The president of the Inter-American Development Bank, Enrique V. Iglesias, today informed the IDB Board of Executive Directors that he is resigning his post, effective September 30, 2005.
Iglesias made the announcement after sending a letter to the chairman of the IDB Board of Governors, Japan Finance Minister Sadakazu Tanigaki, in which he stated: “After working at the Bank for more than 17 years, I believe that the time has come to pass its leadership to new hands, thus enabling a new generation to continue contributing fresh ideas to the Bank’s goals of cooperating in the economic and social development of Latin America and the Caribbean.”
Iglesias was first elected in March 1988 and re-elected in 1993, 1998 and 2003. His current five-year term was due to expire in April 2008. The IDB, the world’s largest and oldest regional development bank, has only had three presidents since it was founded in 1959.
Iglesias became president at a time when Latin American countries were launching a wide range of economic reforms to recover from the so-called “lost decade” of the 1980s. The IDB was to assist its borrowers’ efforts to control inflation, resume growth, liberalize markets and modernize their public and private sectors, in order to fulfill its mission of contributing to poverty reduction and addressing the region’s pressing social problems.
As borrowing countries faced mounting financial needs to carry out such reforms, Iglesias led the IDB through two rounds of resource replenishment, raising its authorized ordinary capital from $34.5 billion to $101 billion. These increases have allowed the Bank to reach a sustainable lending capacity of $8 billion a year and become the leading source of multilateral financing for Latin America and the Caribbean.
During the 1990s member countries broadened the IDB’s areas of activity beyond the foundational mandates of promoting development and integration. The Bank – which had traditionally focused on sectors such as energy, infrastructure, industry and agriculture – was charged with giving priority to poverty reduction, sustainable development and private sector expansion. It was also to delve into new areas, including state modernization, violence reduction, disaster prevention and support for disadvantaged groups such as poor women, indigenous peoples and ethnic minorities. Reflecting these instructions, the IDB assigns 50 percent of its financing to programs in the social sectors.
To meet these challenges, the IDB itself underwent significant structural changes. Its highly centralized operations were split among three regional departments that supervise the Bank’s offices in each borrowing country. The Research Department, the Sustainable Development Department and the Integration and Regional Programs Department were created to study the region’s most pressing economic and social problems and improve IDB-financed programs.
The IDB also established a Private Sector Department to provide financing without sovereign guarantees for major infrastructure and energy projects and, more recently, trade financing and innovative financial transactions to deepen local capital markets. The Bank’s two affiliates started their operations during Iglesias’ watch: the Inter-American Investment Corporation, which focuses on medium-size enterprises, and the Multilateral Investment Fund, which supports microenterprise and small business.
As Latin America and the Caribbean increased its ties with other regions, the IDB also strengthened its links with international partners. The Bank collaborates closely with other multilateral institutions, donor nations and their aid agencies, which provide grant resources and technical expertise to borrowing countries. This year South Korea became the 47th member of the IDB.
The member countries have 45 days to nominate candidates to succeed Iglesias. A special meeting of the Board of Governors will be held within 15 days of the end of the nomination period. To be elected president, a candidate must have the support of countries representing a majority of the IDB’s capital stock as well as an absolute majority of the governors of the 28 member countries of the Americas (the 26 borrowing countries plus Canada and the United States).