Latin America has been devastated by the COVID-19 pandemic, and was already facing major economic challenges and headwinds even before the crisis hit. This should be the hour of the Inter-American Development Bank (IDB), the most important provider of development finance and public-sector assistance in the region. But to help Latin America emerge from the pandemic, the underfinanced IDB urgently needs a capital increase. The only problem: That capital increase risks being held hostage to the Biden administration’s desire to remove the former Trump administration official who is heading the IDB, Mauricio Claver-Carone, from his post before any decision on a capital increase is taken.
For those who do not follow Latin America: The IDB is the largest and most important development institution in Latin America and the Caribbean. It lends considerably more to the region than the World Bank does. In 2020, countries in the region received $12.6 billion in public sector loans from the IDB compared to just under $8 billion from the World Bank. The bank, which celebrated its 60th anniversary two years ago, has strong roots in the region. It operates as a cooperative in which Latin American governments have a large share of control and decision-making. In recent years, the IDB has expanded its membership to include 20 donor countries from outside the Western Hemisphere, including several European countries as well as China, Israel, Japan, and South Korea.
