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Canada, the IDB and the Americas: Development and prosperity

Luis Alberto Moreno


I am pleased to mark the 20th anniversary of FOCAL, Canada’s leading centre for ideas and analysis on the Western Hemisphere. This year also marks the 20th anniversary of Canada’s membership in the Organization of American States (OAS). Over two decades Canada has played an important political role in the hemisphere, a natural evolution of Canada’s long history of migration, business and financial links with the countries of Latin America and the Caribbean.

Canada has been a member of the Inter-American Development Bank (IDB), the largest source of multilateral development financing in the hemisphere, for nearly four decades now. And in recent years, Canada has stepped up to support the IDB through the global financial crisis.

Canada made the bold announcement that it would provide the IDB with US$4 billion in temporary callable capital at the Summit of the Americas in April 2009. Callable capital, which is pledged by member countries though not paid in, is a key factor in our financial strength. By temporarily increasing its share, Canada enabled us to continue lending to many of the most vulnerable countries during the financial crisis.

The Canadian government followed up on this signature commitment by playing a leading role in concluding the IDB’s 9th general capital increase in March 2010, which expanded our capital base from US$100 billion to US$170 billion. This will enable the IDB to help finance the unfinished work of development in critical areas such as education, health, housing, energy and adaptation to climate change in the years ahead.

Latin America and the Caribbean have rarely been in a better position to take on these challenges. Economic growth in the region is forecast to average 4.5 per cent this year, twice the estimated U.S. rate and four times faster than that of the eurozone. Fiscal deficits in Latin America are expected to average 2.3 per cent of gross domestic product in 2010, compared with 6.8 per cent in the eurozone and 10.6 per cent in the U.S. The region’s total public debt is roughly only half the level of Europe and the U.S.

And Canada is well placed to participate in that growth. It has strong, stable financial institutions with deep roots in the region. Its mining, professional services, construction and other companies are active across the hemisphere. Canadian pension and other fund managers are taking advantage of public-private partnerships and other opportunities to invest in infrastructure and other means of long-term development.

The Canadian government has consistently supported democratic, social and economic development, as well as regional stability, in our region. Canada’s new free trade agreements with Colombia, Panama and Peru, coupled with the older Chilean deal and the North American Free Trade Agreement and others that are in the works, are an important vote of confidence in the region and will help build continued mutual prosperity for years to come.

There is no better example of Canada’s role than Haiti. Over the years, Canada has opened its doors to thousands of Haitian migrants. Canada has a long-standing commitment to Haiti’s political, social and economic development and Haitian security. Since January’s devastating earthquake, Canada has been a leader of the international response effort. Canada was the first IDB member to forgive its share of Haiti’s debt with the Bank, and our general capital increase ensures the IDB will be able to devote more than US$2 billion in new grant monies to Haiti in the coming decade.

Before the earthquake, the IDB and FOCAL partnered in a joint effort to expand Haiti’s private sector and harness business opportunities for the people of Haiti. These efforts are now doubly important, and I look forward to continued partnerships with FOCAL.

Next spring, Canada will host the IDB’s 52nd annual meeting in Calgary. This is a superb opportunity for Canadians and Canadian business leaders to connect with the political and corporate leaders of the Western Hemisphere and explore the growing financial and trade opportunities in the region. Our annual meeting is the premier annual financial gathering uniting Latin America, the Caribbean and North America. The theme for the Calgary meeting, sustainable prosperity, notes that this is a moment to seize opportunities —for continued growth, expanded trade and ever more solid relationships. I invite all Canadians interested in the future of the hemisphere to join us.

Luis Alberto Moreno is President of the Inter-American Development Bank (IDB).


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