What should the next IDB President prioritize?

The election of the next Inter-American Development Bank (IDB) President presents opportunities and challenges to finally align a progressive vision for development in Latin America and the Caribbean with effective action. By committing to high standards for inclusive, sustainable development, the new IDB president can shape the progress of the institution for years to come.

In June 2020, the IDB announced the vacancy for President, and the Board of Directors reported that the election will take place at a virtual meeting on September 12-13, 2020. Since its founding in 1959, the IDB has had only four presidents, all of them serving multiple terms. Current President Luis Moreno has been in office for 15 years, serving three terms . With this institutional track record, the selection of the next IDB president marks a rare opportunity to install new leadership that  can shape the IDB’s path. As per the regulations for the election of the president of the IDB, the Board of Governors will measure the nominated candidates against three criteria: 

  1. Knowledge of the region’s development challenges;
  2. Experience working with Latin American and Caribbean countries; and, 
  3. Competence in matters pertaining to the activities, management, and administration of national or international financial and/or development institutions.

While all three are important for the next leader of the region’s most prominent development finance institution, it is also critical that  the new president articulate a clear vision for the IDB Group’s development mission. This vision will shape the course of the institution for the next ten years and should:

1. Align IDB Group-sponsored operations with the IDB’s mission. The IDB, as a Multilateral Development Bank (MDB), has the mission to improve lives in Latin America and the Caribbean (LAC) and to reduce poverty and inequality to achieve sustainable development in a climate-friendly way. Despite having a strong vision of their own mission on paper, the IDB usually falls short in achieving those standards in the projects they finance. What we end up seeing is a huge disconnect between their mission and their actions on the ground in the projects or programs they support. 

2. Recognize and address past challenges. Rather than reducing inequality, promoting sustainable development, and boosting climate-friendly operations, IDB projects frequently contribute to inequality by supporting forced displacements, excluding marginalized groups from project benefits, or exacerbating gender inequality. Similarly, although the IDB has strong rhetoric around the need to address climate change, many projects financed by the IDB Group continue to support conventional energy sources rather than renewables. Projects also contribute to deforestation and forest degradation in the region with the world’s largest tropical rainforest, the survival of which is key to a livable planet.  

3. Commit to specific principles. Considering these challenges, the new President’s articulation of the IDB’s development mission should include the following principles, some specific to the development challenges of the LAC region: 

  • Focus projects on communities. Projects should be selected and designed in partnership with communities, and the institution should prioritize accountability to these stakeholders. The IDB must also protect and safeguard collective land rights for Indigenous, Afro-descendant, and traditional peoples. Projects should acknowledge that Indigenous Peoples and local communities play a critical role in stewarding and safeguarding forests and other natural resources.
  • Reduce inequality. Project benefits should be equitably shared and negative impacts of projects must not disproportionately affect the poorest and most marginalized communities, particularly women, children, persons with disabilities, LQBTQI groups, Indigenous Peoples and Afro-descendants. All activities must address gender gaps and reduce harms such as sexual exploitation and abuse and discrimination. 
  • Promote sustainable development. All activities must be fiscally, socially, and environmentally sustainable for the benefit of current and future generations. All activities must scale up climate action, integrating climate change across its operations, and financing needs for resilient, low-carbon growth. 
  • Fulfill commitments to human rights. The promotion and protection of human rights and social and environmental defenders should be a key purpose and guiding principle of the institution.

These principles are needed because we’ve learned that growth that exacerbates inequality or degrades the environment not only doesn’t work; it in fact undermines development. Thus, these principles should inform all IDB projects and policies, and the next IDB president should be evaluated on whether and how she or he will meaningfully incorporate them in the institution’s work.

Above all, the next IDB president should not only commit to respect and promote the environmental and social standards but also commit to effectively implementing the new Environmental and Social Policy Framework (ESPF). An effective ESPF implementation involves, among others, a robust budget, having the right institutional incentives in place, supporting training activities within the Bank and executing agencies, and developing clear implementation of monitoring and evaluation requirements and capacity. ESPF implementation and application processes need to avoid creating loopholes, uncertainties, unaccountable judgments, or discretionary actions, so the original purpose of safeguards is not rendered ineffective. For more information on the IDB safeguards review process, see the main recommendations and comments provided by civil society. 

The new IDB president also has a unique opportunity to promote a cultural shift at the institution, whereby s/he can open space for civil society and project-affected peoples, recognizing the important role they play in guaranteeing that IDB Group-sponsored development benefits, and does not harm, people and the planet. The IDB should foster an institutional culture, where by the organization accepts that it makes mistakes and is receptive to its internal accountability mechanisms, as well as to interaction and constructive criticism from external stakeholders, such as civil society. The next IDB president has the opportunity to spearhead this shift to a more accountable bank.

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