When the IDB's Latin American governors traveled to Paris, France, in March for their annual meeting, they brought with them the concerns of a continent absorbed by currency devaluation, capital flight and even discussion of the merits of using the U.S. dollar as national currency.
Predictably, these were the themes of the meeting, where policymakers from around the world discussed policies for pulling the region out of the current crisis.
"We will have a difficult year," IDB President Enrique V. Iglesias predicted at the close of three days of sessions held in Paris' Palais des Congrès. But he added that it could have been far worse. When the crisis, which began in Asia, finally made landfall in Latin America, governments reacted swiftly, tightening fiscal and monetary policies as a frontline defense of macroeconomic stability, Iglesias said.
"Countries opted to pay the price quickly in order to get over as soon as possible," he added. Although problems persist, these decisive moves sent international markets a clear message that the region is determined not to fall back into the inflationary spiral that was once its hallmark.
Thanks in large part to its swift and decisive policy reaction, the region will resume its growth in the year 2000, Iglesias predicted.
"This new Latin America is standing by its policies of reform, open markets and institutional modernization in order to be a full partner in the international community," Iglesias said.
The IDB's annual meeting was attended by 5,200 participants, including government and business leaders from the Bank's 46 member countries, economists, analysts and journalists. The formal board sessions, in addition to an ever growing number of concurrent seminars and conferences, make the meeting the foremost annual event for analyzing economic and social issues related to Latin America and the Caribbean.
The IDB-sponsored seminars included sessions on reducing international financial uncertainty, breaking the cycle of poverty and inequality, the interaction between culture and development, early childhood development, small-scale enterprises and the impact of the euro. Several parallel forums, conferences, and other events were also organized in conjunction with the annual meeting, including seminars on decentralization, pension funds, small business and integration, insurance markets, energy, democracy, and youth in the new millennium.
Also held simultaneously with the Bank annual meeting was the meeting of the Board of Governors of the Inter-American Investment Corporation (IIC), a member of the IDB Group that supports the development of small and medium-sized enterprises in Latin America and the Caribbean. (See article "A $500 Million Vote of Support" on the decision to increase the IIC's capital by $500 million.)
IDB SUPPORT. A number of IDB governors, along with International Monetary Fund Managing Director Michel Camdessus, praised the IDB's efforts in helping Latin America cope with the financial turmoil. Among the initiatives cited was the establishment late last year of a $9 billion emergency credit line, which has since been tapped by Argentina, Brazil and Colombia to support their economic reforms and strengthen their social safety nets.
Iglesias stressed that those loans were available to all borrowing member countries, not only to the largest ones. He also reiterated the facility's social objectives: "The entry point for those resources are the social programs," he said. "Our mission is economic and social development. If we can provide help in an emergency to cushion the social impact of a crisis, I believe that is also our task."
NEW CHAIRMAN ELECTED. The meeting's inaugural session was attended by three heads of state: French President Jacques Chirac, Chilean President Eduardo Frei, and Uruguayan President Julio María Sanguinetti.
French Economy Minister Dominique Strauss-Kahn was unanimously elected chairman of the Board of Governors, replacing Colombian Finance Minister Juan Camilo Restrepo. Strauss-Kahn will serve as chairman until the next IDB annual meeting, which will be held in New Orleans, United States, in March 2000.
In his speech, President Chirac emphasized the urgency of counteracting global economic volatility that is expected to have a particularly negative impact on Latin America's economies this year. "The entire international community needs to be mobilized," Chirac said. "We must act together so that the necessary reforms in the international financial system can be implemented in 1999."
The French president also backed proposals to do more to reduce the debt of the poorest countries. "Bilateral debt cancellation should exceed 80 percent for the poorest countries," he said. "Concessionary solutions must be worked out for the other countries burdened by unsustainable debt." Chirac called for an "exceptional effort" in this regard by all creditor countries, as well as by multilateral institutions, "even if that means selling off a part of the IMF's gold reserves."
Presidents Frei and Sanguinetti also stressed the need for world action to deal with new pressures of globalization and volatility. They urged Latin America to stay on the path of integration, social and economic reform, and the strengthening of institutions.
Frei said his country was economically battered "by forces absolutely beyond its control" and that international organizations capable of regulating these forces were "non-existent." He emphasized the need of respect for law, transparency, and quality in government to ensure economic growth.
Sanguinetti said Latin America's difficulties were temporary and were resulting in deeper and more rapid reform efforts that will lead to "re-stabilization" and the abandonment of "outdated mental outlooks."
Both Frei and Sanguinetti urged European leaders to reduce protectionist agricultural barriers, as did Restrepo in his speech to the assembly as outgoing IDB chairman of the Board of Governors.
Other speakers at the inauguration included César Gaviria, secretary general of the Organization of American States; José Antonio Ocampo, executive secretary of the Economic Commission for Latin America and the Caribbean; and France's secretary of industry, Christian Pierret, who represented Strauss-Kahn.
Gaviria said that moves to deepen democracy will enable Latin America to better address its problems, a task that must be undertaken by all sectors of society, "not just economists."