Record sustained MDB lending needed in Latin America, IDB says

Multilateral development banks must work together to repair and improve the Latin American economy in the wake of the COVID-19 pandemic, officials from the Inter-American Development Bank, World Bank, and International Monetary Fund said Thursday. IDB President Mauricio Claver-Carone said his regional lending institution has a “strong partnership” with the World Bank and IMF to scale and increase the impact of their investments. “We’re looking at the financial tools and the technical capacities which we can use together with our partners at other international financial institutions, such as avoiding duplication, focusing on the synergies, and really have the ability to maximize our resources and make our joint effort as efficient as possible, which is needed now more than ever,” Claver-Carone said. “Record sustained lending is going to be needed by all of our institutions … particularly amid the constrained fiscal space.” Along with Claver-Carone, Alejandro Werner and Carlos Felipe Jaramillo — IMF Western Hemisphere department director and World Bank vice president for Latin America and the Caribbean, respectively — highlighted challenges facing the region as the one hit hardest by COVID-19. A steep hill to climb: “There was an increasing sense in recent years that Latin America was a region of middle-income countries that were slowly [on] autopilot getting very quickly to high-income status,” Jaramillo said. “Sadly, the pandemic shows we were not quite there. … The poverty impact and the inequality impact and the loss of the middle class is a huge agenda item that comes now in this reconstruction.” The laundry list: The MDB officials named a host of issues their institutions must help address if the Latin America and the Caribbean region is to recover effectively. They include: digitalization; access to education and health systems, including vaccinations; building and integrating regional value chains; removing barriers to private sector investment; supporting small and medium-sized enterprises; and strengthening social safety nets.