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Saturday, May 27, 2006 

26 May 2006

New Development Initiative Set for Latin America, Caribbean

Plan by Inter-American Development Bank aims to reduce region's poverty

By Eric Green
Washington File Staff Writer

Washington -- The Inter-American Development Bank (IDB) has announced a new plan to promote economic opportunities for low-income people in Latin America and the Caribbean.
In a May 26 statement, the IDB said the Building Opportunity for the Majority Initiative is aimed at the low-income "majority" of the region, where it said some 360 million people, or 70 percent of the population in Latin America and the Caribbean, have incomes below $300 a month.

The IDB said the initiative establishes benchmarks and targets to measure performance over the next five years. The IDB will use the plan as a guide for focusing on a few priority areas, such as expanding the access of low-income people to formal financial services by building on the experience of microfinance. The plan also will guide IDB financing for projects in such areas as expanding access to affordable housing and modern communication technologies. The plan is to be launched at a June 12-13 conference at IDB headquarters in Washington.

Although the region’s low-income population constitutes a $510 billion-a-year market, "these neglected consumers and producers pay a ‘poverty penalty’ that raises their living costs, stunts their productivity and limits their opportunities to accumulate assets," said the IDB.

The region's low-income population, said the IDB, lacks access to running water, reliable electricity, good roads and safe transportation, while their homes tend to be built precariously on land "they probably can't prove they own."

In addition, the businesses of low-income people are hobbled by a scarcity of credit and excessive bureaucratic requirements, the IDB said. Even though the Latin American per capita gross domestic product has grown 95 percent since 1960, the IBD said, poverty and inequality levels barely have budged.

The IDB said its president, Luis Alberto Moreno, believes his institution must work with the region's governments, the private sector and civil society to help more people move into the middle class.

U.S. officials continually have expressed concern about high poverty rates in Latin America and the Caribbean. But Clay Lowery, the U.S. Treasury Department's assistant secretary for international affairs, said in April 4 remarks that poverty reduction in the Western Hemisphere "is both possible and essential."

Lowery said nations successful in reducing poverty have sustained robust economic growth, maintained low inflation and sound finances and have pursued reforms that spread opportunity.

Even though there is no single recipe for success, the best performers are countries that have opened markets, reduced barriers to starting businesses, invested in health and education, and linked their poor populations to markets, Lowery told the Getulio Vargas Foundation in São Paulo, Brazil. (See related article.)

Another official, Adolfo Franco from the U.S. Agency for International Development (USAID), said in September 2005 congressional testimony that the challenge to democracy in the region derives from the "vast levels of inequality and poverty."

Franco, USAID's assistant administrator for Latin America and the Caribbean, said that "unfortunately, the region's classification of mostly middle-income status disguises the harsh realities of its economic disparity" where about 96 million people live in extreme poverty on less than $1 a day.

Furthermore, Franco said inequality in Latin American is higher than any other region of the world, despite increases in per capita income over the last decade. Franco's comments were made in testimony before a subcommittee of the U.S. House Committee on International Relations. (See related article.)

More information on the IDB initiative is available on the bank’s Web site.

For more on U.S. policy in the region, see The Americas.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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