The World Bank’s profile in Latin America is on the upswing, with more countries lining up for loans and newly minted loan facilities being tested for the first time in the region.
“The World Bank has worked with Latin American countries for many, many years, but I do see that our partnership with the region has strengthened in recent months and I do see interest and positive developments in a number of areas in terms of this relationship,” Jorge Familiar, World Bank VP for Latin America and the Caribbean told Emerging Markets.
The enhanced ties come as the region is struggling to preserve gains made during the boom years of high commodity prices, which not only saw unprecedented growth rates but also the emergence of a sizeable middle class.
“The region did incredibly well in terms of economic growth, poverty reduction and reducing inequality for over a decade, but now the situation is more complex. The external environment is far more complicated and I do feel that the World Bank is seen as an institution that adds value in the face of development challenges in the context of these more complex external conditions,” said Familiar, who took office as VP in May 2014, the first Latin American to hold the post in 30 years.
Positive stance
Countries that had shied away from the bank, or even lashed out at its policies in the past decade, are now receiving new loans.
The Bolivian government in February signed its largest ever loan with the bank, receiving $200m for disaster and climate risk management. Bolivia, under President Evo Morales, initially had rocky relations with the bank, but the relationship never ceased.
More than 20 loans to the country have been approved since 2006, but Familiar said the new loan “opens the door for Bolivia to access additional resources and new types of instruments. It shows how the relationship with Bolivia has evolved to a very positive stance.”
Ecuador, which had only received a $2.2m loan from the bank since 2007, returned last year with total commitments of $305m for the new metro in the capital, Quito, and improvement in delivery of public services in the coastal city of Manta. It is quite a U-turn for President Rafael Correa, who announced in 2007 that he no longer planned to work with either the bank or the International Monetary Fund.
Familiar said the loans being approved today in the region are not about assistance, but about engaging with countries to jointly identify needs and responses. “The bank is an institution that dialogues with countries to move the development agenda forward. It is a dialogue in an environment that is more resource-constrained, so there is the need to mobilise capital effectively,” he said.
The bank should also get a boost in its regional image as it prepares, together with the IMF, to hold its annual meeting this October in Lima, Peru’s capital.
“I think this is a fantastic opportunity for the bank to showcase the strong partnership we have with Latin America,” said Familiar.