IDB President says regional economies on right path

The Latin America and the Caribbean region is closing a year marked by economic gains, but it remains exposed to external shocks, Inter- American Development Bank President Luis Alberto Moreno said in a year- end report. In recent 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. Although uncertainty in international markets reduced the rate of the global recovery during 2011, Latin America and the Caribbean averaged a 4.3 per cent economic growth rate. Capital inflows to the region’s larg est countries reached a record US$ 354 billion. The percentage of the region’s population in poverty continued to fall, dropping to about 30.4 per cent. Urban unemployment also dipped, to 6.9 per cent. “ The region is on the right path,” Moreno said. “ We have stronger economies with solid foreign exchange positions, low levels of indebtedness, and a sound and well- regulated financial sector. We also have democratic governments that are increasingly effective in reducing structural poverty, expanding the coverage of public services and in building infrastructure.” However, Moreno added, Latin American and Caribbean nations should not be satisfied with their strong performance over the past few years. The region’s outlook is still vulnerable to external factors such as the European financial crisis, the U. S. fiscal deficit or a deceleration of the Chinese economy. “ Although we have reasons to feel good about what we have done, I want to emphasise that the task is not complete. The risks are there and we still have a long to- do list for the region to strengthen its achievements and keep moving forward,” Moreno noted. “ Our worst enemy is complacency.

To think we can lower our guard and diminish our drive for reform would be an unforgivable mistake.” As an institution devoted to development, the IDB must focus on priority issues, taking a long- term view. In his message to the board of executive directors, which represents the bank’s 48 member countries, Moreno listed some of the biggest challenges the region faces, issues that will determine the institution’s working agenda over the coming years. Increasing productivity is one of the region’s strongest imperatives. Among the problems hindering its progress are the poor quality of education, in sufficient spending on scientific research and techno logical development, and a big backlog in terms of infrastructure.

“ Although investments have increased in recent years, they are still not enough to put us on a par with other emerging economies,” Moreno emphasised.

In terms of social policy, Moreno said Latin America and the Caribbean should not lose their capacity to innovate in social programmes, or to take on issues such as informal employment. The region should also learn the lessons from the European crisis, such as the need to build financially sustainable social security systems, including pensions and health care programmes. Another challenge the region must address is the fight against violence, crime, and corruption, Moreno added. Countries should also strive to set a sustainable development agenda in light of climate change. “ Regardless of the difficulties in reaching a global consensus, we can show the rest of the world that the people of Latin America and the Caribbean are capable of progressing responsibly towards the adoption of sustainable approaches,” he said.