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INSULZA HIGHLIGHTS RESPONSIBILITY OF DEVELOPED COUNTRIES IN ASSIGNING RESOURCES TO REGIONAL FINANCIAL INSTITUTIONS

The Secretary General of the Organization of American States (OAS), José Miguel Insulza, insisted at the opening of the General Assembly of the Inter-American Development Bank (IADB) that co-operation will be the key tool to help poor countries face the global economic crisis despite their weak conditions. Speaking in Medellin, Colombia, Insulza also asked the G-20 to be ready to support developing countries with more substantial donations to international financial institutions, among them the Inter-American Development Bank (IADB).

Refering to the next G-20 meeting, Insulza identified the event in London as a chance for the developed world to show its will to define specific ways of support to the most vulnerable economies in the face of the world financial crisis.

“It is necessary for the International Monetary Fund (IMF), the World Bank, all the regional institutions, to increase their funds and resources provisions for poorer countries, to help nations in difficulties. It is also necessary to speak about a more permanent structure for the international financial system,” he said.

The OAS Secretary General quoted the IADB database to explain the risks looming over the region, and warned that the effects of the economic crisis may send more than 12 million people in Latin America and the Caribbean in two years under the poverty line.

“We know this crisis will bring bitter moments to the economies in our continent: less growth and even negative growth for many, more unemployment, more poverty and, in political terms, more instability,” he said.

As a worry, Insulza said that facing this global crisis required “avoiding temptation of sending somebody else the costs. That happens, for instance, when taking protectionist measures that violate commercial agreements; when suggesting a delay in social, energy or environmental policies; when restricting migrant rights; when the weakest lack access to the resources they need to keep afloat their economies, damaged by the reduction in remittances, exports and the lack of financial flow.”

Insulza also remembered that three Latin American countries –Brazil, Mexico and Argentina- will be at the G-20 meeting, and hoped that their attendance will “clearly show our disposition to take part on the policies they might agree to, as well as on the look for solutions to our problems.”

The OAS Secretary General evoked words by Brazilian president Luiz Inacio Lula da Silva at the recent summit of leaders in Viña del Mar, Chile, and said he would dislike “if our Inter-American Development Bank is not mentioned among the financial institutions that should receive an injection to their capitals to support reactivation policies in their Member countries.” Quite the contrary, he insisted, “we would like to see its name written among the countries that will support a much needed economic recovery in our region.”

Insulza also warned that, even though this crisis was not triggered by the poorer regions, its effects will fall on them. “Recession is already affecting the demand of commodities, a decrease in credit availability is already noticeable, a reduction in remittances is already hurting the smaller countries and it is unavoidable that our economies, even the best prepared, will see a decrease on their growing rates and an increase on their unemployment levels”.

Referring to the IADB meeting in Medellin, Insulza expressed his desire that “a clear debate and a productive consensus about the IADB’s role in the crisis” prevails. He said that, even though it is common knowledge that this crisis is hitting Latin America and the Caribbean in a good economic and political moment, “not every country has the financial capacity nor enough reserves to apply policies of stimulus, employment generation and fight against poverty, which are necessary” to face the crisis. Therefore, he insisted in the urgency of the IADB having more resources to support developing countries.

Reference: E-100/09