Billions More for International Institutions? The ABCs of the General Capital Increases (GCI)

The international financial institutions dramatically increased their lending in 2008–09 to help developing countries cope with the global financial crisis and support economic recovery. Today, these organizations are seeking billions of dollars in new funding. The IMF, which only a few years ago was losing clients and shedding staff, expanded by $750 billion last year. The World Bank and the four regional development banks for Africa, Asia, Europe, and Latin America are asking to increase their capital base by 30 to 200 percent. A general capital increase (GCI) for these development banks is an unusual request. A simultaneous GCI request is a once-in-a-generation occurrence.

The rationale for a cash infusion is to refill the accounts emptied by accelerated disbursements during the financial crisis and to continue to support the demand for funds and expertise from the multilateral institutions as part of a longer-term economic recovery. The GCI would leverage equity capital from shareholders and is intended to stimulate commerce and growth across all regions, including demand for U.S. exports.

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