The economies of Latin America and the Caribbean have performed strongly in the face of a challenging external environment, Inter-American Development Bank (IDB) President Luis Alberto Moreno said, but the region needs to continue to pursue key reforms to ensure growth in the future.
According to a release from the IDB, in year-end remarks to the IDB´s Board of Executive Directors, Moreno summarised the region’s challenges, the institution’s performance over the past year and its priorities going forward. He noted that Latin America´s unemployment rate is at a historic low and over the past decade 58 million citizens of the region have risen above the poverty line. One in three Latin Americans is now part of the middle class, the release stated.
“The main indicators paint a tranquil picture that is welcome and shows we are doing things right,” he was quoted as saying. The region, boosted by high commodity prices, continued to grow its trade with the world. Trade with Asia has been especially noteworthy, growing at a 20 per cent annual rate since 2000 to total an estimated US$442 billion in 2012.
However, many challenges remain. Sixty-six million Latin Americans earn too little money to meet their daily needs. And trade among Latin American and Caribbean countries is still too low, at 19 per cent of overall trade, presenting a strong growth opportunity looking ahead, the release added.
“We must focus our vision of the future on those areas that will enable us to maintain a diversified productive base, build our capacity for innovation, and successfully compete on a rapidly evolving planet,” Moreno was quoted as saying. “Nothing produces greater returns than investments in building social capital.”
He urged countries to lower their country costs by investing in infrastructure. “We must also work to break down financial, bureaucratic, and information-related barriers,” he said. “We should pave the way for private initiative to flourish, so that we can take advantage of better international positioning that is not only desirable, but inevitable.”
Moreno said the IDB continued on its path to build best practices into its operational and administrative management, bolstering transparency, accountability and financial mechanisms. He said it was now standard practice at the IDB to assess whether projects can measure their expected results using rigorous evaluation methods during their preparation phase.
In 2012, the IDB approved new financing mechanisms to help countries cope with natural disasters and safeguard the effects of economic crises.
The IDB approved 170 development projects in 2012 for a total of US$11.5 billion which bolstered support for small and vulnerable economies. This included 44 projects for non-sovereign guarantees, which finance private sector projects, for US$1.5 billion. Reflecting strong demand for IDB products and services, average approvals have nearly doubled over the past five years in relation to the previous five years. A full 44 per cent of the approvals went to small and vulnerable countries, and nearly half went to infrastructure projects, the release stated.
The IDB also provided US$871 million in grant financing – up 29 per cent from 2011- with growing contributions by member countries to create a climate fund for the private sector and provide additional resources for the Mesoamerican Health Initiative, Clean Technology Fund, Multidonor Fund for Regional Integration Initia-tives, and the Transparency Fund.
