The Inter-American Development Bank’s new president joined the multilateral lender not without some controversy. Mauricio Claver-Carone tells LatinFinance in an interview about his agenda to boost capital for bigger lending plans and a bigger involvement of the United States in the region.
BY Jo Bruni
resources towards Latin America and the Caribbean, reviving Pan-Americanism, and
rekindling US interest in the economic development of the region will be
central to the IDB’s work plan during his five-year term as president of the
Inter-American Development Bank (IDB), Mauricio Claver-Carone told LatinFinance.
Cuban American Claver-Carone took office on October 1. His
appointment drew opposition, as it broke an unwritten agreement since the
bank’s creation in 1959 that the presidency would be held by a Latin American.
Before taking this position, he was head of Western Hemisphere affairs at the US
National Security Council.
takes over as the COVID-19 pandemic inflicts considerable damage on the people and
economies in the region.
“If I can say in 2025, when my
term is over, ‘Hey, we didn’t lose another decade,’ then I will have been
– Mauricio Claver-Carone
product in the region is expected to fall 8.1% in 2020, according to the
International Monetary Fund’s (IMF) latest forecast. A total of 47 million jobs
will be lost and 2.7 million companies will close, according to the UN’s
Economic Commission for Latin America (ECLAC-CEPAL), who projects 3% GDP growth
in the coming years, and a return of the region to 2019 GDP levels as late as
2023. The debt-to-GDP ratio is expected to surge to 78% by the end of 2021 from
57% before COVID-19, according to the IDB.
From his new
position, Claver-Carone is looking to bring relief to the region, and in
addition, opportunities to quickly get it back on a path of economic growth.
“If I can say
in 2025, when my term is over, ‘Hey, we didn’t lose another decade,’ then I
will have been successful,” he said.
underlines the need for more concessional financing that will decrease some of
the mounting social and political pressure on the region’s governments. He also
envisions opportunities for employment creation through digitalization, near
shoring, the financial inclusion of small and medium-sized enterprises, and the
to ensure some type of a COVID-19 vaccine facility so we can help in that regard,”
all of this will require more resources than the IDB has currently at its
that the needs of the region are somewhere around the $25 billion range in
lending, so we plan to get to the $20-30 billion range,” he said, referring to
a “concept note” sent out to the IDB board arguing for a capital increase.
On his first
day in office as president of the IDB, Claver-Carone said he would be seeking
support from the US Treasury Department and the US Congress for a capital
boost the bank’s
lending to $20 billion per year from $12 billion.
between the IDB and CAF or CABEI is that the US is a member, its major
shareholder. Its original purpose, which was for the US to be an active
participant in the economic growth and development of our neighbors, is a noble
goal,” he said. “That has since faded, at least in US interest, and we see that
in the last discussions for capital increases in 2010 and 2015.”
CAF is known as
the Development Bank of Latin America and CABEI is the Central American Bank
for Economic Integration.
“Frankly, I see a low probability
for the capitalization of the IDB.”
- José Antonio Ocampo
Colombian minister of finance José Antonio Ocampo doubts that the IDB will
succeed in getting the needed capital increase.
“Frankly, I see
a low probability for the capitalization of the IDB,” Ocampo said. “It’s a
complex situation because the new president was imposed by the Trump
administration against a history of Latin American presidents. We’ll have to
see what the new government of the United States does. But the fact is that
some Republicans in the US Congress have already said they would not vote for
said he is determined to “regenerate or strengthen how the US sees the IDB.”
investment (FDI) in Latin America came to a halt when the commodity boom ended
in 2012,” said Alicia Bárcena, executive secretary of CEPAL in a press
conference on December 2.
“FDI fell 7.8%
in 2019. And in 2020, the fall will range from 45% to 55%; Latin America is the
region where foreign direct investment will fall the most in the world,” she
Claver-Carone this could be reversed in the very short term through near shoring,
which means bringing US companies operating in China closer to the US.
that 75% of US companies in China are either looking to move closer to the US
or considering it,” he said. “We’ve been on overdrive trying to put together
what the immediate impact low-hanging fruit is; it’s an $80 billion opportunity
in sectors where countries in Latin America already have the infrastructure.”
is having conversations with CEOs from the US and the region. Key sectors are
textiles, electric components and “knowledge space” services, and the IDB is
about to release a near-shoring toolkit that will help US companies in China to
move closer to the US.
