The president of the World Bank, Robert B. Zoellick, stated that Latin American largest countries are better prepared now than in the past to face the world crisis, based on strong budgets and primary surpluses and the development of effective social policies.
"Having worked during the crisis of the eighties and nineties, what really stands out is how Latin America is addressing the current situation from a completely different perspective," said Mr. Zoellick after meeting with Chilean president Michelle Bachelet in Santiago.
"Obviously there's a great diversity from country to country, but several of them including the largest such as Brazil, Mexico, Colombia, Peru and Chile are confronting the crisis very well positioned to address the situation," he added.
Zoellick is in Chile participating of the Latin American and Caribbean second summit of Finance Ministers to which has also been invited IMF Director General, Dominique Strauss-Kahn; Luis Alberto Moreno president of the Inter American Development Bank and Alicia Bárcena Executive Secretary of the UN Economic Commission for Latin America and the Caribbean.
According to the World Bank chief, the improved position can be attributed to strong budget and primary surplus policies, larger international reserves, expanded world trade and a flexible management of money exchange rates, as well as a "very sound attitude regarding the social network."
However this does not mean that the region or these countries will be immune to the global crisis, "but will certainly have more flexibility to face it."
"But some of the challenges which some countries will face are the difficulty of having access to international financing in support of their programs," warned Zoellick.
On Wednesday the World Bank reported that the level of financing to countries in need rose 54% to a record US$ 58.8 billion in fiscal year 2009,
"Requests for assistance from the World Bank Group rose sharply this year, and we expect this to continue well into 2010, as the pace of recovery is far from certain." said Zoellick said in a release.
In the fiscal year ended Tuesday, the bank's main lending program, the International Bank for Reconstruction and Development, registered a record US$ 32.9 billion in commitments. The International Development Association, which gives poorer countries interest-free loans and grants, also reported a new high of US$ 14 billion in commitments.
Meanwhile, the bank's private-sector arm, the International Finance Corp., saw a decrease in financing to US$ 15 billion – including US$ 4.5 billion mobilized from syndications and structured finance – from a high of US$ 16.2 billion in fiscal year 2008.
Countries in Latin America and the Caribbean were the biggest recipients of funds, with commitments rising 70% to a record US$ 17.1 billion in the fiscal year.
Zoellick also announced that the World Bank will expand the role of developing countries as a means of increasing its capital base in 2010. He said the bank is expecting to continue lending at a comparable rate in 2010, in which case the bank will need to expand its capital base.
"If we continue at this rate, we will need to augment capital resources," Zoellick told reporters.
The World Bank is considering measures that would increase the voting share of developing countries, Zoellick said, adding that "we are thinking about what steps can be taken to increase the role of developing countries in the World Bank."
He also said the bank is exploring ways to access capital that developing countries have invested in the bank in local currencies.
When asked about prospects for global economic recovery, Zoellick said that Latin America could play an important role.
"I hope that Latin America can add to overall global demand," he said, adding, "the world economy is stronger if you have multiple pools of growth."
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