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Improving Productivity and Increasing Fiscal Efficiency: Blueprint for Sustaining Growth in Central America, Panama and the Dominican Republic

Inter-American Development Bank Regional Governors meet in Washington, D.C. to analyze 2016 economic outlook

The countries of the Central American isthmus and the Dominican Republic will continue to grow at approximately 4.5 percent in 2016, thanks to the expected economic recovery in the United States and the drop in oil prices, creating a favorable climate for the subregion to implement reforms to increase productivity and international competitiveness.

This was the message delivered by Luis Alberto Moreno, president of the Inter-American Development Bank (IDB), in his opening remarks at the Thirtieth Meeting of the Governors of the Isthmus of Central America and the Dominican Republic, held in the U.S. capital on February 29 and March 1. Each year, the Governors from the subregion gather several weeks prior to the Bank’s Annual Meeting.

Addressing the top economic officials from Belize, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Panama, Moreno said, “It is important to take advantage of today’s conditions to enact policies designed to achieve growth, stability, employment and equality, in both the medium- and long-term.”

“The countries should promote the development of comparative advantages in the production of goods incorporating higher-technology components,” said Moreno, “in addition to diversifying the energy matrix; increasing public savings through improvements in tax collection and streamlined spending; and investments in infrastructure and human capital, with an emphasis on logistics and worker training to involve more young people in economic activity.”

The subregion’s governments have improved their policy frameworks to maintain stability and avoid volatility, and have expanded their foreign trade. In addition, they have implemented regional integration initiatives such as the Central American Integrated Electricity System (SIEPAC), the Mesoamerican Health Initiative, the Pacific Corridor road network, and the Plan of the Alliance for the Prosperity of the Northern Triangle.

“All of these efforts allow us to be more optimistic about the future,” said Moreno, adding “this is a good time to reflect on what we can do to ensure that prosperity will prove sustainable and that its benefits will be shared more equitably.”

The purpose of the two-day meeting is to exchange views on the region’s economic performance, as well as review the details of Bank operations in 2015 and an overview for 2016. Topics to be discussed include the world economic outlook and financing options for the region, together with actions to improve the transparency of public policies.

The gathering also afforded senior IDB managers an opportunity to explain the impact of the recent reorganization of the various departments of the Bank that work with private-sector operations. The new entity within the IDB Group was created in recognition of the importance of public-private partnerships in the financing of infrastructure and of development in Latin America and the Caribbean in general.

According to data presented during the meeting, the IDB has doubled its loan approvals and disbursements to the subregion over the past decade:

  • In 2015, the IDB approved over $2 billion for improving transportation and energy infrastructure and expanding the coverage and efficiency of basic social services. Disbursements reacheda record $1.98billion.
  • An additional $445 million was approved for private-sector projects focused on improving access to credit by small- and medium-sized business and for energy diversification.
  • A further 124 technical assistance operations amounted to $48.4 million. More than 40 percent of those resources addressed regional initiatives in health, energy integration, trade facilitation and logistics.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source oflong-term financing for economic, social and institutional development in Latin America and the Caribbean.The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.