About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (June 18, 2020)

handle is hein.crs/govdfzw0001 and id is 1 raw text is: xa S 1,k w- The North American Development Bank Updated June 18,2020 The North American Development Bank (NADB) is a binational financial institution created and funded by Mexico and the United States. The NADB provides loans and grants to public and private entities for environmental and infrastructure projects on both sides ofthe U.S.-Mexico border. Modeled after the multilateral development banks (MDBs), such as the World Bank, the NADB has a unique environmental focus and is the only development bankthat also finances projects in the United States. The NADB was created underthe auspices ofthe North American Free Trade Agreement (NAFTA) in 1994, through a binational side agreement between the United States andMexico. It was createdto address some policynakers' concerns that NAFTA could worsen environmental conditions in the borderregion as economic activity increased. The NADB's financing activities initially focusedon projects relatedto water supply, wastewater treatment, andmunicipal solid waste disposal. In recent years, theNADB expanded its financing activities to include air quality, such as financingthe development of wind farms forthe generation of electricity. NADB-eligible projects mustbe locatedwithin 100 kilometers (about 62 miles) north ofthe U.S.-Mexico internationalboundary in the U.S. states ofTexas,New Mexico, Arizona and California, orwithin 300 kilometers (about 186 miles) south oftheborder in Mexico. Projects beyondthese limits may be deemed eligible under certain conditions and subject to approvalby the NADB's Board of Directors. In January 2015, then-PresidentObama and Mexican President Enrique Pefia Nieto agreedto support a doubling oftheNADB's capitalbase, from$3 billion to $6 billion, subject to the necessary legislation and availability of appropriations. The proposed capital increaserequires an additional $450 million in paid-in capital and $2.55 billion in callable capital, split equally between both countries. Both countries have pledged to take their individual paid-in capitalto atotalof$450 million by 31 December2022. Like other MDBs, callable capital may be called if and when required to meet the Bank's debt or guarantee obligations, subjectto certain procedural requirements, and may not be us ed to make loans. The NADB leverages its position by issuing debtin international capitalmarkets. The capital increase is motivated bythe Bank's substantial increase in lending overthepast five years, which has strained its capital adequacy ratios. Additionally, a change in credit rating agency methodology requires the NADB to maintain high er capital adequacy ratios than other MDBs. NADB financing is also more concentratedthan other MDBs, because, by mandate, projects are geographically constrained to the borderregion andtargetedin specific sectors. The proposed capital increase has also rais edpolicy debate about the future ofthe NADB more broadly. So me analysts questionthe continuing need forNADB financing two decades afterNAFTAwas created, andwhetherit is crowding out private sector financing. Other analysts argue that the NADB is critical to supporting needed environmental and infrastructure projects in the border region that would notbe otherwise fundedby private investors. Some analysts further call forthe NADBto expand its activities beyondthe borderregion and to all of Mexico. Lending During the Bank's early years, much ofits lending capacity was underutilized. In the Bank's first decade (1994-2004), outstanding loans remained below $100 million. In 2000, the NADB Board expanded the range ofprojects that the NADB could investin beyondwater and solid-waste management into a wide range ofenvironmental in frastructureprojects. In 2004, President George W. Bush signed legislation (P.L. 108-215), that authorized the NADB to expand its geographic jurisdiction andnake grants and non-narket rateloans out ofits paid-in capital resources with Board approval. Figure I. NADB Outstanding Loans: OverTime and By Sector ........ ...... 0 66 lk'8 6 k **. I * - 1 .......... .......... $9. _* M ..1 ........ ........ ........ . 44 . .. I ......... . i ....... .......... .......... .......... ........ .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ........... ........... .......... ... ........... .. . . .......... .......... .......... .. .......... .......... .......... .......... .......... .......... .......... .......... .......... 2011 2012 2013 2014 2015 2016 2017 20:18 Source: Created by CRSfrom NADBAnnual Reports. N...0' N Millions Eni k Per ,t @ Infrastructu~re En r.vironment

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most