Media Center

Press Release

AT OAS FORUM, THE PRESIDENT OF THE WORLD BANK RECOMMENDS TRANSFORMING THE CURRENT ECONOMIC CHALLENGES INTO OPPORTUNITIES

The President of the World Bank, Robert Zoellick, was invited to participate as the main speaker at the Thirty-first edition of the Lecture Series of the Americas of the Organization of American States (OAS) that took place on Monday December 8th, 2008.

After a brief introduction by the OAS Secretary General, José Miguel Insulza, Mr. Zoellick engaged in a dialogue with former Assistant Secretary of State for Inter-American Affairs, Bernard Aronson, during which he shared his views on the various challenges that Latin America is facing with respect to the current economic crisis that is affecting the world markets.

In the first part of his presentation, the World Bank leader pointed to the difficult economic situation that the international community is going through. He described the progress of the crisis; explaining how it initially impacted at the financial level, then at the economic level, and he projects that it most likely will become an unemployment crisis.

Recognizing many of the advances achieved, Mr. Zoellick referred also to the inequality and the development gap in the hemisphere. He highlighted the need to disaggregate into regions, as some countries are better positioned to deal with the turmoil to come. On that theme, he expressed a particular concern for the Caribbean countries, which will be most impacted due to the drop-off in remittances and tourism.

In this context, Mr. Zoellick invited hemisphere leaders to view these challenging times as an opportunity and to continue their efforts to invest in the foundations for future growth. He added that “while many countries of the region have strengthened their monetary and fiscal positions, and are actively fighting against inflation; there are still two major challenges that have to be undertaken and that would help at a point like this. One refers to the structural challenges needed to have a more flexible, adaptive competitive economy; and the second is investment in social development, like education and basic health care.”

In addition, the World Bank President explained some of the measures that the Bank is undertaking to support countries during this financial crisis. Among others, he mentioned the changes in lending policies for middle-income countries (which have been simplified, becoming more flexible and with lower rates) and the bank’s new policy to offer each country individualized solutions that respond to their specific needs.

In reference to the financial crisis, Mr. Zoellick also recommended governments to take the necessary measures to guarantee the sustainability of microenterprises, avoiding the risk to affect them in the effort to defend the financial and credit national systems. He encouraged countries of the region to protect the most needed people and the minorities, and to take measures to make them part of the system. This statement was based on his perception that “traditionally, when governments tighten up the financial system, it is the poorest and smallest who lose out.”

Furthermore, the World Bank President described as “not very hopeful”, the possibility of advancement in the pending trade talks between the U.S. and other Latin-American countries. He observed that the United States needs to help its people adapt to change, since the government should and has the capacity to create programs, such as those to guarantee wage insurance, which can help deal with some of the work force’s anxieties. Nevertheless, he expressed his belief that the new administration wants to “get off on the right foot” in its relationship with the region.

Mr. Zoellick’s allocution ended with a summary of his perspectives about the future and duration of the financial crisis. On this point, he said that it is difficult to predict what is going to happen, because there are many uncertain elements, and the development of the crisis will depend on the actions that people take over the course of early 2009. “A number of countries have implemented the right fiscal policies in trying to create liquidity, but still, there is a huge of lack of confidence in the market” he said, and stressed the need to take more active decisions by those how have not done so already.

Reference: E-465/08