BBC Worldwide Monitoring | December 27, 2001
The IADB (Inter-American Development Bank) president, Enrique V. Iglesias, said in an end-of-year press release that the bank approved a record 7.8bn dollars in development loans for Latin America and the Caribbean in 2001. But he warned that capital flows are drying up, privatization opportunities are fewer and poverty and unemployment are spreading, leading to social tensions and widespread disillusionment with the reform process. "The glass is half empty and half full," he said. The following is an excerpt from a report by Caribbean Media Corporation (CMC) news agency; subheadings as published:
Washington, 26 December: The Inter-American Development Bank (IADB), responding quickly to rising financial needs of Latin America and the Caribbean during a time of economic stress, approved 7.8bn dollars* in loans to the region during 2001.
It was the third highest level in the bank's history and a record amount for its regular lending programme, the IADB said in a release on Tuesday 25 December . "The worldwide economic slowdown of 2001, exacerbated by the 11 September terrorist attacks in the United States, brought on an increased demand by countries in the region for fast-disbursing sector loans to assist in stabilization and modernization efforts," the Bank said.
"The Bank responded by providing 3.1bn dollars in financing for policy-based sector loans in its regular programme for reform and modernization of the state and to protect social spending during times of economic stress."
The policy-based financing supported fiscal reform in Argentina, Colombia, Peru and Uruguay; social reform, safety net protection, human capital investment and poverty reduction in Bolivia, Brazil, Dominican Republic, Honduras and Jamaica; public management modernization and health sector reform in Uruguay; and pension reform in Nicaragua.
For the eighth straight year, the IADB was the largest multilateral development bank lender to Latin America and the Caribbean in volume, especially to the smaller and lesser developed countries.
IADB stands ready to respond to slowdown in region
In his year-end report to the Board of Executive Directors, IADB President Enrique V. Iglesias warned that the Bank and other multilateral institutions must offer greater assistance to respond to the challenge of the current cyclical slowdown, which has been characterized by a simultaneous contraction of the world's most powerful economies: the United States, Europe, Japan and East Asia.
"The crisis hits us hardest in the falling prices of raw materials, the Achilles heel of the region," he said.
Capital flows are drying up, privatization opportunities are fewer and poverty and unemployment are spreading, leading to social tensions and disillusionment with the reform process.
Iglesias cited Argentina as a country of particular concern to the Bank because of the economic and social crisis there.
Despite the current problems, Iglesias said, during the 1990s the region made great strides in achieving economic and financial stability, reducing inflation, dismantling trade barriers and improving macroeconomic management.
"The glass is half empty and half full," he said.
On the negative side, he noted the region "continues to save little, export little and grow by little. External vulnerability continues to be very high."
Poverty continues to be widespread, he noted, and income is "the most unequal in the world".
Iglesias said the agenda of the Bank to meet the crisis will include the promotion of policies to stimulate economic growth and competitiveness, protect social gains and the small business and microenterprise sectors, deepen the process of integration, provide support for trade negotiations and increase direct financing to the private sector as a catalyst to attract greater investment.
The Bank will continue to undertake intense policy dialogues with countries of the region to identify best practices and policies, he added...
Operations in 2001
Among the highlights of the Bank in 2001 was the favourable vote cast by the Bank's Board of Governors to double the ceiling on loans and guarantees by the Private Sector Department from five per cent to 10 per cent of the amount of the lending portfolio...
The Bank approved financing for five infrastructure projects for a total cost of 279m dollars from the Bank's ordinary capital (A loans) and 589m dollars for syndicated loans (B loans).
Debt relief was provided to four of the poorest countries in the region - Bolivia, Guyana, Honduras and Nicaragua under the enhanced initiative for heavily indebted poor countries (HIPC).
The Bank promoted the integration of the Central American isthmus and southern Mexico through the Plan Pueblo-Panama by reprogramming 240m dollars in financing to support the Central American Electric Interconnection System (SIEPAC).
Loans were approved for El Salvador and Peru to assist them in recovery and reconstruction from earthquake emergencies, and preventive environmental and natural resources loans were approved for Honduras and Nicaragua and, in a separate operation, for the three nations that share the Upper Lempa Basin of Central America.
Fifty per cent of the IADB projects during 2001 and 50.5 per cent of the total loan volume represented investments in poverty reduction and social equity enhancement, percentages that surpassed the guidelines set by the Board of Governors.
* Note: The figures for the operations in the year 2001 are provisional. The final figures will be available when the Bank publishes its Annual Report 2001 in the first trimester of 2002.BBC Worldwide Monitoring:
