ESSAYS

Verging on Merging at the Inter-American Development Bank

September 30, 2013

Abstract

The spotlight may be on Jim Kim’s new strategy for the World Bank this year, but Luis Alberto Moreno is busy pursuing an overhaul of his own at Washington’s other multilateral development bank (MDB). And while the Inter-American Development Bank’s (IDB’s) private-sector restructuring is narrower in focus, it would mark a major organizational shift with implications for how the bank engages in an increasingly wealthy region and for the relative standing of the bank’s largest (the United States) and smallest (China) shareholders.

At the moment, the key organizational question under discussion is, Merge in, or merge out? That is, should a consolidated private-sector function reside in a new entity outside of IDB’s ordinary capital window (merge out, see Figure 2a), or should the function be consolidated within the ordinary capital window. IDB management appears to be squarely behind a merge-out option for a variety of reasons, but it’s not clear yet if the bank’s shareholders are on board.

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