The opening ceremony took place in the Diego Portales Building in the Chilean capital. Photo by J. Inostroza

Latin America and the Caribbean face three great social, economic and political challenges at the dawn of the 21^st Century: reducing poverty, increasing competitiveness, and consolidating integration, Inter-American Development Bank President Enrique V. Iglesias said today at the inauguration of the Annual Meetings of the Board of Governors of the IDB and the Inter-American Investment Corporation.

The opening ceremony took place in the Diego Portales Building in the Chilean capital with the participation of presidents Ricardo Lagos of Chile, Fernando de la Rúa of Argentina, and Jorge Batlle of Uruguay.

"As Latin American and Caribbean nations move into the 21^st Century, it is imperative, now more than ever, that they find ways of propelling economic growth to improve the lot of their people, rearranging priorities to push poverty reduction, and social progress concerns generally, to the top of the list," Iglesias said.

In spite of the efforts of the past decades by countries of the region to consolidate economic stability and democracy, approximately 220 million persons live in poverty, and almost half of them are indigent.

At the same time, Iglesias added, serious inequities persist in most countries of the region. About 40 percent of the national income in the region is in the hands of the wealthiest 10 percent of the population, while at the other extreme of the social scale the poorest 30 percent of the population receives only 7.5 percent of the total.

"Growth that fails to extend opportunities to the masses can end up interrupting or even reversing gains of economic, giving rise to populism and the weakening of democracy and social harmony," Iglesias said.

"One formidable challenge for Latin America’s economies is to achieve more efficient production and make more efficient use of economic and human resources," the IDB president said. "Productivity gains are imperative if the region is to step up economic growth and equip itself for global competition."

"But this is only one facet of the challenge," he continued. "If we aspire to an equitable society, we need economic growth robust enough to remedy the problem of unemployment and create gainful employment for a growing workforce."

At the same time, Latin America must intensify efforts to reduce vulnerability to external crises. In addition to expanding and diversifying production and exports, the countries of the region must redouble efforts to increase internal savings and strengthen their financial systems to reduce dependency on foreign capital flows.

One way for the region to successfully insert itself into the world economy is through integration. Iglesias pointed out the advances of Latin America and the Caribbean in the past decade with the so-called "New Regionalism," but he questioned whether these efforts were losing momentum, as occurred with other integration schemes of the past.

"After nearly a decade, the ‘easy’ stage of the New Regionalism in Latin America and the Caribbean may well be over, and a bolder political vision may be needed to push through more sweeping collective commitments," he said.

"It would be a tragedy to forfeit that investment."

To assure the success of both existing subregional agreements as well as more ambitious ones, like the Free Trade Area of the Americas, Iglesias proposed that the countries of the Hemisphere set goals to eliminate nontariff trade barriers, adopt transparent mechanisms to resolve conflicts, liberalize commercial services, advance in the area of macroeconomic and monetary policy, modernize commercial institutions and deepen structural reforms.

Iglesias told the IDB governors that a frontal attack on poverty continues to be the main objective of the institution as part of an ambitious social development agenda that is aimed at generating greater equality of employment opportunities and the inclusion of the most disadvantaged social sectors, including women, youth, people with disabilities, and racial and ethnic minorities.

At the same time, he said, the Bank will continue to support countries in the region in their efforts to stimulate equitable and sustained economic growth, integrate into the global economy, and modernize political institutions in order to improve management of the public sector, promote social dialogue and combat corruption.

Internet and Latin America’s social challenge

Although Internet use is growing faster in Latin America than in any other region in the world, a great deal more must be done to use information technology to foster equitable development in the region, according to speakers at a seminar held on the first day of the Annual Meeting of the Board of Governors of the Inter-American Development Bank.

"This is truly a revolution," said IDB President Enrique V. Iglesias at the inauguration of the seminar "Latin America and the Caribbean in the Digital World

The Internet has become ubiquitous, said Iglesias. He observed that those protesting against globalization use the Internet in order to globalize their protest movement.

Iglesias emphasized the key role the Internet will play in strengthening the region’s democratic governments. "The Internet takes problems and makes them visible," he said. "As such, it threatens totalitarian regimes, but fosters democratic governments."

The seminar was held in the Mapocho Cultural Center next to an exposition of information technology called Cyber Americas, the largest such event to take place so far in Latin America. Cosponsoring the event was the government of Chile and the firm International Venture Partners, LLC. Participating were foremost experts from information technology firms active in Latin America.

According to Iglesias, the public sector has a major role to play in closing the gap between what he called "info-rich" and "info-poor," a process that he called imperative for achieving democracy and equitable growth.

Iglesias highlighted the growing role of the IDB in fostering the information technology in the region, calling the Internet, along with energy and transportation, the three great areas in which the Bank is seeking to integrate the countries of the region.

In his presentation, AOL Latin America President and CEO Charles Herington said that the key to increasing Internet use is keeping the technology simple. "Think customers, not technology," he told the seminar participants. "We have to make the Internet part of people’s everyday lives, so it must be easy." The key is convenience, he said, and from there, the technology becomes a necessity.

To a large extent, he said, this is already happening. He cited one poll in which respondents were asked if they would choose Internet, a telephone or TV if they were alone on a desert island. Two-thirds chose the Internet, he said.

Debt relief for poorest countries

IDB shareholders last night voted to approve the financial framework that would enable the Bank to provide debt relief to Bolivia, Guyana, Honduras and Nicaragua under the international initiative to ease the burden on the world’s most heavily indebted poor countries (HIPC).

The framework puts in place the remaining resources needed for the IDB to meet its full obligation of $1.1 billion in net present value under the enhanced HIPC initiative.

The IDB is expected to receive $168 million from donors through the HIPC Trust Fund as well as contributions totaling $150 million from countries in Latin America and the Caribbean that have agreed to the conversion of resources from the IDB’s Fund for Special Operations that they would otherwise have been able to use. The financing framework also provides for substantial donor support through the HIPC Trust Fund to five subregional creditors of the HIPC countries in Latin America and the Caribbean.

Agreement with Spain

Spain’s Finance Minister Rodrigo de Rato y Figaredo and IDB President Iglesias yesterday signed a framework agreement to provide flexible conditions for cooperation in providing financing for development projects. They also established the Spanish General Cooperation Fund, to be administered by the IDB. With an initial contribution of 50 million euros, the fund will finance selected development and technical assistance projects for the region.