IDB could benefit from closer collaboration with other MDBs, Claver-Carone says

WASHINGTON — More effective cooperation with other multilateral development banks will allow the Inter-American Development Bank to have greater impact in Latin America and the Caribbean, new IDB President Mauricio Claver-Carone told Devex. Claver-Carone, who took up his post Oct. 1, said that the size of other MDBs like the World Bank and International Monetary Fund would allow his regional bank to leverage more capital by the creation, for instance, of joint country platforms where all MDB activity could be coordinated. “They have space in their portfolio for countries where we don’t, so why shouldn’t we be leveraging each other's balance sheets and portfolios in order to support countries with joint projects?” Claver-Carone said. “But in order to do that — we can do that with other MDBs and also with [development finance institutions] — we need to have joint goals for each of those countries.” IDB lends $12 billion a year — although Claver-Carone seeks to secure a capital increase to $20 billion — and has 48 member countries, 26 of which are borrowing. The World Bank and IMF each have 189 member countries, with the World Bank Group committing $77 billion in fiscal year 2020. Of that, $12.8 billion was committed in Latin America and the Caribbean. On his second day in office, Claver-Carone met virtually with World Bank President David Malpass and IMF Managing Director Kristalina Georgieva to discuss regional issues, including COVID-19 response. Malpass said he welcomed the close collaboration of the three lending institutions and called the first joint call “productive.” “If we [MBDs] plan better in a joint fashion and have joint country platforms … that’s going to be a huge opportunity.” --— Mauricio Claver-Carone, president, IDB Claver-Carone — who previously served as senior director for Western Hemisphere affairs in the White House National Security Council — compared the MDB system to the U.S. government, in which different departments and agencies can often have the same goals but the size of the bureaucracy and lack of communication mean efforts are not aligned to maximize impact. He said there is sometimes duplication on projects from separate MDBs, with different institutions all giving money to do the same type of project. “Not only is it inefficient, but it’s also ineffective because then we’re not really coalescing to have the greatest impact where we’ve already identified where we can have the greatest impact,” Claver-Carone said. “If we plan better in a joint fashion and have joint country platforms knowing and identifying what are those projects, what are those opportunities, and focusing on achieving results … that’s going to be a huge opportunity.” IDB could also benefit from cooperation with other regional banks, like the Asian Development Bank, Claver-Carone said. That institution has 68 members, 49 of which are in Asia and 19 of which are outside the region. Even though it is also a regional development bank like IDB, the diversity of ADB’s portfolio allows it “more room for risk” because of its range of borrowing nations, Claver-Carone said. ADB committed $21.64 billion in loans and grants in 2019. “We can actually also work with the Asian Development Bank, for example, to share risk so that we can have these exposure agreements whereby we can share some risk with some of these other institutions that have a lot more room,” Claver-Carone said. “I think there’s a lot we can do there that’s going to not only give us the ability to either move ourselves more money, but … help borrowing nations.” Claver-Carone said that IDB does have one advantage over other MDBs operating in Latin American and the Caribbean: its reputation. Because the bank is so well known in the region, countries have confidence in the lending institution and readily work with it, he said. He called IDB the “lender of choice” for Latin America and the Caribbean, saying governments have a lot of confidence in the bank, which has offices in all 26 borrowing countries. “We probably have the best relationships with the governments and the people there. Knowledge is really our comparative advantage, and our technical assistance,” Claver-Carone said. “The World Bank doesn’t have that in countries — and needless to say, [nor do] other … MDBs — so if we’re really able to work in a much more cohesive manner, we can help direct not only other [international financial institutions] in the region but also DFIs.”