During the course of the financial and economic crisis the multilateral development banks were called on by the international community to increase their lending activity in order to combat the crisis in the developing countries. During the period of the crisis they performed an important anti-cyclical role. Combating the crisis tied up significant financial resources; this was the reason why the development banks had reached their lending limits. An increase in the capital of the development banks is required in order for them to continue being able in future to fulfil their mandate of reducing long-term poverty and to remain capable of taking action in the event of future crises.
The negotiations with all the development banks on an increase in capital have been concluded. The Swiss Federal Council has decided to contribute towards the increases in capital of the development banks. It is proposing to commit 3.5 billion Swiss francs, 167 million of which is payable over eight years and will be apportioned to the official development aid. The balance is being designated as guarantee capital.
Switzerland's participation in the capital increases is in its long-term interests. The Swiss Federal Council attaches a great deal of importance to the multilateral development banks: combating poverty and structural problems are two of the pressing challenges in many developing countries. Many of the current problems are extending across a number of regions, or even having a global impact and demand correspondingly global answers. Appropriate representation within the development banks and their controlling committees is in Switzerland's interest as the development banks are becoming increasingly important for matters relating to development, the environment, economics and financial policy. Switzerland must meet its share of the burden for the increases in capital so it can play its part in helping to shape the direction of the development banks in the future.
The Swiss Parliament will debate the dispatch during the Winter session 2010 and Spring session 2011.
Address for enquiries:
Beatrice Maser, SECO, Head of the Economic Development and Cooperation Division
Tel. +41 (0)31 324 07 53
Jörg Frieden, SDC, Assistant Director-General, Head of Department Global Cooperation,
Tel. +41 (0)31 322 34 76