Social loans exceed target, Iglesias tells IDB directors

Bank president presents year-end report

By Daniel Drosdoff, Washington, D.C.

Social investments in Latin America and the Caribbean account for 43 percent of the IDB's active $46 billion loan portfolio, according to preliminary figures reported by Bank President Enrique V. Iglesias to the Board of Executive Directors at the board's final meeting of the year. The figure exceeds the target of 40 percent, he said.

An additional 19 percent of the 521-project portfolio is helping to reform and modernize the state in Latin American and Caribbean countries.

"Practically two-thirds of the Bank loans are directed to society and institutions," Iglesias said. "I believe we are the multilateral financial institution with by far the greatest volume of loans dedicated to social sectors." Social sectors include such areas as education, health, sanitation and poverty reduction.

The figures cited in the president's report are provisional. Final figures will be available in the Bank's 2000 annual report, which will be published in March.

Largest lender. In 2000, the Bank approved 79 loans for a total of $5.243 billion, according to Iglesias. This lending volume made the IDB the major source of external financing for the region for the seventh year in a row. The Bank's lending is particularly significant for the smaller and lesser-developed countries. IDB disbursements during the year on previously approved loans are estimated at $6.874 billion.

Also last year, the Bank instituted new fast-track loan processing procedures to improve its response to natural disasters in the region. Operations included a $20 million loan to Belize for reconstruction following Hurricane Keith and a $20 million loan to Venezuela in the wake of torrential rains and landslides.

Flexible and faster lending procedures were also applied for innovative loans, multiphase lending operations, and sector operations.

The Bank in 2000 also approved its first credit guarantee, a $75 million operation for bonds that will help to tap local resources to finance the upgrading of the toll road between Chile’s capital of Santiago and the port of Valparaiso. Eleven loans and guarantees for a total of $512 million were approved for private sector infrastructure projects during 2000. Every dollar invested by the IDB in a private sector project mobilizes six dollars in other sources of financing, Iglesias said.

More growth needed. Noting that Latin America grew a "respectable 4 percent" during 2000, President Iglesias said the region has achieved remarkable stability despite its many problems. In particular, inflation continues to fall, and is now slightly more than 8 percent.

"Latin America must continue with its reforms," Iglesias said. "It is interesting to note that the region is moving forward with a process of sound economic management and a stable macroeconomic policy in spite of turbulence, pressures and social problems."

Iglesias warned, however, that the region must "double its growth rate" to make headway in catching up to developed countries and reducing poverty. "Latin America must save more, invest more, and export much more," he said.

He also cautioned that long years of economic adjustments have created a "certain fatigue" in many countries that is dampening enthusiasm for reform. He also noted that Latin American and Caribbean economies are intimately dependent on the performance of the United States’ economy.

Date posted: January 2001