Skip to main content
Latin America faces short-term difficulties

PARIS - Inter-American Development Bank President Enrique V. Iglesias warned today that Latin America and the Caribbean will face difficult times in the short-term, but he expressed confidence in the future of the region, urging it continue on the path to integration and to take steps to strengthen its political systems to overcome poverty and inequality.

Inaugurating the 40th Annual Meeting of the IDB Board of Governors and the 14th Annual Meeting of the Board of Governors of the Inter-American Investment Corporation, Iglesias said "it would be an illusion to think that the coming times will be easy. In particular, 1999 will be a year in which many countries will have less growth than in 1998. The climate of external instability will continue, and there will be pressures that threaten the continuity of economic and social policies."

Iglesias endorsed the reforms now underway in the region but emphasized the need to concentrate efforts on strengthening political systems, which lack a broad enough base of democratic institutions, a shortcoming that hinders the ability to respond to the needs and hopes of Latin Americans.

"There is no way around it: politics is vital to the life of peoples," Iglesias said. "Issues bearing on judicial reform, strengthening of parliaments, and promotion of civil society...are all core concerns in political efforts to deepen and bolster democratic systems."

If political systems have not been sufficiently efficient, he said, it is because of the weakness of democratic institutions, and that explains why those countries that have achieved the highest levels of development are those that have the most deeply rooted democratic institutions.

In Iglesias' view, if Latin America has not resolved the problem of poverty and inequality in spite of having been one of the regions of the world with the greatest growth in the 20th Century, it is fundamentally because of the weaknesses in its political systems.

"As the next step, these electoral democracies need to become full-fledged democracies, in which the various branches of government are truly independent of one another but work in harmony... (with) strong regulatory and oversight agencies and a professional civil service that can shield the State and public policy from undue influence of corporate, family, or other interests, "he said.

The IDB president also emphasized the importance of decentralization of many services traditionally provided by the public sector, and this implies a political and administrative transfer to new government jurisdictions of decision-making that affects the lives of Latin Americans.

After analyzing the impact of international financial crises and natural disasters that hit the region during 1998, Iglesias said that to meet such challenges the IDB will focus its efforts on economic reforms, social investment, strengthening the frameworks of regulation and supervision, and especially support countries' efforts to strengthen their executive, legislative, and judicial branches of government.

The Bank will also continue supporting regional integration, with special emphasis on physical integration and the transparency of knowledge and information, experiences, and best practices in the region.


Iglesias acknowledged the impact of the volatility in international markets and natural disasters on Latin America, but he noted that, so far this year, the region has once again shown its resilience. Nevertheless, he also pointed out that there is a growing sense of frustration and uncertainty.

"The lack of equal opportunity should be one of our great concerns," he said. "Where opportunities are not open to everyone, societies cannot be cohesive or political systems stable... Just as important, the lack of opportunity for broad segments of a country's population is a constraint for its development."

The region's demographic trends are among the reasons to view the future with some optimism, Iglesias said. The drop in fertility rates in many Latin American countries may make room for improvements in the quality of education and lead to higher savings and jobs creation, which would allow more women and young people to join the labor force.

"The region thus has good reason to be optimistic: we have a window of opportunity in which to solve the problem of inequality and poverty, and we can do it. While the conceived policies will take time to show results, the time for action is now."

Jump back to top