U.S. Treasury Secretary John Snow today emphasized the importance of private sector-led development as the engine of growth in Latin America in a speech to the Inter-American Development Bank’s Board of Executive Directors.
For capital to fully play its role, it is necessary to have an investment climate that protects rule of law, that promotes respect of contracts, and that encourages clear and transparent agreements, Snow added.
“Capital is a coward” and only goes to places where it feels adequately protected, said Snow, who underscored the role of political leaders and institutions like the IDB in creating appropriate conditions for economic growth through structural reforms.
Snow’s visit to the IDB Board of Executive Directors coincided with this body’s approval of the reformulation of a loan to Haiti, a decision that the Secretary hailed as “historic.”
Snow also pointed out that the economic growth of Latin America is well below its potential and stressed the key role of G-7 member countries as engines in this process. He said United States economic growth could rise to around 4 percent for 2004.
“Reforms take time, the benefits of good economic policy are not instantaneous,” Snow said. He also emphasized the importance of stimulating domestic economies, without placing excessive expectations on exports, and concluded that international credit markets are looking at Latin America much more positively in recent months.
IDB President Enrique V. Iglesias agreed with Snow in that “without growth, it is very difficult to have good social policies,” and insisted on the importance of good governance, structural reforms, private sector participation and trade for Latin America and the IDB’s agenda.
After his presentation, Secretary Snow – who was scheduled to meet Argentine President Ernesto Kirchner later today – answered questions made by several directors. The Board of Executive Directors represents the IDB’s 46 member countries.