MercoPress. South Atlantic News Agency

“Cautious optimism” about the region's future.

“The storm is gone, recession is gone”, but the situation can't go further than a “cautious optimism”, warned Enrique Iglesias, president of the Interamerican Development Bank, IDB, during the closing ceremony of the bank's 45th annual assembly that was held this week in Lima, Peru.

"All governments must persist in the track of growth; the recovery of Latinamerica is still conditioned to the tempo and changes of the international scene", said Mr. Iglesias underlining the need to manage the current global bonanza with "cautious optimism" and planning into the future.

Mr. Iglesias invited the representatives of 46 countries and several thousands participants gathered in Lima "to act anti-cyclical", generating defences for the bad times, and "to jump to the wagon of modernity and open our economies", because in today's globalized world there's no alternative.

The IDB annual report which was the basis for debate in the Lima regional economic and development summit, indicates that in 2003 Latinamerica and the Caribbean began to recover from a recession that started in 1998 and should consolidate with growth reaching 4% in 2004, compared to 1,5% last year.

This situation is speared by the strong and bullish prices of commodities, China's growing demand and international interest rates, the lowest in over half a century.

However in the mid term prospects for the region are not so encouraging, "tinted with uncertainty" since the long recession had substantial consequences such as growing poverty, unemployment and infrastructure investment deficit.

"Macroeconomic policies must be targeted to strengthen fiscal balance and improve debt structure to avoid future financial turbulences", insisted Mr. Iglesias, but also insisting that government policies must be geared to "the creation of jobs and more opportunities for the poor".

According to the IDB report regional unemployment reached a record 10,7% in 2003, which together with a drop in salaries buying power, increased poverty, "225 million Latin-Americans, 44% of the total population live with less that two US dollars per day per capita".

"Poverty and social exclusion during the crisis have become a threat for mid term stability in the region", said Mr. Iglesias who also pointed out the "extended discredit" among the Latinamerican population towards the market reforms of the nineties. "Reform and liberalization which meant economic stability and inflation control for many, not always distributed benefits and costs fairly", admitted the IDB president.

Finally one of the most important initiatives of the Lima meeting was the proposal sponsored by ten Latinamerican countries requesting international multilateral credit organizations not to consider infrastructure investment as budget expenditures. The idea is that infrastructure investment, of which Latinamerica is desperately in need, should be exempt from the deficit equation.