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

IDB economist Ana Maria Ibanez stressed at the first seminar of the assembly the need to accurately identify 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 (aid) from public programs.

Brazil's Ilan Goldfajn, who took office at the helm of the IDB in January, said Wednesday at a press conference that the "challenge ahead" is to meet "many social demands with few resources."

Cold snap

The IDB's "annual" meeting meets after three years of suspension due to the pandemic and in turmoil after the failure of three banks in the United States and fears of contagion.

The failure 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, European bank prices gave way on Wednesday to a panic, driven by the fall of up to 30% in the share of the banking giant Credit Suisse.

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

If the president of the IDB did not mention in his opening speech the turbulence in the banking sector, he had predicted the day before in front of journalists that the "conjuncture" will be on the menu of this assembly of the 48 governors of central banks of the American continent.

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

Limited resources

"There are always short-term issues. We are in a moment where the cost of money is rising in the world (...) and the cost of money still has an impact" on economies, Goldfajn said.

Established in 1959, the IDB, headquartered in Washington, D.C., is one of the leading long-term financing institutions for Latin American and Caribbean countries.

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

The continent's governors will hold closed-door meetings on Saturday and Sunday after two days of seminars with experts on food security, investments needed to reduce poverty, infrastructure for development, public-private collaboration, biodiversity protection 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's because of debt, public deficit, (budgetary resources) are never infinite," Goldfajn said. "You have to create resources, but for that you need growth," he said.

The turmoil in the banking sector comes at a very bad time for Latin America and the Caribbean. The region's total debt has exploded to $5.800 trillion (from $3 trillion in 000), or 2008 percent of the region's GDP, the IDB said.

Over the past 20 years, the region has grown 12 times less than emerging Asian countries, the IDB president said. Its economies even shrank in the five years leading up to the coronavirus pandemic, when growth was rampant almost everywhere else in the world, he said.

© 2023 AFP