KUWAIT CITY – The Islamic Development Bank (IDB) on Wednesday, May 31, approved the establishment of a multi-billion-dollar poverty fund to help poor Muslim nations.
"The IDB board of governors agreed to set up the fund and asked its executive directors to work out a set of rules for it," Kuwaiti Finance Minister Bader al-Humaidhi told reporters, according to Agence France-Presse (AFP).
Wrapping up the two-day annual meeting of IDB, Humaidhi said the fund will primarily offer assistance to the least developed Muslim countries.
He added that the capital of the fund was expected to be in the vicinity of five billion dollars.
Saudi Arabia has earmarked one billion dollars to the fund, said the Kuwaiti minister.
The fund was proposed by Saudi King Abdullah bin Abd al-Aziz at the Organization of the Islamic Conference (OIC) summit in Makkah last December.
Humaidhi said the other 56 member states of the Jeddah-based IDB are expected to make pledges in the future after "constitutional procedures."
IDB president Ahmad Mohammed Ali said the fund was not expected to start operations before the next annual meeting, to be hosted by Senegal next year.
Double Capital
The IDB meeting also approved a proposal to double the bank's authorized capital to 45 billion dollars.
Humaidhi said an agreement was also reached to raise the IDB subscribed capital from 12 to 22.5 billion dollars.
"This will provide the bank greater flexibility and ability in providing more assistance to Muslim nations," he asserted.
The IDB member-states also signed an agreement establishing the International Islamic Trade Finance Corp aimed at boosting trade among Muslim countries.
The body will have an authorized capital of three billion dollars, with a subscribed capital of 500 million dollars.
It will work to raise trade among the IDB member-states to 20 percent of their total exchanges over the next 10 years, from 13 percent now.
Established in 1975, the IDB is the economic arm of the 57-member OIC.
Its board of governors is made up of finance or economy ministers of member states.
The IDB, which gives low-interest loans, has so far extended a total of 38 billion dollars to Muslim countries.
Oil Money
During the IDB meeting, former Iranian President Mohammad Khatami called on Muslim oil-producing countries to give 1 percent of their oil revenues to help the Palestinian people.
Khatami said such allocations would amount to between $2 billion and $3 billion, according to Reuters.
"The money should go towards health, education and housing projects," said the Iranian leader.
He added that the money should be divided between donations and long-term, interest-free loans.
"I have no doubt that governments or any person in the Islamic world will step in to provide for this initiative."
The Palestinians have been facing serious shortages of food and medicine since the US and the EU suspended direct aid to the Hamas-led government.
The two sides have also ruptured ties with the new government.
Israel has also stopped transferring customs duties worth around $50 million a month and previously collected for the Palestinian Authority.