Agreement Establishing the Multilateral Investment Fund
[Regeling vervallen per 13-03-2007]
Whereas, many leaders in Latin America and the Caribbean have embraced marketbased
economic reform, recognized the need to reduce external debt burdens to manageable
levels and recognized the need for liberalized investment regimes;
Whereas, the need to attract private capital is critical to the economic development
of the countries of Latin America and the Caribbean, and investment reform is needed
to stimulate foreign and domestic investment in these countries;
Whereas, the prospective donor members of the Inter-American Development Bank listed
in Schedule A of this Agreement (each considered a "Donor" on adherence to this Agreement
and so referred to hereinafter) have agreed to establish a multilateral fund in the
Bank as a transitional measure to assist in investment reform;
Whereas, such a multilateral fund can provide critical resources to supplement and
complement the activities of the Inter-American Development Bank, the Inter-American
Investment Corporation and other multilateral development banks, to provide support
for their policies and their initiatives to promote investment reform and stimulate
in particular the activities of micro-enterprises;
Whereas, the Inter-American Development Bank (hereinafter referred to as the "Bank"),
to fulfill its purposes and in pursuit of its objectives, has agreed to administer
such a fund, and on February 11, 1992, has signed the Agreement for the Administration
of the Multilateral Investment Fund (hereinafter referred to as the "Administration
Agreement");
Therefore, the Donors agree to establish the Multilateral Investment Fund (hereinafter
referred to as the "Fund") as follows:
Article I. General purposes
[Regeling vervallen per 13-03-2007]
The general purposes of the Fund are to:
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a) encourage the development and implementation of investment reforms and facilitate
significantly increased levels of private investment, both foreign and domestic, thereby
accelerating the economic and social growth and development in the regional developing
member countries of the Bank, and the developing member countries of the Caribbean
Development Bank;
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b) encourage those members in their efforts to implement development strategies based
on sound economic policies which encourage increased private investment and an expanding
private sector, as those policies will increase employment opportunities and foster
small businesses and micro-enterprises, and thus help alleviate poverty, improve income
distribution, and strengthen the role of women in development;
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c) stimulate micro-enterprises, small businesses and other entrepreneurial activities
in those members;
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d) provide financing to help enable those members to
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(i) identify and implement policy reforms which will increase investment,
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(ii) bear certain of the costs associated with investment reforms and an expanding private
sector, and
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(iii) broaden participation of smaller entrepreneurs in their economies; and
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e) promote in the full range of its operations environmentally sound and sustainable
economic development.
Article II. Contributions to the Fund
[Regeling vervallen per 13-03-2007]
Section 1. Instruments of Contribution.
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a) As soon as reasonably possible after depositing the instrument indicating that it
has ratified, accepted, or approved this Agreement under Article VI, Section 1 (hereinafter
referred to as an "Instrument of Acceptance"), but no later than sixty days after
depositing that instrument, each Donor shall deposit with the Bank an Instrument of
Contribution in which it agrees to pay to the Fund the amount set forth for it in
Schedule A in five equal annual installments (such Contribution hereinafter referred
to as an "Unqualified Contribution").
Donors which have deposited an Instrument of Contribution prior to the date this Agreement
enters into force pursuant to Article V, Section 1 (hereinafter referred to as the
"Effective Date") may postpone payment of the first installment until the 30th day
after that date. Donors depositing an Instrument of Contribution on or after the Effective
Date shall pay their first installment within 30 days after such deposit, but no later
than the first anniversary of the Effective Date or such later date as determined
by the committee established under Article IV (hereinafter referred to as the ``Donors
Committee"). Donors shall pay each subsequent installment before or on the corresponding
anniversary of the first installment.
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b) Notwithstanding the provisions of paragraph (a) of this Section regarding Unqualified
Contributions, as an exceptional case, each Donor may deposit an Instrument of Contribution
in which it agrees that payment of all installments except the first is subject to
subsequent budgetary appropriations, and in which it undertakes to seek to obtain
the necessary appropriations to pay the full amount of each installment by the payment
dates set out in paragraph (a) (such Contribution hereinafter referred to as a ``Qualified
Contribution").
