CARTAGENA, Colombia – Latin America and the Caribbean can overcome external threats stemming from the Euro-zone debt crisis, slow recovery in the US and China’s deceleration to make this the region’s decade, leading multilateral lending institutions said today, on eve of the Summit of the Americas.
In a joint statement on the eve of the 6th Summit of the Americas, the multilaterals said that achieving this goal hinges on the determination of governments to seize the opportunity. However the risk of contagion is greater for smaller economies in Central America and the Caribbean, which deserve more support and attention, the institutions warned.
An average of $35 billion annually can be made available to regional economies to support economic growth with social inclusion, the statement said.
After recent replenishment rounds, the Inter-American Development Bank (IDB) should be able to provide US$12 billion, the World Bank Group (WBG) can mobilize around $12 billion, while the Latin American Development Bank (CAF) can put up another $11 billion, for both public and private sector investments.
During the 2009 5th Summit of the Americas the three institutions, along with other sub-regional bodies, pledged and delivered $90 billion in two years to create a financial buffer zone in view of the severity of the global financial crisis.
“At the time the crucial goal was to provide liquidity to confront a serious crisis; the situation is different now,” said IDB President Luis Alberto Moreno. “Latin America navigated the crisis in an exemplary manner and is now better positioned to confront the changed circumstances. However complacency is our worst enemy. We now have to confront challenges in order to increase productivity and continue on a path to growth and social equity.”
Over the last decade 73 million Latin Americans moved out of poverty. Social inequality was reduced and economic growth moved at a fast clip thanks to favorable terms of trade spurred by high commodity prices.
However, all three institutions urged countries to re-launch a socially inclusive growth agenda by improving competitiveness, upgrading infrastructure and logistics, boosting investments in innovation, and improving quality in education and citizen security.
“Latin America has made significant strides in addressing its social and economic gaps, proving that sound economic policy coupled with social inclusion can bring opportunity and hope for poor people,” said World Bank Group President Robert B. Zoellick. “To sustain the social and economic gains of the past decade, the region needs to address critical bottlenecks to improve productivity, and successfully compete in the global economy.”
In addition to traditional financing, each institution offers specific comparative advantages, which allows for synergies and partnerships. These include cutting-edge knowledge and technical assistance in key development areas, South-South/South-North dialogues and exchanges and innovative financial instruments (risk insurance, natural disaster insurance, credit lines, swaps, among others).
“The main challenge for Latin America is to build comprehensive agendas with a long-term vision, including simultaneously four key issues: macroeconomic stability, microeconomic efficiency, social equity and environmental balance,”Enrique Garcia, President and CEO of CAF. “The region needs to achieve growth rates higher than today’s. To that end, an accelerated process of productive transformation is essential, as well as higher levels of investment and more solid institutions,” Garcia noted.
The multilaterals also stated that Latin America is capable of making progress on “green growth” initiatives, able to engender economic and social improvements. The region currently holds the cleanest energy matrix in the world. It is responsible for only 11 percent of greenhouse gas emissions that cause climate change, but puts up with a disproportionate share of its growing consequences.