infrastructure, with aspecial focus on water and sanitation.
• Ineducation and innovation, it promotes effective social policies and programs and supports regional development of science and technology.
• Inopportunities for the majority,itengages theprivate sectorin social and development projects usingmarket incentives and partnerships.

Voting Power

The voting power of each member country of the IADB is based upon its payment into the Bank’s capital fund. However, the majority of the voting power is held by the 26 borrowing member countries as a group, in the following proportion:

Latin America and the Caribbean (Borrowing Countries) / 50.2%
United States / 30.1%
Japan / 5.0%
Canada / 4.0%
Other Members / 10.97%

Budget/ Financial Resources

-Ordinary Capital: The major source of funding for the lending activities of the IADB comes from the subscriptions of its members which totaled more than $101 billion at end 2009[5]. The Bank increased its lending in 2009 to a total amount of $17.9 billion in 81 operations, whichgenerated expected profitsof $16.2 billion. This can be compared with a lending total of $11.1 billion in 2008in 76 operations, which generated expected profits of $10.7 billion;

-Fund for Special Operations (FSO): This fund provides concessional loan financing to assist the poorest countries in the Western Hemisphere and to finance debt relief initiatives. In 2008, the Fund’s assets totaled $6.3 billion;

-Trust Funds: There are 44 trust funds administered by the IADB that have been established with donations from individual member countries or groups of countries. These are an important source of financing for technical cooperation programs.The largest contributor to the trust funds is Japan, but new funds have recently been provided by China, the Republic of Korea, Norway, and Italy; and

-Co-Financing Resources: In recent years IADB operations have benefited from co-financing resources from more than 15 multilateral institutions, including the World Bank group and some 20 bilateral agencies.

Since its foundation in 1959, the IADB has increased its capital eight times over to meet its goals. The review process for the most recent general capital increase of the Ordinary Capital and replenishment of the Fund for Special Operations began at the Bank's Annual Meeting in Medellín in March 2009[6], when theBoard of Directors decided that the Bank should increase its capital to help the countries affected by the economic crisis. A total capital increase of $70 billion was agreed to at the Bank’s Annual Meeting in 2010 in Cancun, Mexico. This additional capital basewill enable the Bank to double its pre-crisis annual lending adding $12 billion per year in transactions.

At the end of 2009, the IADB’s total outstanding debt amounted to $60.3 billion excluding swaps, while its liquidity was about $18.1 billion.[7]

The IADB represents more than 50% of the total multilateral lending for the countries in the Americas. Five countries accounted for 69% of total sovereign loans at year-end 2009, which is broadly unchanged with respect to previous years. Brazil and Argentina remain the Bank's largest borrowers, followed by Mexico, Colombia, and Peru. Brazil's loans amounted to $13.5 billion (23% of total). Since 1994, the IADB has become the main source of development finance for the Latin American and Caribbean. Between 1994 and 2008, the Bank approved more than$108.6 billion in loans.

The highest authority of the IADB is the Board of Governors, made up of representatives from each of the 48 member countries. Most governors are finance ministers or central bank presidents. The Board of Executive Directors, composed of 14 representatives from the member countries, oversees the Bank’s day-to-day operations. Directors approve country and sector strategies, operational policies, and loans. They also set interest rates for Bank loans, authorize borrowings in the capital markets and approve the administrative budget of theinstitution.

The President of the Inter-American Development Bank is elected for five year term by Board of Governors. Luis Alberto Moreno of Colombiatook office on October 1st, 2005. A new Governor will be chosen in the fall of 2010.

Main Areas of Work of the Inter-American Development Bank and the OAS

Several cooperation agreements have been signed between the OAS and the IADB that cover cooperative work in all of the areas of the OAS mandates, namely: Democracy, Human Rights, Multidimensional Security and Integral Development. The following is a summary of previous and ongoing cooperative activities between the OAS and the IADB over the past few years.

• Democracy – Political Affairs
• Corruption

The OAS and the IADB have signed several agreements to cooperate on the issue of corruption. The first agreement from 1984 deals with mechanisms to avoid and combat corruption in Latin America and the Caribbean, entitledAgreement for Technical Cooperation on Taxes Studies in Bolivia[8]. The most recent cooperative agreement dates from 2007 and is focused on Supporting the Implementation of the Inter-American Convention against Corruption and its Following Mechanisms[9].