Payment of an installment due after any such date shall be made within 30 days after
the requisite appropriations have been obtained.
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c) If any Donor which has made a Qualified Contribution has not obtained the appropriations
to make payment in full of any installment by the dates indicated in paragraph (a),
then any Donor which has paid the corresponding installment on time and in full, may,
after consultation with the Donors Committee, direct the Bank in writing to restrict
commitments against that installment. That restriction shall not exceed the percentage
which the unpaid portion of the installment, to be paid by the Donor which has made
the Qualified Contribution, bears to the entire amount of the installment to be paid
by that Donor, and shall be in effect only for the time that unpaid portion remains
unpaid.
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d) Any member of the Bank which does not appear on Schedule A, and which becomes a Donor
in accordance with Article VI, Section 1, shall make a contribution to the Fund by
depositing an Instrument of Contribution in which it agrees to pay an amount and on
dates and on conditions approved by the Donors Committee under that Article.
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e) The Fund shall not be increased beyond the total of the amounts set out in Schedule
A plus the amounts set out in Instruments of Contribution deposited pursuant to paragraph
(d).
Section 2. Payments.
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a) Payments due under this Article shall be made in any freely convertible currency determined
by the Donors Committee, or in non-negotiable non-interest-bearing promissory notes
(or similar securities) denominated in such currency and payable on demand in accordance
with criteria and procedures to be established by the Donors Committee to meet the
operational commitments of the Fund. Payments to the Fund in a freely convertible
currency, which are transferred from a trust fund of a Donor, shall be deemed to be
paid towards the amount due from that Donor when transferred.
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b) Such payments shall be made to an account or accounts established specially for that
purpose by the Bank, and such notes shall be deposited in that account or with the
Bank, as the Bank shall determine.
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c) To determine amounts due for each Donor paying in a convertible currency other than
the United States dollar, the U.S. dollar amount opposite its name in Schedule A shall
be converted into the currency of payment at the IMF representative exchange rate
for that currency calculated by averaging those rates on a daily basis during the
six-month period ending on November 30, 1991.
Article III. Operations of the Fund
[Regeling vervallen per 13-03-2007]
Section 1. General.
The operations of the Fund shall be managed through three Facilities, namely, the
Technical Cooperation Facility, the Human Resources Facility and the Small Enterprise
Development Facility. It is the responsibility of the Donors Committee to ensure that
all Fund operations shall be consistent with the Bank Group's general programs and
policies applicable to its own operation, and the Bank Group's strategy and program
for the respective country resulting from the continued policy dialogue and the development
priorities of the country concerned through the formal mechanisms set out in the Administration
Agreement.
Section 2. The TechnicaI Cooperation Facility.
Under the Technical Cooperation Facility, grants shall be provided for technical cooperation,
as appropriate, to governments, government agencies, privatization agencies, stock
exchanges or others, to achieve the purposes of the Fund, and, in particular, to finance:
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a) country diagnostic studies to identify investment constraints, including legislative,
financial and regulatory impediments to investment;
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b) the development of national country plans for comprehensive reform of the policy and
legal environment for investment, in conjunction with, and complementary to, Bank
country programs;
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c) advisory services to implement plans mentioned in paragraph (b), which may involve
advice on reforming investment laws, laws on intellectual property rights, commercial
laws, tax systems, labor laws, laws to protect the environment and legal procedures,
as well as advice on implementing those laws, and regulatory agencies;
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d) advice on the design and implementation of privatization programs, including advice
on the valuation and techniques for privatizing particular enterprises; and
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e) assistance on developing and strengthening financial systems
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(i) to remove impediments (such as interest rate distortions) and support healthy competition;
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(ii) to develop sound prudential safeguards, including accounting and disclosure standards,
and institutions to administer them;
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(iii) to expand the capabilities of the banking sector and capital markets by more direct,
transparent and technically-current information networks; and
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(iv) to take other measures to strengthen the financial sector, such as advice on the creation
and development of capital or commodity markets.