“I can’t tell
you the number of phone calls I’ve gotten from US companies, financial institutions,
institutional investors that are excited about this opportunity,” he said.
Over the last
decades, US investment has diminished in the region, and the relationship
between US companies and the IDB also diminished, Claver-Carone contends. For
example, IDB Invest, the private sector arm of the IDB, has been getting more
co-financing from Europe than from the US. “But US companies are interested in
the region. They just haven’t had a good steward, and I think the IDB can be a
great steward,” he said.
near-shoring efforts have an institutional backing that he himself helped
create. In December 2019, the US Department of State launched the Growth in the Americas program under
Claver-Carone’s leadership. Growth in the Americas “is a whole-of-government initiative
that will foster private sector infrastructure investment in Latin America
and the Caribbean,” the Department of State said in a press release.
In July, while
still in the National Security Council, Claver-Carone told Reuters that the
Administration was creating a “back to the Americas’ initiative” that included
returning some facilities outsourced in China back to the US and others to
Latin America and the Caribbean.
years the IDB has financed and created a lot of the investment development
agencies in the different countries, so we have a good sense of who has done
their homework and where those comparative advantages lie and what we can take
advantage of right away,” he said. “That’s one of the really great things about
the IDB versus the US government where it was very difficult to get the data
Claver-Carone, near-shoring is not only about China, as some have pointed out.
“It’s the long-held dream of Pan-Americanism and commercial integration brought
to life,” he said.
envisions for the IDB a coordinating role for multilateral cooperation efforts
in the region to address the challenges ahead.
“I’m trying to
create a historic cooperation between International Financial Institutions
(IFIs),” he said.
there is room for improvement in multilateral response capacity and in how
efficiently resources are deployed through better coordination, and he has been
seeking to put this into practice in the recent hurricane disaster in Central
“The IDB has created
a task force with World Bank and CABEI. I’ve spoken with CEPAL and hosted all
the governments last week and all the presidents, vice presidents and ministers
to get on the same page, first and foremost, in regard to damage-assessment
evaluation,” he said. “One of the things I don’t want, because we’ve seen it a
lot in the past, is competing assessments.”
He has also
been on the phone with the European Union, Japan and other donor countries to
ensure one cohesive evaluation and channeling funds in a manner that is
efficient and effective.
“We’ve seen in
other natural disasters that everyone does a little bit, and then it doesn’t
add up to a whole lot,” he said. “So, we want to just make it all one big
envisions the IDB’s coordinating role as being proactive, not just reactive, as
was the case in Central America. That includes coordination not only in the
near-shoring initiative, but also in tending to the financial pressures that
the region is facing.
“We are working
closely with the IMF on Argentina,” he said. “They just concluded their staff
visit there, and we’re working closely with them to see what gaps we can help
small island debt is a big issue,” Claver-Carone said, adding that he is
looking to address the problem along with Kristalina Georgieva, managing
director of the IMF.
all but destroyed Caribbean’s tourism-based economies, which have also taken a
heavy toll from hurricanes and a deep drop in remittances. But being middle
income countries, most Caribbean nations are not eligible for concessional
funding from the International Monetary Fund (IMF) or for the Fund’s
Catastrophe Containment and Relief Trust (CCRT), which allows the IMF to
provide debt service relief.
“I think here
Kristalina and I really see eye to eye. I’m going to crack that nut. We’re
going to crack that nut,” he said in reference to the need for the IMF to
modernize eligibility formulas so as to make support available to vulnerable
The IMF is
looking to create a Caribbean fund to help Caribbean countries through their
financial pressures, and the IDB is open to work alongside that, he said.
“We’re open to
creating some type of Caribbean fund of our own or in conjunction with the
Fund,” Claver-Carone said. “Particularly as they [the IMF] have their hands
tied by these somewhat antiquated definitions.”
“We should be
announcing on the Caribbean by the end of the year an initial measure to help
them ease some of their debt repayment pressures,” he said.