In the next few days, a decision will be made on the new presidency of the leading development bank for Latin America. This is important: the IDB needs new motivation and an urgent boost of energy.
by Alexander Busch, Latin America correspondent for Handelsblatt and Neue Zürcher Zeitung
On Sunday, the Board of Governors of the Inter-American Development Bank (IDB) will elect the new presidency for the next five years. This is a key and important decision for the region.
With lending of $23.4 billion in 2021, it is the most important multilateral financier for the region alongside the World Bank and the Latin American Development Bank CAF. Alongside the U.S., which calls the shots with a 30 percent share, Brazil and Argentina are the most influential members with an 11 percent voting share. But Germany, for example, also has a 1.9 percent stake in the bank, and Japan holds five percent.
It is completely open who could make the running: Ilan Goldfajn, who is currently responsible for Latin America at the International Monetary Fund (IMF) in Washington, is applying from Brazil. Many consider him the most suitable candidate because of his experience as ex-central bank chief in Brazil and at the head of leading private banks. Whether Brazil’s recently elected President Luiz Inácio Lula da Silva will support his candidacy remains unclear.
Nicolás Eyzaguirre Guzmán, former Chilean finance minister and Goldfajn’s predecessor at the IMF, has also thrown his hat into the ring. He has worked with left-of-center governments in Chile and is therefore considered a suitable interlocutor for the new leftist governments in South America. Mexico, Trinidad and Tobago and Argentina have also nominated candidates.
The election comes just two years after the last one. Mauricio Claver-Carone, who was almost single-handedly pushed through by President Donald Trump, had to vacate his post because he had violated compliance rules. According to an investigative report by the bank, he allegedly had an affair with a female employee, whom he also approved two hefty pay raises in one year.
The appointment of the US-American Claver-Carone in 2020 contradicted the unwritten rule that had been observed since the bank was founded in 1959: Presidents have always come from Latin America – but it is primarily the U.S. that calls the shots at the Washington-based bank. Trump broke the rule with the support of Brazil, ruled by President Bolsonaro.
Claver-Carone had set out to put the bureaucratic, expensive bank, which was riddled with political cronies, back on its feet. He failed, however, mainly because he had no networks in Latin America and knew little about the region.
Latin America would now benefit from a more agile development bank that is more willing to take risks and would also be endowed with greater capital. This time, there are competent candidates for the post at the head of the most important multilateral donor.