Milan, Italy -The Board of Governors of the Inter-American Development Bank inaugurated its 44th Annual Meeting today in a climate of uncertainty over the international situation, but in which speakers voiced optimism over the ability of Latin America and the Caribbean to rekindle economic growth and make progress in reducing poverty.
Attending the inaugural session were IDB governors and senior governmental officials and many other key policy makers. The session was held at the Fiera Milano, a major conference center in this northern Italian city.
The IDB’s Annual Meeting is the major event that examines economic and social development issues in Latin America and the Caribbean. In addition to the formal sessions, participants attended seminars on a wide range of development topics, among them, small- and medium-size businesses, using new information technologies to strengthen democracy, best practices for social inclusion of marginalized groups, globalization and the challenge of equitable development, and implementing employment policies under fiscal restraints. Over 3,100 participants registered for the meeting, including official delegations, representatives of the private sector, international organizations, and nongovernmental groups, and journalists.
In his welcoming remarks, Roberto Formigoni, president of the Lombardi Region, referred to the dramatic times the world is going through, and urged that countries come together to work for development and integration. “We must construct peace through development,” he said.
He offered his own region as an example of “social capitalism,” in which exports are not just limited to products, but also to cultural contributions which contribute to peace and development. Lombardy, along with certain other regions in Europe, have maintained their cultural identities while participating fully in the process of globablization, he said.
In his last speech as chairman of the IDB’s Board of Governors, Brazilian Minister of Planning Guido Mantega described the problems facing the region, including shrinking capital flows, continued protectionism in trade, reductions in foreign direct investment, and return of the threat of recession.
He highlighted the key role the Bank must play to help overcome these problems. In particular, he said it was essential for the Bank to have at its disposition a wide variety of financial instruments and facilities “in order to respond appropriately to the many different countries and situations facing them. Above all, it needs to stimulate debate aimed at creating other counter-cyclical instruments.” He said that the approval given to the Bank to make emergency loans was a major step forward. He also called trade finance a new facility that “could prove indispensable at this difficult time for the external sector of Latin American countries.
Mantega also called for a “new consensus” in the international approach to development. “Human life, equality of opportunities, sustainable development are universal and unconditional values that are normally included among a people’s ultimate objectives,” he said. But he also called for a consensus in public policies, based in “willingness to compromise and find secure paths for a just society.” In this regard, he offered the example of Brazil, which has created an Economic and Social Development Council that brings together entrepreneurs, labor unions, civil society, parliamentarians and other sectors.
The IDB governors unanimously elected Italian Minister of Economy and Finance Giulio Tremonti chairman of the Board of Governors until the next IDB Annual Meeting, which will be held a year from now in Peru.
In his address, Tremonti said it is necessary to achieve equilibrium between finance and systems of social and judicial norms. For example, he said, it is a mistake to “transplant the futuristic finance of Wall Street to political systems that are not as modern.”
He also urged measures to overcome the problem of the informal economies in Latin America. “A person cannot live in the shadowy area between illegality and the hope of a social miracle,” he said.
Tremonti also called for greater emphasis on ensuring the effectiveness of development initiatives through use of a system of indicators that would make it possible to evaluate results of operations. “The improvement of effectiveness of development assistance is based principally on the capacity of the beneficiary countries for identifying necessary reforms, and then carrying them out,” he said.
In his address before the inaugural session, IDB President Enrique V. Iglesias said that nations of the region should focus on developing a long-range vision while dealing with present-day uncertainties and difficulties. They must also redouble efforts to achieve sufficiently high rates of economic growth that will reduce poverty and ease social tensions.
“The immediate prospect for the world economy and for our region is one of uncertainties . . . exacerbated by the complex situation of the Middle East,” Iglesias said. “Nevertheless, the economies of several countries in the region have begun to improve compared to the beginning of 2002.”
If international conflicts do not worsen, the economy of the region could grow between 1.5 and 2 percent this year, he said. If the upward trend continues, growth could reach 4 percent in 2004, he added. In 2002 the region’s gross national product fell 0.5 percent.
In order to make inroads against the poverty that has trapped up to 44 percent of the population of Latin America and the Caribbean, the regional annual growth rate must reach an average of 2.7 percent annually over the next 15 years, the IDB president warned.
Iglesias recommended an agenda for sustained recovery that includes maintaining macroeconomic equilibrium, focusing social policy to benefit the neediest sectors of the population, expanding foreign trade, deepening integration, attracting investment, promoting growth of the private sector and increasing business productivity, especially for small- and medium-sized enterprises.
Also addressing the inaugural session were Carlos A. Magariños, director general of the United Nations Industrial Development Organization; José Antonio Ocampo, executive secretary of the Economic Commission for Latin America and the Caribbean; Cesar Gaviria, secretary general of the Organization of American States, and Pier Ferdinando Casini, president of the Italian Chamber of Deputies.