MercoPress. South Atlantic News Agency

“Intelligent interaction” instead of Washington consensus

Surging raw material prices, better trade figures, stronger currencies and the lessons from the past seem to have imposed a sober mood in the Inter American Development Bank, IDB annual Assembly held this week in Okinawa, Japan.

This less volatile Latinamerican scenario offering investors fewer opportunities for short term profits have kept bankers and fund investors away from Okinawa or in lesser numbers.

World Bank and IMF numbers show that Latinamerican governments have built up reserves, paid debt instead of further borrowing and as public opinion has moved against privatization, investment bankers no longer have the rich harvesting of the nineties.

IDB president Enrique Iglesias a veteran of recurrent financial crises in Latinamerica and always at the outlook for signs of a bubble in financial markets believes that the message of his Okinawa inaugural address, "administer the bonanza to prepare for the hard times" has reached the region.

Governments in the region including several centre left administrations have prepared the way for economic stability with cautious policies.

Contrary to the laissez-faire of the nineties and the Washington consensus, the state is back and public-private partnership is a watchword at the IDB. Changes to the IDB lending criteria approved at the conference include looser counterpart requirements, new facilities to monitor the effectiveness of public spending and greater leeway to lend in local currencies, with the purpose of greater "intelligent interaction" between public and private sectors. Besides, the fixed exchange rates of the nineties attacked by speculators have been abandoned.

Latinamerican governments are also involved in long term development strategies taking advantage of the growing interest of Asia, and particularly China in the region.

A good reason to have held this year's annual conference in Japan, with one of the leading delegations, both in number and high ranking officials, coming from China.