Section 3. The Human Resources Facility.
Under the Human Resources Facility, grants shall be provided, as appropriate, to governments,
government agencies, educational institutions or others, to develop the human resource
base needed for increased investment flows and an expanded private sector, and, in
particular, to finance:
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a) the training of workers who may be displaced as governments implement investment reforms,
reduce public expenditures, restructure or privatize;
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b) the training of workers and managers to assure that skilled workers and managers are
available to meet the manpower needs of investors and an expanded private sector,
and that managers are familiar with international practice in such areas as finance,
accounting, planning, marketing and distribution, management information systems and
so forth;
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c) the training of individuals who can serve those regulatory functions essential for
the operation of a market-oriented system, including training in such disciplines
as consumer protection, worker protection, the administration of competition laws
and the protection of the environment;
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d) the training of professionals who are considered important to the development of the
local economy, through strengthening the scientific, technical and managerial capabilities
of the human resource base; and
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e) the strengthening of vocational training and other institutions which will serve the
purposes set out in a), b), c) and d).
Section 4. The Small Enterprise Development Facility.
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a) Under the Small Enterprise Development Facility, financing shall be provided to indigenous
micro-enterprises and smaller businesses directly or through intermediaries, and to
institutions serving them, to achieve the purposes of the Fund, as set out below.
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b) For the purposes set out in paragraph a), grants may be provided for technical cooperation
to non-governmental organizations and domestic financial institutions (including financial
intermediaries) to expand the volume and range of services available to micro-enterprises
or smaller businesses. Such grants for technical cooperation may be used to help those
organizations and institutions to:
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(i) improve financial and business practices so that they may become self-sustaining;
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(ii) develop innovative financial services, such as leasing and rediscount facilities,
and participate in interbank markets; and
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(iii) develop services to assist micro-enterprises or smaller businesses to prepare business
plans, identify business opportunities and sources of financing, and solve particular
marketing or other business problems.
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c) To also achieve the purposes of paragraph a), a Small Enterprise Investment Fund shall
be established, and shall at all times and in all respects be held, used, obligated,
invested and accounted for separately from other resources of the Multilateral Investment
Fund. The resources of the Small Enterprise Investment Fund may be used to make loans,
equity investments, and quasi-equity investments to smaller business and micro-enterprises,
and to non-governmental organizations and domestic financial institutions which are
creating or expanding services to micro-enterprises or smaller businesses, or which
are lending to or investing in micro-enterprises or smaller businesses. The Donors
Committee shall determine the basic terms and conditions of such loans and investments.
Any amounts, whether dividends, interest or otherwise, received by the Bank from the
operations of the Small Enterprise Investment Fund shall be deposited to the account
of the Multilateral Investment Fund, for allocation by the Donors Committee pursuant
to Article IV, Section 3.
Section 5. PrincipIes for Fund Operations.
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a) Financing from the Fund shall be provided under the terms and conditions of this Agreement
consistent with the rules set out in Articles llI, IV and VI of the Agreement Establishing
the Inter-American Development Bank (hereinafter referred to as the ``Charter"), the
policies of the Bank applicable to its own operations, and the rules and policies
of the Inter-American Investment Corporation where relevant. In addition, while all
developing member countries of the Bank are potentially eligible recipients, financing
from the Fund shall be provided only if
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(i) in the case of grant assistance, the recipient has established that the assistance
will likely have a catalytic impact on investment flows;
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(ii) the developing member country of the Bank, in the territory of which the resources
will be utilized, either
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(iii) the developing member country of the Bank, in the territory of which the resources
will be utilized, is in compliance with agreements with relevant international financial
institutions.
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b) In deciding on providing grant funds, the Donors Committee shall pay particular attention
to the commitment of specific member countries to poverty reduction and investment
reform, the social costs of economic reforms, the financial needs of the prospective
recipients and the relative levels of poverty in specific member countries.
