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Civil Society: An IDB Perspective

I would like to thank all of you here for attending this sixth regional IDB – Civil Society meeting. It is extremely important to have this opportunity to reflect on how we can collaborate more effectively in efforts to contribute to economic and social development in Latin America and the Caribbean. I would also like to thank Minister Paulo Bernardo, the Bank’s Governor for Brazil, for joining us here this morning.

Since it started operations nearly five decades ago, the Inter-American Development Bank (IDB) has worked in tandem with the region to achieve political, economic, and social progress. Over that period, the countries of Latin America and the Caribbean have moved forward to consolidate democracy and implement economic, institutional, and social reforms that are fundamental to ensuring sustainable development.

In those processes, civil society has emerged as an important player in Latin America and the Caribbean, in issues of local and national concern and in matters of regional and global interest that extend beyond the region. The consolidation of civil society and nongovernmental organizations as opinion-makers and agents of change in Latin America and the Caribbean, and throughout the world, is undoubtedly one of the leading developments of our times.

Both the Bank and civil society are currently facing an extremely dynamic environment in the region. Latin America and the Caribbean are undergoing a profound transformation, partially due to internal forces, but also accelerated by changes at the global level in areas such as economic integration, advances in information technology and communications, Asia’s rise as an economic power, and global environmental challenges.

While significant progress has been made in average social indicators, macroeconomic stability, the quality of economic management, and the consolidation of civil society, most countries have fallen short in reducing inequalities and poverty in the 15 years since the end of the “lost decade” of the 1980s. Consequently, countries in the region still lag behind comparators, such as the countries of Central Europe and Southeast Asia. Its levels of poverty and exclusion resemble more closely those of much poorer regions, and, institutional weaknesses in public administration are reflected in public policies and basic services that are frequently inadequate.

This situation has not gone unnoticed by the people in the region. There is disillusionment with achievements in certain areas of development and great concern over the choice of development models the region must follow.

The favorable economic climate that now prevails and the cumulative experience in economic and social management acquired in recent years create new opportunities to deal with age-old problems. Political changes and new administrations also help to renew expectations. The region’s democracies are enjoying an electoral process that offers citizens a wide array of options, reflecting the social diversity and pluralism that exists.

At this time, Latin America finds itself in an upward cycle in which commodity prices are high; remittances and international market liquidity are also significant; and economic growth has clearly been above trend in recent years. In fact, the region is experiencing its best growth cycle in nearly three decades, with levels of close to 5% annually since mid-2003, in an environment of low inflation and declining debt. Nonetheless, the region and its economies are capable of even more. After all, other emerging regions are growing at higher rates.

Every upturn is eventually followed by a downturn, which means that countries should act prudently in managing the window of opportunity that is opening up to them. The challenge is to make the most of the prosperous times, while preparing our economic systems to withstand future crises— by reducing debt for example, channeling surpluses to strengthen competitiveness, infrastructure, human capital, and social safety nets; and ensuring the efficient management and restructuring of the public sector.

As part of this undertaking, it is important to consider the long-term challenges: building and preserving a favorable business climate that provides incentives to employment generators––small, medium-sized, and large companies; developing scientific and technological capacity; establishing systems to train a skilled and competitive labor force for the labor markets of today and tomorrow; and formulating targeted and effective strategies and policies that ensure economically, socially, and environmentally sustainable development, to mention just a few.

There is no question that deepening democratic governance is key to undertaking each of these challenges, as is the citizenry, of which organized civil society is part. The State needs to put an end to cronyism and corruption, which undermine its legitimacy. It also requires established political parties with sound programs; legislatures that can work and legislate with the Executive Branch, while keeping it in check; independent judiciaries that are increasingly accessible and user-friendly; and, lastly, an independent and qualified civil service dedicated to serving the public.

Civil society–NGOs, social movements, unions, companies, the media, academics, experts, and other stakeholders–plays a vital role in improving the conditions of governance.

First, as noted in the Bank’s most recent Report on Economic and Social Progress in Latin America (IPES), civil society is a key partner in the process of defining and implementing public policies. In order to ensure the quality and sustainability of policies, a consensus must be reached among the principle stakeholders involved in their implementation, and this is where civil society has an important role to play.

Second, as stakeholders acting independently from the State, civil society organizations contribute to the cohesion and development of social capital. Many times, this has translated into effective poverty-reduction programs, an area in which civic groups often have a comparative advantage over governments and official institutions because their intermediation capacity enables them to get to marginalized sectors with no voice beyond the reach of the State.

Third, civil society organizations can serve as an external control agent for public institutions. One issue left pending is the present use of public funds by special interests: in many countries in the region, tax revenues are low, and some of those funds are lost through inefficient spending. The processes of budget preparation and execution must become more transparent in order to increase fiscal efficiency. Civil society has an important part to play in overseeing those processes.

