The Inter-American Development Bank (IDB) is concerned about the poor targeting of aid to the poorest

President of the Inter-American Development Bank Ilan Goldfajn, then president of the Central Bank of Brazil, takes part in a press conference on January 10, 2018 in Brasilia (AFP/Archives/Sergio Lima)

The Inter-American Development Bank (IDB) opened its meeting in Panama on Thursday, worrying about the poor targeting of public aid intended for the poorest.

IDB economist Ana Maria Ibanez stressed during the assembly’s first seminar the need to identify precisely the populations most in need of public aid.

“Today, 40% of the poorest are not on the list of aid programs in our countries”, she lamented, noting that on the other hand “many people who are not poor receive (the assistance) from public programs.

The Brazilian Ilan Goldfajn, who took office at the head of the IDB in January, underlined Wednesday at a press conference that the “challenge to be taken up” is to respond “to many social demands with few resources”.

– Cold –

The “annual” assembly of the IDB meets after three years of suspension due to a pandemic and in the midst of turmoil following the bankruptcy of three banks in the United States and fears of contagion.

The bankruptcy in a few hours of the Californian bank Silicon Valley Bank (SVB) and two other American banks last week threw a chill that spread across the Atlantic.

Before recovering on Thursday, the prices of European banks gave way to a panic on Wednesday, driven by the fall of up to 30% in the action of the banking giant Credit Suisse.

The cold spell on the banking sector can have negative consequences for the economies of Latin America by slowing down the granting of loans and by increasing their cost, note the experts.

A Silicon Valley Bank building, photographed in Tempe (USA) on March 14, 2023

A Silicon Valley Bank building, photographed in Tempe (United States) on March 14, 2023 (AFP/Rebecca Noble)

Although the President of the IDB did not mention the turbulence in the banking sector in his opening speech, he had predicted the day before to journalists that the “economic situation” would be on the menu of this meeting of the 48 governors of the central banks of the American continent.

– limited resources –

“There are always economic questions. We are at a time when the cost of money is rising in the world (…) and the cost of money always has an impact” on economies, had noted Mr. Goldfajn.

Founded in 1959, the IDB, headquartered in Washington, is one of the leading long-term financing institutions for countries in Latin America and the Caribbean.

The United States, Argentina and Brazil have between them nearly 53% of the voting rights.

The governors of the continent will hold meetings on Saturday and Sunday behind closed doors after two days of seminars with experts on the themes of food security, investments needed to reduce poverty, infrastructure for development, collaboration between public and private , the protection of biodiversity and the fight against climate change.

“Citizens want better outcomes, less poverty, more equality, more education, more health”, but “countries have limited resources. Whether it is due to debt, public deficit, ( budgetary resources) are never infinite,” Goldfajn said. “You have to create resources, but for that you need growth,” he argued.

The turbulence in the banking sector comes at a very bad time for Latin America and the Caribbean. The region’s total debt has exploded to reach 5,800 billion dollars (against 3,000 billion in 2008), or 117% of the region’s GDP, worries the IDB.

Over the past 20 years, the region has grown 12 times less than that of emerging Asian countries, laments the President of the IDB. Its economies even contracted in the five years before the coronavirus pandemic, when growth was the norm virtually everywhere else in the world, he pointed out.

© 2023 AFP

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