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c) Financing in the territories of countries which are members of the Caribbean Development
Bank, but not the Inter-American Development Bank, shall be conducted in consultation
and agreement with, and through, the Caribbean Development Bank and under such conditions,
consistent with the principles of this Section, as the Donors Committee shall decide.
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d) Fund resources shall not be used to finance or pay for project expenses which have
been incurred prior to the date the Fund resources may be made available.
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e) Grants from a Facility may be made available on a basis which permits contingent recovery
in appropriate cases of funds disbursed. Any amounts so recovered shall be deposited
to the account of the Multilateral Investment Fund, for allocation by the Donors Committee
pursuant to Article IV, Section 3.
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f) Only nationals or companies from Donors, or regional developing countries which are
members of the Bank, shall be eligible for procurement from Fund resources, except
that developing member countries of the Caribbean Development Bank shall be eligible
for procurement from financing provided pursuant to paragraph (c) of this Section.
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g) The Fund shall not be used to finance any undertaking in the territory of a regional
developing member country of the Bank if that member objects to such financing.
Article IV. The Donors Committee
[Regeling vervallen per 13-03-2007]
Section 1. Composition.
Each Donor may participate in and appoint a representative, on the basis of a nomination
by its Governor of the Bank, to meetings of the Donors Committee.
Section 2. ResponsibiIities.
The Donors Committee shall be responsible for the final approval of all proposals
for grants from the Technical Cooperation Facility, the Human Resources Facility and
the Small Enterprise Development Facility, and all proposals for loans, equity investments
or other financings from the Small Enterprise Investment Fund.
Section 3. Allocation Among Facilities.
The Donors Committee may allocate the resources of the Fund at any time to any Facility,
including the Small Enterprise Investment Fund, and may decide that a specific percentage
of total Fund assets be reserved for a particular Facility, provided that no more
than forty (40) percent of total resources of the Fund may be allocated to any Facility.
Section 4. Meetings.
The Donors Committee shall meet at the principal office of the Bank as often as the
business of the Fund requires. The Secretary of the Bank (serving as Secretary of
the Committee) or any Donor may call a meeting. As necessary the Donors Committee
shall determine its organization, rules of operation and procedure. A quorum for any
meeting of the Donors Committee shall be a majority of the total number of representatives
representing not less than four-fifths of the total voting power of the Donors.
Section 5. Voting.
Unless otherwise specified in this Agreement, the Donors Committee shall reach decisions
by a three-quarters majority of the total voting power. The total voting power of
each Donor shall consist of the sum of its proportional votes and its basic votes.
Each Donor shall have one proportional vote for each one hundred thousand United States
dollars it has contributed in cash or notes (or similar securities) under Article
II, Section 2, or the equivalent in cash or notes (or similar securities) which it
has contributed in freely convertible currencies under Article II, Section 2. Each
Donor shall also have basic votes consisting of such number of votes as results from
the equal distribution among all the Donors of twenty (20) percent of the aggregate
sum of the basic votes and proportional votes of all the Donors.
Section 6. Report.
When approved by the Donors Committee the annual information statement submitted under
Article V, Section 2a) of the Administration Agreement shall be forwarded to the Bank's
Board of Executive Directors.
Article V. Term of the Agreement
[Regeling vervallen per 13-03-2007]
Section 1. Entry into Force.
This Agreement shall enter into force on the date when at least five prospective donors
listed on Schedule A, the proposed contributions of which on that Schedule total at
least 800,000,000 United States dollars, have deposited the instruments referred to
in Article VI, Section 1.
Section 2. Term of this Agreement.
This Agreement shall remain in force for a period often years after the Effective
Date, and may be renewed for no more than one additional renewal period of five years.
