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The IDB fears that overlapping crises will impact Latin America

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Goldfajn heads the annual meeting of the IDB, which is attended by the governors of the 48 member countries of the Bank, mostly finance ministers, after a black week for the banking system in the United States and Europe.

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Future prospects (of the region) are affected by the consequences of overlapping crises what we went through: from the pandemic (from covid-19) until Russian invasion of Ukrainewith higher debts and record inflation, food and energy insecurity and, of course, the climate crisis,” stressed the IDB helmsman, who did not mention the turmoil in the banking sector.

“It is of vital importance that today we think about these challenges that go beyond individual countries, they are regional and global problems,” added the Brazilian economist in a speech before the Bank’s governors and the Panamanian president, Laurentino Cortizo.

The IDB assembly will culminate on Sunday with the disclosure of a macroeconomic report with data and forecasts for the region.

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The conclave began on Thursday with debates by officials, businessmen and experts, in the midst of Concerns after the bankruptcy of three banks in the United Statesincluding Silicon Valley Bank, as well as difficulties in the US First Republic and Swiss Credit Suisse, whose shares have plummeted.

In these forums, which continued on Friday, the storms in the banking system were not addressed, but Goldfajn anticipated that “cyclical” issues will be addressed by the IDB governors in their deliberations behind closed doors.

Goldfajn pointed out in his speech that he told the governors this Saturday, in a session behind closed doors, that “Governments must overcome the historic plagues of poverty and inequality, increase productivity and accelerate growth, while coping with more frequent weather events, and with scarce resources.”

“None of this is easy,” said Goldfajn, who took the reins at the IDB two months ago. “The challenges we face were not created overnight and we will not solve them overnight. But […] with patience and persistence we can make impressive progress,” he added.

Exists concern that the turmoil in the banking sector may affect Latin America and the Caribbeansince the fall of three banks in less than a week in the United States marks the worst bankruptcies since the financial crisis of 2008.

“You have to be vigilant because in the financial markets contagion can be very fast,” the Chilean Finance Minister told AFP. Mario Marcel.

“Market reactions can reach our countries. In fact the price of raw materials these days have been falling and lower commodities weaken our own currencies,” he added.

Marcel explained that “to the extent that central bank interventions are effectivethat can be changed, but as long as other types of complex situations do not appear”.

In addition, Goldfajn led a meeting with ministers of amazon countries and donors to find ways to finance programs of conservation in one of the largest lungs on the planet.

“It is time to increase ambition, to the level required by the Amazon,” said the head of the IDB in this appointment, according to an IDB statement.

“We have to collaborate with all neighboring countries, acting as a regional integrator for the Amazon, and we trust the IDB for that,” said the Minister of Planning and Budget of Brazil and Governor of the IDB, Simone Tebetcited in the statement.

Source: Ambito

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