Geithner Backs IDB Expansion

Major IDB shareholder the US is backing calls to increase the size of the multilateral. “To help address the region’s demand for finance this year and next, we encourage the IDB to expand its existing resources, alongside the World Bank and the other regional development banks,” treasury secretary Tim Geithner told the IDB annual meetings in Medellin Sunday. “We believe there is additional room to expand your balance sheet and deploy additional resources to help governments in the region compensate for the sharp reduction in private finance,” he adds. According to Geithner, the IDB should set to work immediately to identify prudentially sound ways to further ramp up its lending in 2009 and 2010, reviewing its capital adequacy model and existing policies on lending limits. “Part of this effort must be directed at providing the poorest countries with crisis response tools. This is the most pressing immediate priority,” says the treasury secretary. The US is prepared to begin a formal review of the capital needs of the bank to assess the merit of an increase in the bank permanent capital base. Geithner adds that work on expanding private financing will be more critical in the months ahead. The secretary also stresses commitment to good governance, as well as ability to innovate.