Meeting of the Inter-American Development Bank highlights strong Latin American and Caribbean recovery
CALGARY, Canada – The Annual Meeting of the Inter-American Development Bank ended Monday with broad recognition of Latin America and the Caribbean’s promising economic outlook, with IDB Governors praising progress on the Bank’s reform agenda and renewing calls for a quick implementation of a capital increase.
The Board of Governors, the IDB’s top decision-making body, last year reached an agreement to raise the Bank’s authorized capital by $70 billion, up to a total of $170 billion, in order to expand its lending capacity. Governments must secure legislative ratification of their respective contributions in order to make the increase effective over a five-year period.
In a speech opening the Board’s annual meeting, IDB President Luis Alberto Moreno said the capital increase would enable the Bank to expand its lending capacity to about $12 billion a year, against an average $7.8 billion for the period between 1994 and 2008.
"For several months now I have been repeating in many forums a phrase in which I firmly believe: this should be the decade of Latin America and the Caribbean," said Moreno. "We are on a path of rapid growth that should allow us to cement the progress we have made in fighting poverty and building more just and inclusive societies."
Moreno also noted that the region faced many challenges, with 180 million individuals still living below the poverty line. He told Governors the Bank was committed in its work of reducing poverty and inequality, and helping bring about sustainable growth. The Bank, he added, would focus on key challenges such as improving its productivity, fostering greater integration, boosting financing for the private sector, and tackling climate change and natural disasters. He said a stronger and more dynamic region needed stronger multilateral support.
Addressing their fellow board members, governors from borrowing member countries emphasized the importance of implementing the capital increase agreement.
“The current dimensions of the IDB have become too small for our region’s demands,” said Brazil’s Planning Minister, Miriam Belchior. “That is why the approved capital increase must not be delayed, lest we involuntarily compromise the institution’s relevance.”
Mexico’s Finance Secretary, Ernesto Cordero, who stepped down as board chairman, highlighted the key role the IDB played in helping Latin American and Caribbean countries weather the recent global financial crisis.
“Each of our countries must now undertake the internal processes required to make effective shortly. Not doing so in a timely manner would seriously compromise the institution’s financial capacity in the short-term as well as the support given to Haiti,” Cordero added.
As part of the capital increase agreement, the governors also set a comprehensive agenda of institutional reforms to enhance the IDB’s effectiveness, transparency and accountability. Several governors recognized the progress the Bank has made in implementing the agenda.
Canadian Minister of State for Finance Ted Menzies, the temporary alternate chairman of the board, stressed that the IDB must have the capacity to assist borrowing member countries in boosting their productivity, improving the quality of education, modernizing their infrastructure, deepening their economic integration and dealing with climate change and natural disasters.
“However, making the Bank bigger is not enough. In agreeing to the General Capital Increase, governors also committed to ensuring the Bank becomes better. The real challenge lies in a responsible implementation of the vision set out in the GCI for the Bank’s work over the next decade,” Menzies said. “The Bank is moving in the right direction.”
Speaking for the United States, the IDB’s single largest shareholder, U.S. Treasury Assistant Secretary Marisa Lago recognized the work done over the past year to implement this complex reform agenda.
“n addition to continuing the great work done in the field, the IDB has achieved remarkable results in moving forward on core governance reforms. And we, the United States, are taking the requisite steps to meet our commitment to fulfill the IDB General Capital Increase,” she said.
The capital increase would also allow the IDB to expand its lending to the private sector in Latin America and the Caribbean. During the meeting in Calgary Bank officials unveiled plans to double such financing to $3 billion annually by 2015.
During their plenary sessions the governors approved the IDB’s 2010 financial statements, which show the Bank approved over $12 billion of financing for the region last year and a record amount of grants, which greatly benefitted Haiti.
Haitian Finance Minister Ronald Baudin thanked his fellow governors for the decision they took after last year’s earthquake to provide his country $200 million in grants annually until 2020 to support its reconstruction efforts.
“The IDB’s assistance is more crucial than ever for us,” Baudin said. “The fact that this decision contemplates the long-term gives us the opportunity to better plan and target the programs that will be carried out over many years.”
Governors also expressed their solidarity to the Japanese government, a key partner and generous contributor to Latin America and the Caribbean, lamenting the loss of life and the damage caused by the earthquake and the tsunami that hit Japan earlier this month.
More than 3,000 people participated in the five-day event in Calgary. Next year’s annual meeting of the IDB Board of Governors will be held in Montevideo, Uruguay.
Seminars
The five-day meeting included seminars on business opportunities and development challenges for Latin America and the Caribbean in sectors such as infrastructure, trade, natural resources and information technology. One seminar on current global economic conditions featured top international experts’ views on how this scenario is impacting emerging markets.
The IDB released a study on opportunities and challenges facing Latin America and the Caribbean under the new economic order arising from the global recession. The study shows that emerging markets now account for most of the world’s growth and that Latin America and the Caribbean face an unprecedented favorable external scenario in coming years that will affect the region’s commodity importers and exporters in different ways. The report calls for the region to seize the opportunity to implement policies to generate sustainable economic growth.
At another event with several mayors from Lain America and the Caribbean, Moreno announced a plan to partner with intermediate cities in the region that aspire to set a new standard for sustainable urban development. The IDB will help cities analyze their development challenges in an integrated manner, prioritize investments, and identify funding from national and international sources.
On March 26, on the margins of the IDB annual meeting, finance ministers of the Americas met to discuss the impact and benefits of simultaneous investments in regional physical integration and regulatory reforms at the Fourth Meeting of the Hemisphere’s finance ministers.
At that gathering, Canada, Mexico and the United States said they will contribute $13 million to an IDB-managed regional infrastructure integration fund supporting cross-border projects designed to reduce transport and logistics costs to expand trade. The fund is expected to reach $20 million, with additional contributions from other donors.
Agreements
The series of seminars began with a full-day conference on youth development. During the event 10 young leaders from the region, selected from a pool of more than 1,800 applicants, spoke on their contributions to their communities’ development.
The IDB signed a series of agreements in Calgary, including a memorandum of understanding with the Government of the Republic of Korea to cooperate in knowledge-sharing and consultation activities that will benefit member countries in Latin America and the Caribbean. The Bank also signed agreements to support the private sector in Eastern Caribbean states and two accords with China’s Eximbank on an infrastructure facility and a public-private fund to invest in joint projects in the region.
The IDB also launched the second edition of its Juscelino Kubitschek Awards,which recognize outstanding contributions made by non-profits and academic institutions to development in Latin American and the Caribbean.