In light of these and other factors, the IDB recognizes that citizen participation is not only necessary–but also constructive and desirable–for its activities to support the economic and social development of its borrowing member countries. Experience has shown that participatory processes that are properly designed and led help improve the effectiveness, efficiency, equity, and sustainability of development projects.

For the IDB, a participatory approach has multiple advantages: it produces projects that are more in touch with local conditions, thus achieving greater sustainability; it increases transparency and accountability in the handling of resources; and it can generate a multiplier effect among communities, in addition to contributing to the sense of ownership felt by the programs beneficiaries.

Over the years, the Bank has been using and promoting participatory mechanisms that have enabled it to ‘learn by doing’ and to build up its experience. Some examples of these mechanisms are: consultations with borrowers and civil society on projects with environmental and social impacts, and those that involve community resettlement; as well as consultations with relevant civil society stakeholders on the Bank’s sector policies and strategies; initiatives for dialogue on public policies at the national and regional levels; and formal and informal meetings between the Bank and civil society groups, such as the civil society advisory boards (CSABs), that have been formed by several of the Bank’s Country Offices in the region.

Given the wealth of accumulated experience from participatory activities in 2004, the Board of Executive Directors adopted a Strategy for Promoting Citizen Participation in Bank Activities. The objective was to give greater monitoring capacity and transparency to participatory processes in preparing and implementing programs and projects. This Strategy defines ‘participation’ as the entire process whereby citizens are able to exert their influence on decision-making, either directly or through their governments.

Many of the Bank’s lending operations have received input on project selection and execution from civil society organizations and the direct beneficiaries. Some of the operations that have been remarkably innovative over the years are the Community Development for Peace Program (DECOPAZ) in Guatemala; the Program in Support of Vulnerable Groups (PAGV) in Argentina; the Community Solidarity Program in Brazil; and the Program for Civil Society and Access to Justice in Bolivia, to name just a few. The experience of ‘participatory budgeting’ in Brazil, which was implemented for the first time in various prefeituras also stands out. It spurred the creation of municipal councils, on which popularly-elected delegates make decisions on the most important investment projects.

We know the road we have traveled. Now we must decide together how to move forward. The region needs tangible results that respond effectively to the needs of the majority. This can only be achieved by working in partnership with the public and private sectors and the general public, in order to end social fragmentation and consolidate recent gains in economic growth. The Bank and civil society are committed to the region; there is much more that unites us than separates us.

A partnership assumes accepting and sharing responsibility. The Bank is making new efforts to update its know-how and skills, bring itself closer to its member countries, and respond more effectively to their needs, improve and increase the transparency of its processes and procedures, and, in short, adapt to a rapidly changing environment.

These changes include creating better opportunities for civil society organizations to coordinate their efforts with our activities. In recent weeks, the Bank’s Board of Executive Directors adopted a new environmental policy that incorporates international best practices and is aligned with the realities of this new century. Another policy in the process of being approved deals with the critical issue of indigenous peoples development. The Bank is also well advanced with the revised independent investigation mechanism, on which civil society was consulted before the final proposal was presented to the Board of Executive Directors.

The Bank is also making a significant effort in the area of transparency and the fight against corruption. In order to consolidate a zero tolerance policy, we are implementing best practices in accountability and transparency in our internal and project-related procedures and processes. A new Code of Ethics has been introduced for the Board of Executive Directors and a new Code will be presented shortly for the Bank’s entire staff. The Codes will be accompanied by training for Bank personnel. We are also strengthening ties with other multilateral agencies to form a common front against corruption, and are implementing better standards and mechanisms for the contracting and procurement process of Bank-sponsored projects. At the same time, we are providing both funds and know-how to help strengthen public and private agencies that work to ensure more transparent and suitable environments in the Bank’s member countries.

At the Bank, it is our hope that the relationship with civil society will continue to deepen in the future. Our region and its people need this to happen, and this meeting is certainly an expression of our mutual commitment to this end. The Bank will continue providing the region with new ideas and tools to help it address its major challenges. The active support of civil society is essential, however, for our common purpose of fostering sustainable development and equity to become a reality.

While this is the first time I have participated in a meeting of this kind, as President of the IDB, I would like to reaffirm my commitment to maintaining this forum of dialogue, so useful to the Bank’s work. Civil society is an essential component of the process to define, design, and implement our programs and projects. That is why, one of the initiatives during my tenure will be to establish civil society advisory boards (CSABs) in all of the Bank’s Country Offices in Latin America and the Caribbean, and to strengthen existing CSABs. Looking for new ways to involve civil society organizations in the Bank’s activities will become an ongoing effort.

Much is expected of you; in return, you can count on us. Thank you.

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