A. DESCRIPTION OF THE INTER-AMERICAN

DEVELOPMENT BANK 1

1

Headquarters: 808 Seventeenth Street N.W., Washington, D.C. 20577. Phone 202-393-4171

President. Antonio Ortiz Mena.

CREATION AND AUTHORITY

The Agreement establishing the Inter-American Development Bank came into effect in December 1959, when it was accepted by 19 Latin American Republics and the United States, and the Bank commenced operations on October 1, 1960. The United States became a member by virtue of the Inter-American Development Bank Act (73 Stat. 299; 22 U.S.C. 283 note). Trinidad and Tobago became a member in 1967, and Barbados and Jamaica in 1969.

PURPOSE

The purpose of the Bank is to promote the economic development of its member countries, individually and collectively.

ORGANIZATION

Basic powers of the Bank are vested in a Board of Governors consisting of one Governor appointed by each member country. Responsibility for actual operations of the Bank rests with a Board of Executive Directors, which has seven members chosen by the Bank's member countries. The voting power of the member countries is approximately proportionate to their subscriptions to the ordinary capital. The President of the Bank, elected by the Governors, is ex officio chairman of the Board of Executive Directors and, under the direction of the Board, conducts the ordinary business of the Bank and is chief of its staff.

ACTIVITIES

The Bank may make loans to either governmental or private entities. Loans generally are made for specific projects, but also may be granted to development banks and institutions in member countries for relending for projects not large enough to warrant direct credits from the Bank. Loans to private borrowers are made with an appropriate guarantee.

The Bank provides technical advice and assistance in preparing, financing, and executing development plans and projects, including the consideration of priorities and the formulation of loan proposals on specific national or regional development projects.

1 Source: U.S. Government Organization Manual, 1970/71. Washington, D.C., U.S. Government Printing Office, 1970. p. 585-586.

The Bank also administers the Social Progress Trust Fund under an agreement executed between the United States Government and the Bank on June 19, 1961. The Trust Fund is used for loans for projects or programs designed to achieve improved conditions in the fields of land settlement and improved land use, housing for low income groups, community water supply and sanitation facilities, and supplementary financing of facilities for advanced education and training related to economic and social development. The Bank also administers funds for other countries, including Argentina, Canada, Germany, Sweden, the United Kingdom, Norway, and the Vatican, for the economic and social development of Latin America. Technical assistance may also be provided.

As of December 31, 1970, the Bank had authorized 662 loans totalling $4,068,624,000, net of cancellations and exchange adjustments, in such varied fields as agriculture, industry and mining, water supply and sewerage systems, electric power, transportation and communications, housing, education, pre-investment, and export financing.

B. ARTICLES OF AGREEMENT ESTABLISHING THE INTER-AMERICAN DEVELOPMENT BANK

The countries on whose behalf this Agreement is signed agree to create the Inter-American Development Bank, which shall operate in accordance with the following provisions:

ARTICLE I. PURPOSE AND FUNCTIONS

Section 1. Purpose

The purpose of the Bank shall be to contribute to the acceleration of the process of economic development of the member countries, individually and collectively.

Sec. 2. Functions

(a) To implement its purpose, the Bank shall have the following functions:

(i) to promote the investment of public and private capital for development purposes;

(ii) to utilize its own capital, funds raised by it in financial markets, and other available resources, for financing the development of the member countries, giving priority to those loans and guarantees that will contribute most effectively to their economic growth;

(iii) to encourage private investment in projects, enterprises, and activities contributing to economic development and to supplement private investment when private capital is not available on reasonable terms and conditions;

(iv) to cooperate with the member countries to orient their development policies toward a better utilization of their resources, in a manner consistent with the objectives of making their economies more complementary and of fostering the orderly growth of their foreign trade; and

(v) to provide technical assistance for the preparation, financing, and implementation of development plans and projects, including the study of priorities and the formulation of specific project proposals.

(b) In carrying out its functions, the Bank shall cooperate as far as possible with national and international institutions and with private sources supplying investment capital.

ARTICLE II. MEMBERSHIP IN AND CAPITAL OF THE BANK

Section 1. Membership

(a) The original members of the Bank shall be those members of the Organization of American States which, by the date specified in Article XV, Section 1(a), shall accept membership in the Bank.

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(b) Membership shall be open to other members of the Organization of American States and to Canada, at such times and in accordance with such terms as the Bank may determine. For the purpose of increasing the resources of the Bank, nonregional countries which are members of the International Monetary Fund, and Switzerland, may also be admitted to the Bank, at such times, in accordance with such terms and, under such general rules as the Board of Governors shall have established, subject to such limitations on their rights and obligations, relative to those applicable to regional members, as the Bank may determine. 1

Sec. 2. Authorized Capital

(a) The authorized capital stock of the Bank, together with the initial resources of the Fund for Special Operations established in Article IV (hereinafter called the Fund), shall total one billion dollars ($1,000,000,000) in terms of United States dollars of the weight and fineness in effect on January 1, 1959. Of this sum, eight hundred and fifty million dollars ($850,000,000) 2 shall constitute the authorized capital stock of the Bank and shall be divided into 85,000 3 shares having a par value of $10,000 each, which shall be available for subscription by members in accordance with Section 3 of this article.