Prior to the end of the initial period, the Donors Committee shall consult with the
Bank about the advisability of extending the operations of the Fund or any Facility
for the renewal period. At that time the Donors Committee, acting by a vote of at
least two-thirds of the Donors representing not less than three-quarters of the total
voting power of the Donors, may extend this Agreement or any of the operations of
any Facility or Fund for the renewal period or a period shorter than the renewal period.
Section 3. Termination by the Bank or the Donors Committee.
This Agreement shall terminate in the event that the Bank suspends or terminates its
own operations under Article X of the Charter. This Agreement shall also terminate
in the event that the Bank terminates the Administration Agreement under Article VI,
Section 3 of that Agreement. The Donors Committee may decide to terminate this Agreement
or any Facility, or the Small Enterprise Investment Fund, at any time by a vote of
at least two-thirds of the Donors representing not less than three-quarters of the
total voting power of the Donors.
Section 4. Winding up of Fund Operations.
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a) On termination of this Agreement, the Donors Committee shall direct the Bank to make
a distribution of assets to Donors after all the liabilities of the Fund are discharged
or provided for. Any such distribution of remaining assets shall be in proportion
to contributions made by Donors in cash or by encashment of notes or similar obligations
under Article II, Section 2. Balances remaining in any such notes or similar obligations
shall be canceled.
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b) On termination of any Facility or the Small Enterprise Investment Fund, and after
all relevant liabilities are discharged or provided for, the Donors Committee, by
a vote of at least two-thirds of the Donors representing not less than three-quarters
of the total voting power of the Donors, may decide on the allocation or distribution
of funds remaining in the Facility.
Any distribution to Donors shall be in the proportions referred to in paragraph (a)
above.
Article VI. General provisions
[Regeling vervallen per 13-03-2007]
Section 1. Adherence to this Agreement.
This Agreement may be signed by any prospective donor. Any such signatory may become
a Donor under this Agreement by depositing with the Bank an instrument of ratification,
acceptance or approval, setting forth that it has ratified, accepted or approved this
Agreement. Any member of the Bank not on Schedule A may adhere to this Agreement by
depositing an Instrument of Acceptance and an Instrument of Contribution in an amount,
and on dates and conditions, approved by the Donors Committee, which shall reach decision
by a vote of at least two-thirds of the Donors representing not less than three-quarters
of the total voting power of the Donors.
Section 2. Amendment.
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a) This Agreement may be amended by the Donors Committee, which shall reach decision
by a vote of at least two-thirds of the Donors representing not less than three-quarters
of the total voting power of the Donors. The approval of all Donors shall be required
for an amendment to this Section, to the provisions of Section 3 of this Article which
limit the liabilities of Donors, or an amendment which increases the financial or
other obligations of Donors, or an amendment to Article V, Section 3.
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b) Notwithstanding the provisions of paragraph (a) of this Section, any amendment which
increases the existing obligations of the Donors under this Agreement or involves
new obligations of the Donors shall take effect for each Donor which has notified
its acceptance in writing to the Bank.
Section 3. Limitations on Liability.
In the operations of the Fund, the financial liability of the Bank shall be limited
to the resources and reserves (if any) of the Fund, and the liability of Donors as
Donors shall be limited to the unpaid portion of their respective contributions that
has become due and payable.
Section 4. Withdrawal.
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a) After full payment under a Qualified or Unqualified Contribution, any Donor may withdraw
from this Agreement by delivering to the Bank at its principal office written notice
of its intention to do so. Such withdrawal shall become finally effective on the date
specified in the notice but in no event less than six months after the notice is delivered
to the Bank.
However, at any time before the withdrawal becomes finally effective, the Donor may
notify the Bank in writing of the cancellation of its notice of intention to withdraw.
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b) When a Donor has withdrawn from this Agreement, it shall remain liable for all its
obligations under this Agreement which shall have been in effect before the effective
date of its notice of withdrawal.
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c) Arrangements for settling respective claims and obligations, entered into by the Bank
and a Donor pursuant to Article VII, Section 7 of the Administration Agreement, shall
be subject to approval by the Donors Committee.
