On this day in Caribbean history, December 30, 1969, the Caribbean nation of Jamaica became the 23rd member-nation of the International American Development Bank (IADB or IDB or BID). Jamaica’s membership becomes effective when Ambassador Sir Egerton R. Richardson, the representative of Jamaica on the Council of the Organization of American States (OAS), signed the agreement establishing the bank in a ceremony at the Pan American Union. Ambassador Richardson also deposited an instrument of ratification of the agreement with OAS secretariat, thus completing the requirements for entry into the bank.
The IDB is the largest source of development financing for Latin America and the Caribbean. Established in 1959, the IDB supports Latin American and Caribbean economic development, social development and regional integration by lending to governments and government agencies, including State corporations.
The IDB is governed by its Board of Governors, a 48-member body who regularly meets once a year. In March 2010, reunited in Cancun, Mexico, the Board of Governors of the Bank agreed on a $70 billion capital increase, along with full debt forgiveness for Haiti, its poorest member country, devastated by an earthquake that had destroyed its capital, Port-au-Prince, two months before.
The developing countries that borrow from the IDB are the majority shareholders, and therefore control the majority of the decision-making bodies of the Bank. Each member’s voting power is determined by its shareholding: its subscription to the Bank’s ordinary capital. The United States holds 30 percent of the Bank’s shares, while the countries of Latin America and the Caribbean combined hold 50.02 percent but with another 20% from Europe the US can veto decisions. This arrangement is unique in that the developing member countries, as a group, are the majority shareholders. Though this arrangement was first viewed as risky, it is believed by some that strict peer pressure prevents the borrowers from defaulting, even when under severe economic pressure.