BELO HORIZONTE, Brazil – The new President of the Inter-American Development Bank, Luis Alberto Moreno, today proposed to turn the IDB into a more agile, decentralized institution focused on sectors and priority issues that will improve the competitiveness of the Latin American and the Caribbean economies.
In his opening speech at the Annual Meeting of the IDB Board of Governors being held in this city April 3-5, Moreno presented his priorities for his five-year mandate to the 47 member countries. He took office last October.
The Board of Governors, the IDB’s main decision-making body, consists of representatives of all its member countries, who are for the most part finance ministers and presidents of the central banks.
Moreno, the fourth president of the IDB since its creation in 1959, said he inherited a financially sound institution, with deep knowledge of the region and a solid commitment to its social and economic development.
The IDB must become the “Bank of Competitiveness” in order to help Latin American and Caribbean countries face the challenges of a globalized economy, he said. He added that the institution will focus its financing on initiatives that will help the region reduce the gap in infrastructure, technology and institutions that is holding back its progress.
In order to fulfill this role, the Bank must respond to the demands of its borrowing countries and their populations, he said.
“In the first place I want to create a Bank that is closer to its clients, the people of Latin America, and I will foster its decentralization,” Moreno said. “Secondly, we will make the Bank more agile, reducing the time between the approval and the disbursement of loans.”
Other priorities will be to increase the volume of financing to the private sector and regional infrastructure projects to help Latin America achieve an effective integration of its economies, as Europe and the North American countries have done.
With reference to the political changes presently underway in Latin America, Moreno pledged the IDB’s support for reforms to help the people of the region achieve their legitimate demands.
For that reason, the IDB will continue to support structural programs to combat poverty. It will also begin to work more closely with subnational governments, such as provinces and municipalities, which are increasingly taking responsibility for social services such as education and basic health.
Moreno reviewed the economic outlook in the region, which during the last three years has enjoyed its best performance of the past three decades thanks to renewed growth, a surge in prices of export commodities, a drop in inflation, a reduction of fiscal deficits, an improvement of the external debt profile and the accumulation of international reserves.
In contrast with these optimistic data, Moreno also raised some concerns: “In relative terms, Latin America is today less important than what it was when the Bank was founded,” he said. “In 1959 we represented 6 percent of the global gross product, and there we remain. Our participation in international trade was 7.3 percent. Today it is 5.1 percent. We have not reduced the income gap with the developed countries.”
Moreover, Latin America has lagged behind with respect to countries in other regions that were less developed when the IDB was created.
Although Latin American countries have achieved notable progress in reducing child mortality and increasing basic education over the past 47 years, basically the same proportion of the population in the region remains stuck in poverty and lacks technological development to sustain competitiveness in the modern world.
Regarding efforts of Latin America and the Caribbean to achieve sustained economic and social development, Moreno rejected the notion that there is one best model.
Even though there are clear principles to follow to reach higher and sustained growth rates, he said, those are not sufficient. “It has been a mistake to believe that good macroeconomics or open trade by themselves can generate the miracle of development,” Moreno said.
Latin America must eliminate institutional obstacles that prevent a more equitable distribution of economic benefits and which condemn most of its population to lower conditions of living and generate social and political instability, he added.
In this respect, Moreno proposed an initiative that will involve the IDB in projects specifically directed to expand access to the benefits from economic and social development for the great majority of Latin America and the Caribbean.
The initiative, Creation of Opportunities for the Majority, will be launched in a conference to be held at IDB headquarters in Washington, D.C., June 11-13, with the participation of heads of state, academics and social and private sector leaders.
Moreno also pointed out that one of the priorities of his administration will be to take advantage of the role of the IDB as a platform for dialogue between Latin America and the Caribbean and its industrialized country partners, following the mandate of the founders of this institution.
In his speech Moreno paid homage to Juscelino Kubitschek, Brazilian statesman and a promoter of Pan American integration, including the founding of the IDB. In memory of this former mayor of Belo Horizonte, governor of Minas Gerais and president of Brazil, the Bank will create an award for leaders in efforts to further develop Latin America and the Caribbean.