The IADB and the OAS have carried out severalcooperative projectsto combat corruption in the Hemisphere, including:

-Red GEALC:The Network of E-Government of Latin American and the Caribbean[10]was created in 2003 jointly by the Executive Secretariat for Integral Development of the OAS (SEDI), the Instituto para la Conectividad en las Américas (IDRC/ICA), the Inter-American Development Bank, which joined the project in 2005 along its Regional Public Goods Initiative,andthe Canadian International Development Agency (CIDA-ACDI) which joined the program in 2006,in order to promote horizontal cooperation among countries in Latin America and the Caribbean, and facilitate the exchange of solutions and expertise between them in areas of electronic government.[11]

-Inter-American Government Procurement Network[12] - RICG): Network composed of government organizations with responsibility for public procurement regulation, management and modernization. The Network is designed to foster and exchange information and experiences on lessons learnt and best practices. The Technical Secretariat of the Network is headed by the Executive Secretariat for Integral Development/SEDI and the IADB is one of the Board Members.[13]

• Other Topics

Although the majority of the cooperation agreements between the OAS and the IADB in the area of political affairs have focused on the topic of corruption, an agreement was signed in 2004 on Technical Cooperation Agreement on the Situation and Perspective of Political Parties and Political Partisanship in the Andean Countries (Cooperación técnica regional no reembolsable No. ATN/SF-8846-RG. “Situación y perspectiva de los Partidos y del Sistema de Partidos Políticos en los Países Andinos).

Contact Information
OAS: Secretariat for Political Affairs
Mr. Robert Devlin
Director of the Department of State Modernization and Good Governance
Email:
IADB: Institutional Capacity and Finance Sector
Mr. Fernando Carrillo
Senior Advisor
Email:

• Integral Development
• Cooperation for Development

The first agreement between the OAS and the IADB in the area of economic development was signed in 1966, entitled Agreement for Cooperation on a Plan for Comprehensive Rural Development in Latin America. Joint activities have also been undertaken on severaltopics related to economic development, including a roundtable on “Foreign Investments in Latin America” in Caracas, Venezuela, 1974, with the participation of the IADB, the OAS, the International Chamber of Commerce and financial authorities of the member States;and Programs for Reconstructing Schools in Central America after Natural disasters in the year 2000, which intended to finance workshops in Honduras, Nicaragua, Guatemala and El Salvador to share knowledge and best-practices on the topic after the damage caused by Hurricane Mitch earlier in the same year.

The most recent agreement is a Technical Cooperation Agreement on a Program for Training Leaders[14] which has as its objective the promotion of centers for entrepreneurship and professional capacitating for students in Latin America. (date?)

Contact Information
OAS: Secretariat for Integral Development
Mr. Jorge Saggiante
Director of the Department of Economic Development, Trade and Tourism
Email:
IADB: Infrastructure and Environment Sector
Ms. Michele Lemay
Specialist
Email:

• Environment/ Sustainable Development

The OAS and the IADB have a long-standing cooperation in the area of sustainable development. The first cooperation agreement between the two organizations in this area was signed in 1974 and is entitledTechnical Cooperation Agreement to Conduct a Project for Multiple Uses of the Pilcomayo River Water Resources[15].

The most recent agreement between the two organizations in the environmental area was signed in 2009 between the Inter-American Institute for Cooperation on Agriculture (IICA) and the Government of Guyana. This is an MOU intended to promote joint projects on renewable energy, energy efficiency and bio-energy in the Caribbean. The parties agreed to investigate ways in which sustainable energy and bio-fuels projects can be promoted and financed in the Caribbean, to seek opportunities for public-private partnerships and private investments on renewable energy, energy efficiency and bio-energy, to develop an agro-energy strategy to be used by CARICOM member states, and to help CARICOM member states access the world bio-fuel markets.

Other collaborative partnerships have been those undertaken in the context of the IADB’s Regional Policy Dialogue whoseobjective is to support the region's participation in the global economy. The Dialogue covers seven topics, including the environment. Under this topic the IADB has created an environment network comprised of vice ministers of environment of OAS member states, who address various issues within the dialogue. The OAS has collaborated with the IADB in the dialogue process and on periodic network meetings focusing on the themes of trade and environment, environmental goods and services and forest conservation practices in the context of global CO2 emission reduction initiatives.

