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IDB continues to combat poverty in Latin America, Caribbean

Published: 
Thursday, January 6, 2011

The Inter-American Development Bank (IDB) will continue to boost its efforts to help Latin American and Caribbean countries combat poverty and inequality and promote sustainable growth as while social indexes are improving about 180 million are still considered poor. The Washington DC based IDB in its latest report said it approved a record number of 170 projects last year totaling an estimated US$12.9 billion. Around a third of the IDB’s loan approvals last year were for the region’s 19 smallest economies.
This is up from 165 projects totaling US$15.9 billion in 2009 when the IDB expanded its lending in the face of the global financial crisis.

For the coming years the IDB will set ambitious targets to support the reduction of poverty and inequity, adaptation to climate change, environmental sustainability, renewable energy, regional integration, productivity and private sector competitiveness and sustainable cities. The region’s countries have largely recovered last year with the percentage of people below the poverty line falling to 31.9 per cent of the population, against 33.1 per cent the previous year and 44 per cent in 2002. The IDB’s performance last year reflects a strong increase in demand from its borrowing members over the past decade.

Average annual approvals have risen from US$6.2 billion for 2001-2005 to nearly US$11 billion for 2006-2010. IDB expects to have disbursed around US$10.9 billion last year. Although this is also below 2009 exceptions, disbursements continue the growth trend with respect to pre-crisis levels. Overall, net flow of loans to the region would have reached around US$4.7 billion last year with the poorest countries receiving an estimated US$1.9 billion in disbursements. Approvals of non-reimbursable technical cooperations also continued to grow last year, totaling an estimated US$512 million or 41 per cent more than in 2009.

In his year-end report to the Bank’s Board of Executive Directors, IDB President Luis Alberto Moreno underscored that despite the devastation caused by the earthquakes in Haiti and Chile and other natural disasters in Guatemala, Colombia, Ecuador, Venezuela and Brazil, the region largely succeeded in navigating the effects of financial crisis. “At year-end 2010, growth projections for Latin America and the Caribbean are better than for developed economies,” Moreno said in the report. “Financial, monetary and fiscal institutions are much sounder than two decades ago. Natural resources in demand around the world are abundant in our region and social policy has made great strides through the use of increasingly effective tools.”

Moreno also highlighted the growing solidity of the region’s fiscal and political institutions. “The region’s economic policy landscape shows governments of different stripes that have adopted effective macroeconomic policies in a very pragmatic way,” Moreno said. He added that despite these achievements, Latin America and the Caribbean must tackle numerous development challenges in areas including social equity, education, productivity, integration, food security and adaptation to climate change.

He thanked the Bank’s Governors for approving a historic capital increase earlier this year that will enable the IDB to better assist member governments in these areas. “The bank is now of a size consistent with the development needs of our member countries, with governance that ensures the efficient use of contributors’ resources, a greater ability to meet the needs of the poorest sectors and the right tools to address the region’s challenges,” Moreno said. According to the terms of the capital increase approved by the IDB’s Governors in Cancun, Mexico, last March, the bank’s borrowing capital will increase from US$101 billion to US$171 billion over the next five years.

President Moreno also highlighted the IDB’s response to Haiti’s needs in the wake of the Jan earthquake. In addition to cancelling Haiti’s debt to the Bank’s Fund for Special Operations in the amount of US$484 million, the IDB approved US$251 million in new grants for Haiti and expects to disburse US$176 million by year end. These resources were channeled to critical programmes in education, transportation, energy, finance and water and sanitation. Looking ahead, we have an intense agenda and great responsibility to the region,” Moreno said. “We are committed to stepping up support to the smallest and least developed countries and to providing exceptional support to Haiti.” —Bernama.com

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