Caribbean Development Bank

• Author: Duke Pollard
• Profession: Sitting senior judge of the Caribbean Court of Justice (CCJ), the highest appellate municipal court of the Caribbean Community (CARICOM)
• Pages: 108-142

108 THE CARICOM SYSTEM

6

THE CARIBBEAN DEVELOPMENT BANK

The attempts to federate the OECS territories and Barbados following the collapse of

the wider West Indian Federation in 1962 also resulted in failure. Consequently, it was

decided to establish a team of experts to examine the economic viability of the political

units. All of these initiatives at political integration by interested metropolitan countries

must be appreciated in the context of the cold war, the political alienation of Cuba and

the perception that the fragile economies of the Commonwealth Caribbean appeared to

be fertile ground for communist expansionism particularly following the events in British

Guiana immediately before 1953. In the minds of the metropolises, if the conditions

were not ripe for political integration, consideration should be given to economic

integration as the next best alternative or risk losing the inquiring minds of the

Commonwealth Caribbean to uninformed and untried ideas of socialism enjoying

currency in some quarters of the Commonwealth Caribbean. In 1966 the Canada/

Commonwealth Caribbean Conference which convened in Ottawa, recommended, inter

alia, the establishment of a financial institution to serve the entire Commonwealth

Caribbean. A UNDP Group of Experts meeting shortly thereafter, recommended the

establishment of the Caribbean Development Bank (CDB) with initial capital of

US$50,000,000. This recommendation was acted upon by a conference of

plenipotentiaries from the Region which negotiated and concluded the Agreement

Establishing the Caribbean Development Bank on October 18, 1969.

Coming as it did after the Dickenson Bay Agreement in 1965 and the CARIFTA

Agreement in 1968, it was not surprising that the CDB was expected to play a key role

in accelerating the economic development and promoting the economic integration of

the regional Member States. These desiderata which were set out in the preambular

paragraphs of the Agreement Establishing the Caribbean Development Bank were clearly

identified in Article 1 of the Agreement as the purpose of the Bank. In fulfillment of its

purpose, the bank was expressly required to perform a variety of functions, including:

assistance to regional members in the coordination of their development programmes

with a view to achieving better utilisation of their resources, making their economies

more complementary and promoting orderly expansion of their international trade, in

particular intra-regional trade; mobilisation within and outside the Region of additional

resources for the development of the Region; financing of projects and programmes

which contribute to the development of the Region or any of the regional members;

provision of appropriate technical assistance to regional members particularly by

undertaking or commissioning pre-investment surveys and by assisting in the

The Caribbean Development Bank 109

identification and preparation of project proposals; promotion of public and private

investment in development projects by, inter alia, aiding financial institutions in the

Region and supporting the establishment of consortia; cooperating and assisting in

other regional efforts designed to promote regional and locally controlled financial

institutions and a regional market for credit and savings and the stimulation and

encouragement of the development of capital markets within the Region.

In terms of the principles guiding the Bank’s lending policies, there appears to be

an understanding among the Member States of the CDB that the principle of special

and differential rights for smaller economies which informs the provisions of Chapter

Seven of the Revised Treaty of Chaguaramas would be applied. As a fundamental

principle, the Bank will not finance in any Member, a project or undertaking to which

the Member objects. The Bank, however, makes or participates in loans to regional

members or any of their agencies or political sub-divisions, and makes loans to public

or private enterprises in regional members and to international and regional agencies

engaged in regional economic development. Projects which are not large enough to

justify direct financing by the Bank are financed through loans to the regional member

concerned to be disbursed to such projects on behalf of the Bank. The Bank may make

loans or grants for feasibility studies and project preparation if the Bank considers that

the project justifies detailed investigation. As a general rule, the Bank requires borrowers

to secure competitive bids from potential suppliers and that engineering plans and

specifications be drawn up independently of the suppliers. When the recipient of a

loan is not itself a member government, the Bank may require the guarantee of an

appropriate entity including a member government. The Bank’s loans to institutions

cover a wide range of projects including ports, agriculture, livestock, agro-processing

and marketing, airports, hotels, tourist facilities, residential mortgages and human

resource development.