AMinisterial Summit for Energy and Climate of the Americaswas held on April 15-16, 2010, at the OAS Headquarters in WashingtonDC, co-hosted by the IADB and the OAS, whose purpose was to advance common objectives under the Energy and Climate Partnership of the Americasthrough concrete programs.More than 400 representatives from government, convened over 20 ministers of energy from the region and other senior regional delegates, the private sector and civil society gathered at the meeting to discuss advances in the Energy and Climate Partnership of the Americas (ECPA), a new regional energy cooperation effort started in the Summit of the Americas in Trinidad & Tobago in 2009.

The Institute of the Americas Energy Program was asked by the U.S. Department of Energy to help organize the agenda and logistics of the meeting. Energy Program Director Jeremy Martin and Institute President Jeffrey Davidow participated in the sessions. At the end of the meeting, the IADB announced it would increase financing for renewable energy and climate-related projects to $3 billion annually by 2012..

Contact Information
OAS: Secretariat for Integral Development
Mr. Cletus Springer
Director of the Department of Sustainable Development
Email:
IADB: Infrastructure and Environment Sector
Mr. José Augustin Aguerre
Specialist
Email:

• - Multidimensional Security
• Money Laundering

The OAS and the IADB signed their first agreement on the topic of money laundering in 1998, during a ceremony at the Bank's Washington headquarters, entitled Regional Technical Cooperation N. ATN/SF 5909-GS - The Integrity of Financial Market Program.The agreement created a project that lasted until 2002 aimed to provide practical training courses for regulators to assist in implementation of compliance measures under domestic laws, as well as their effective application.

In 2006 a cooperation agreement between the OAS and the IADB was signed entitled the Technical Cooperation Agreement on “Juicios Simulados” on Money Laundering in Latin America.. Under the agreement a special fund has been created for new contracts for consulting services and necessary goods to conduct “juicios simulados”programs on money laundering in Latin America.

Other joint projects between the OAS and the IADB on money laundering include:

-Hemispheric Program for Money Laundering Control in the Financial System CICAD- IADB: The project’s objective was to provide training and technical assistance to the regulators of financial institutions in South America, and to promote the adoption of measuresto control money laundering in national legislation.The project started in 1998 and finished in 2000.

-Fighting Money Laundering from the Judicial System: This program focused upon improving the capacity of judicial bodies to judge and penalize money laundering through providing intensive training to judges and prosecutors in Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay, and Venezuela. The project started in 1999 and finished in 2004.

-Establishing and Developing Financial Intelligence Units: This project provided technical assistance and training for national institutions to analyze money laundering trends by organized crime in Argentina, Bolivia, Brazil, Chile, Ecuador, Peru, Uruguay, Paraguay and Venezuela. The program began in 2002 and finished in 2006.

In 2010 the OAS, through CICAD (Comision Interamericana para Control de Abuso de Drogas) and with the partnership and financial support of the EuropeanCommission and others, including the IADB,held the Lugo Summit, in Spain in April. The Summit focused on the formulation of public policies at the municipal and interagency levels for the incorporation of drug dependents into formal employment and social interaction, in a context of safety and civic responsibility.

Contact Information
OAS: Secretariat for Multidimensional Security
Mr. James Mack
Executive Secretary of the Inter-American Drug Abuse Control Commission
Email:
IADB: Institutional Capacity and Finance Sector
Mr. Gustavo Osvaldo Beliz
Senior Specialist
Email:

• Human Rights
• Children

A cooperation agreement in the area of children’s rights was signed between the IADB and the OAS in 2006 for the United Nations Children’s Fund (Memorandum of Understanding for Cooperation in the Area of Citizen Registration). This agreement has as its objectives to promote citizen registration and is linked to the IADB’s initiative “Building Opportunities for the Majority”. It targets the right of every child to a name and a nationality. Also in 2006, the program of the OAS and the IADB on “Protection of the Rights of Children in Latin America” was renewed, with the objective of improving the situation of children's rights by: and: