Cecilia Machado: Brazil at the IDB

The Inter-American Development Bank, the IDB, is much more than a multilateral financial institution. It serves as an instrument for the economic development of Latin America and the Caribbean, having as clients the various governments and institutions that seek the bank to develop projects in the region. Acting in partnership with them, the IDB provides resources, but also disseminates knowledge and provides technical assistance for the execution of projects that are aligned with its objectives.

Targeting resources is important as Latin America’s economic performance in recent decades has been quite modest. Productivity gaps, which had already hampered countries’ ability to deal with various crises and shocks, have been widened further by the digital transition and adoption of new technologies in developed economies, climate change and the Covid-19 pandemic. , which generated substantial losses in student learning.

In times of normalization of fiscal and monetary policies and the slowdown of global economies, the role of the bank became even more evident. The high indebtedness of governments and restrictive interest rates should, very soon, limit the possibility of financing important projects in Latin America.

With so many questions on the table, the new management of the IDB faces the challenge of choosing priorities and using the resources at its disposal in the most efficient way possible. In the words of the newly elected president, Ilan Goldfajn, those who have many priorities end up having none, and therefore the focus on three important fronts has great potential to foster a sustainable development agenda that improves people’s lives.

First, the institution will have a special eye on projects that seek to reduce poverty, inequality and food insecurity, increasing the scope of the social protection network, fostering gender and racial diversity and structuring programs that reach the most vulnerable population.

Second, it will be necessary to guarantee compliance with the objectives of the Paris Agreement for the reduction of carbon emissions and to have financial instruments that allow measuring and ratifying the fulfillment of goals objectively, without incurring in greenwashing.

And, third, investments in infrastructure, mainly in technology, must be done in partnership with private capital, since resources are limited.

Since 2008, the IDB has had an evaluation methodology that guarantees tangible and positive results for the 26 countries that are borrowers from the bank. The tool determines good practices for project selection, implementation and evaluation and uses the best available evidence to formulate region-specific policies and practices. For those who want to know a little more about the projects supported by the IDB in Brazil, I recommend following Policing in Hot Spots (bit.ly/3EPDWmh), which tests the effectiveness of ostensive policing in places with high crime rates. The project, in partnership with the military police, has the technical support of Joana Monteiro, a great specialist in public security in the country.

Brazil at the IDB represents gains for the bank and for the region through the qualified management of its new president, who knows very well the problems that affect Latin America and the Caribbean and who has excellent technical training to direct the bank’s resources for projects with social, environmental and climate returns.

Ilan Goldfajn was my professor in the master’s degree in economics at PUC-Rio, in the mandatory subject macroeconomics 1. He guided several colleagues who passed through there during this period, but he also served as an inspiration to all of us who followed the progress of his career at great pace, as when he became president of the Central Bank of Brazil. Success, Ilan!