Multilateral Talks Capital Increase

Among the 3 main issues on the agenda at this year’s IDB meetings in Medellin is the appropriate scale of the bank financially in the medium to long term, and a capital increase looks likely. “At this stage, we’re just asking for guidance. We’re not asking [shareholders] for a specific number, we haven’t recommended any particular number,” IDB chief operating officer Dan Zelikow tells LatinFinance. Former Peruvian finance minister Pedro Pablo Kuczynski is leading a commission that will report on the issue Sunday in Medellin. Zelikow declines to state parameters for an increase. The 2 other main issues for the COO are what the bank is doing to respond to crisis, and what more can it do, as well as what the multilateral would do with the resources if shareholders decide the IDB should be bigger. The bank has engineered significant frontloading of available lending capacity and this year plans to approve up to $18bn, versus $11bn in 2008, up sharply from a 10-year trailing average of $5bn-$6bn, says Zelikow. The IDB has $51.2bn in outstanding loans and can go up to around $63.0bn. “We’re talking about putting out most of the available headroom that we have in 2009,” says Zelikow. This will be via investment loans and spending on infrastructure, social safety nets, institutional reforms and the liquidity facility, for which there is big demand. “We’re also looking at ways to mobilize resources from third parties to co-finance our operations,” says Zelikow, who adds that the bank has expanded trade finance to $1bn from $400m. “Just in the past 3 months we’ve taken on 35 more clients. We all want to ensure that trade finance flows continue,” says the banker. The IDB also wants to promote advice and technical assistance. “Increasingly we’re going to be emphasizing that approach to the activity as well as the money,” says Zelikow. The official sees positives and negatives in the overall LatAm outlook. “Many countries made some very positive macroeconomic reforms at a time w