(b) The authorized capital stock shall be divided into paid-in shares and callable shares. The equivalent of four hundred million dollars ($400,000,000) shall be paid in, and four hundred and fifty million dollars ($450,000,000) shall be callable for the purposes specified in Section 4(a)(ii) of this article.

(c) The capital stock indicated in (a) of this section shall be increase by five hundred million dollars ($500,000,000) in terms of United States dollars of the weight and fineness existing on January 1, 1959, provided that

(i) the date for payment of all subscriptions established in accordance with Section 4 of this article shall have passed; and (ii) a regular or special meeting of the Board of Governors, held as soon as possible after the date referred to in subparagraph (i) of this paragraph, shall have approved the abovementioned increase of five hundred million dollars ($500,000,000) by a three-fourths majority of the total voting power of the menber countries.

(d) The increase in capital stock provided for in the preceding paragraph shall be in the form of callable capital.

(e) Notwithstanding the provisions of paragraphs (c) and (d) of this section, the authorized capital stock may be increased when the Board of Governors deems it advisable and in a manner agreed upon

1 This paragraph was amended by action of the Board of Governors on March 23, 1972.

2 On January 28, 1964, the Board of Governors increased the authorized capital stock of the Bank to two billion one hundred and fifty million dollars ($2,150,000,000); on June 20, 1968, to three billion one hundred and fifty million dollars ($3,150,000,000); and on December 30, 1971, to five billion one hundred and fifty million dollars ($5,150,000,000).

3 The number of shares in the authorized capital stock was increased by the Board of Governors on January 28, 1964, to 215,000 of which 30,000 were reserved for subscription by new members. On June 20, 1968, the number was raised to 315,000, and on December 30, 1971, to 515,000.

The authorized paid-in shares were increased by the Board of Governors on January 28, 1964, to the equivalent of four hundred and seventy-five million dollars ($475,000,000) and on December 30, 1971, to the equivalent of eight hundred and seventy-five million dollars ($875,000,000).

The authorized callable shares were increased by the Board of Governors on January 28, 1964, to the equivalent of one billion six hundred and seventy-five million dollars ($1,675,000,000); on June 20, 1968, the amount was raised to two billion six hundred and seventy-five million dollars ($2,675,000,000); and on December 30, 1971, to four billion two hundred and seventy-five million dollars ($4,275,000,000).

by a two-thirds majority of the total number of governors representing not less than three-fourths of the total voting power of the member countries.

Sec. 3. Subscription of Shares

(a) Each member shall subscribe to shares of the capital stock of the Bank. The number of shares to be subscribed by the original members shall be those set forth in Annex A of this Agreement, which specifies the obligation of each member as to both paid-in and callable capital. The number of shares to be subscribed by other members shall be determined by the Bank.

(b) In case of an increase in capital pursuant to Section 2, paragraph (c) or (e) of this article, each member shall have a right to subscribe, under such conditions as the Bank shall decide, to a proportion of the increase of stock equivalent to the proportion which its stock theretofore subscribed bears to the total capital stock of the Bank. No member, however, shall be obligated to subscribe to any part of such increased capital.

(c) Shares of stock initially subscribed by original members shall be issued at par. Other shares shall be issued at par unless the Bank decides in special circumstances to issue them on other terms.

(d) The liability of the member countries on shares shall be limited to the unpaid portion of their issue price.

(e) Shares of stock shall not be pledged or encumbered in any manner, and they shall be transferable only to the Bank.

Sec. 4. Payment of Subscriptions

(a) Payment of the subscriptions to the capital stock of the Bank as set forth in Annex A shall be made as follows:

(i) Payment of the amount subscribed by each country to the paid-in capital stock of the Bank shall be made in three installments, the first of which shall be 20 percent, and the second and third each 40 percent, of such amount. The first installment shall be paid by each country at any time on or after the date on which this Agreement is signed, and the instrument of acceptance or ratification deposited, on its behalf in accordance with Article XV, Section 1, but not later than September 30, 1960. The remaining two installments shall be paid on such dates as are determined by the Bank, but not sooner than September 30, 1961, and September 30, 1962, respectively.

Of each installment, 50 percent shall be paid in gold and/or dollars and 50 percent in the currency of the member.

(ii) The callable portion of the subscription for capital shares of the Bank shall be subject to call only when required to meet the obligations of the Bank created under Article III, Section 4 (ii), and (iii) on borrowings of funds for inclusion in the Bank's ordinary capital resources or guarantees chargeable to such resources. In the event of such a call, payment may be made at the option of the member either in gold, in United States dollars, or in the currency required to discharge the obligations of the Bank for the purpose for which the call is made.

Calls on unpaid subscriptions shall be uniform in percentage on all shares.