Membership of the Caribbean Development Bank is open to both States and

Territories of the Region and non-regional States belonging to the United Nations, its

specialised agencies or the international Atomic Energy Agency. Up to the time of

writing, the regional members of the Bank were Anguilla, Antigua and Barbuda, The

Bahamas, Barbados, Belize, British Virgin Islands, Cayman Islands, Columbia,

Dominica, Grenada, Guyana, Jamaica, Mexico, Montserrat, St. Kitts and Nevis, Saint

Lucia, St. Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands,

and Venezuela. Non-regional members are Canada, the United Kingdom, Italy, Germany,

and the Peoples Republic of China. Regional members who are entitled to contribute

up to 60 per cent of the Bank’s issue share capital, can borrow from the Bank but non-

regional members cannot borrow from the Bank. The structure of the Bank consists of

a Board of Governors, a Board of Directors, one President, two Vice-Presidents, other

officials of the Bank and other staff. The Board of Governors is the supreme policy-

making organ consisting of one governor and one alternate nominated by each member.

For this purpose, Anguilla, the British Virgin Islands, Cayman Islands, Montserrat and

the Turks and Caicos Islands, otherwise known as the Overseas Territories, are

considered to be one member. The borrowing members of the Bank wield a majority of

the voting powers of the Board of Governors. The Board of directors consists of 18

directors, 12 of whom represent the regional members and six the non-regional members.

The Board of Governors may delegate certain powers to the Board of Directors which is

responsible for general policy matters of the Bank and the direction of operations. The

110 THE CARICOM SYSTEM

President of the Bank is charged, under the direction of the Board of Directors, with the

organisation and operation of the Bank. Officials of the Bank, including the President

and Vice-Presidents are international bureaucrats owing their loyalty only to the Bank.

In the funding of projects, the Board of Directors may only consider projects

recommended by the President on behalf of a project appraisal conducted by the officials

of the bank

The financial resources of the Bank consist of ordinary capital resources comprising

subscribed capital and loan capital and special fund resources established or accepted

by the Caribbean Development Bank. The original authorised capital stock of the

Bank was 10,000 shares with a par value of US$5,000 each totalling US$50,000,000.

Of this amount, US$25,000,000 will be paid up and US$25,000,000 callable shares of

the weight and fineness in effect on September 1, 1969. Since its inception to the

present, the authorised capital resources of the Bank have been increased several times

and today amounts to 107,971 subscribed shares of which 23,643 are paid up and

84,328 are callable. The ordinary capital resources of the Bank may be increased by

augmenting its authorised shares or by borrowing.

The Caribbean Development Bank, like so many other inter-governmental

organisations within the CARICOM system enjoys full juridical personality in the

jurisdictions of regional members with capacity to contract, acquire and dispose of

moveable and immoveable property and to initiate and defend legal proceedings.

Regional members also accord the CDB, Governors, Directors, their alternates and

officers and employees of the Bank functional immunities except when the Bank waives

such immunity in specified conditions. These immunities are those normally accorded

to officials of inter-governmental institutions under international law. The archives of

the Bank are inviolable and its assets are immune from seizure, attachment or execution

prior to delivery of final judgement against it. Salaries and emoluments paid by the

Bank to Directors, alternates, officials and employees, including experts performing

missions for the Bank are exempt from taxation except where Governments reserve the

right to tax their nationals or permanent residents. These immunities, privileges and

exemptions are set out in a headquarters agreement between the Government of Barbados

and the Caribbean Development Bank. Other regional members have enacted legislation

to accord the Bank and persons entitled the privileges, immunities and exemptions

mentioned above.

AGREEMENT ESTABLISHING

THE CARIBBEAN DEVELOPMENT BANK

The Contracting Parties:

Conscious of the need to accelerate the economic development of States and

Territories of the Caribbean and to improve the standards of living of their peoples;

Recognizing the resolve of these States and Territories to intensify economic co-

operation and promote economic integration in the Caribbean;

Aware of the desire of other countries outside the region to contribute to the economic

development of the region;