MercoPress. South Atlantic News Agency

Development banks pledge 90 billion USD for Latinamerica

World Bank Group President Robert B. Zoellick

Leading multilateral development banks announced Wednesday they will increase their support to Latin America and the Caribbean by providing as much as 90 billion US dollars during the next two years in a joint effort to spur economic growth in the region by coordinating their crisis response initiatives.

The Inter-American Development Bank and the Inter-American Investment Corporation (IDB/IIC), the World Bank Group (IBRD, IFC and MIGA), Corporación Andina de Fomento (CAF), the Caribbean Development Bank (CDB) and the Central American Bank for Economic Integration (CABEI) are working together to identify partnerships to increase their collective impact and explore new opportunities to protect the economic and social gains achieved in the region during the last five years.

The IDB/IIC is expected to provide 29.5 billion of the total while the World Bank Group plans to provide 35.6 billion over the next two years. In addition, CAF plans to provide 20 billion while CABEI and CDB are expected to provide 4.2 billion and 500 million respectively.

“Latin America and the Caribbean have achieved substantial economic and social progress over the last five years and we must ensure that this is not lost because of the external shock of the global crisis. We need to avoid a social and human crisis,” said World Bank Group President Robert B. Zoellick. “I welcome the close cooperation among the multilateral regional banks and the World Bank Group, and I am committed to making this common platform work as we help lay the foundations for an economic recovery.”

Support from the IDB may increase further as the Bank is currently working on measures that may boost lending in the short run. The IDB has also started a process to review its capital to ensure adequate capacity to finance long-term development needs, under a resolution approved by its Governors in the Annual meeting at the end of March in Medellin.

“The IDB is working with its multilateral partners to make a collective response and is committing a significant portion of its existing lending capacity to combat the crisis,” said IDB President Luis Alberto Moreno. ”In order to continue to support the region in its ongoing financing needs, the IDB will be seeking additional capital resources.”

Unlike past crises, the effects of the current economic crisis are being transmitted in the region primarily through the real economy. This crisis has halted more than five years of sustained economic growth —averaging 5.3% a year— fuelled in part by the adoption of responsible economic policies and a boom in commodity prices.

“In moments such as the current one, it is evident that multilateral development agencies should coordinate their work to meet the region’s needs,” CAF President Enrique García, said. “This joint effort, which we are forming, will allow us to offer concrete solutions to face the present situation. The amounts pledged by CAF under this effort will add to other similar efforts that we been doing since the beginning of the crisis.”

The Latin American and the Caribbean region is not the epicenter of the crisis; on the contrary, this time the region is suffering the impact of the global shock. Latin America managed to lift 52 million people out of poverty from 2002–2007 but this