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Debates on climate change and sustainable energy dominated the agenda of the annual meeting of the Inter-American Development Bank (IDB) in Panama this Friday, amid turbulence in the banking system in the United States and Europe.
Three Latin American finance ministers shared their countries’ proposals to curb climate change, on the eve of the first plenary session of the governors of the 48 IDB countries, the highest instance of the organization. The head of Finance of Uruguay, Azucena Arbeleche, suggested that the interest rate charged for loans by multilateral financial organizations, such as the IDB or the World Bank, be “linked to the environmental behavior of countries.”
“That countries that contribute to a global public good such as the environment be rewarded,” said Arbeleche in a panel in which his Colombian counterparts, José Antonio Ocampo, and Mario Marcel from Chile also participated. Ocampo highlighted Colombia’s progress in initiatives to protect the Amazon, the main lung of the world, but indicated that in the “transportation sector we are far behind.”
The minister was pleased because “two of the car assemblers in Colombia are going to assemble electric vehicles”, but he admitted that a great challenge for his country is to have “cleaner” trucks and buses. For his part, Minister Marcel stressed that “Chile, which was a country almost 100% dependent on the importation of fossil fuels, now almost half is obtained from renewable sources and by 2030 it will be above 80%.”
“A long time ago, the change in the energy matrix began to be taken seriously and what we have advanced up to now gives us a very important advantage,” said Marcel, who stressed that “there has been a lot of continuity in the last three governments on climate change”, despite being of different ideological signs.
– concerns –
The IDB meeting began on Thursday amid concerns over the bankruptcy of Silicon Valley Bank and two other banks in the United States, as well as difficulties at the US First Republic and Credit Suisse in Switzerland. US and European markets returned to trading at a loss on Friday, after a further plunge in shares of First Republic Bank in New York and Credit Suisse in Zurich, a sign of lingering concerns about the banking sector despite protective measures. extraordinary from the authorities.
The collapse of three banks in less than a week in the United States marks the worst bankruptcies since the 2008 financial crisis. These storms could slow down credit or increase its costs, which would directly harm Latin American nations, according to experts. The new president of the IDB, the Brazilian Ilan Goldfajn, did not mention in his opening speech to the assembly the storms in the banking system, but he anticipated that “conjuncture” issues will surely be dealt with in this conclave by the Bank’s governors , mainly finance ministers from the continent.
– Contagion? –
Although the seminars of this IDB assembly have not addressed the turbulence in the banking sector, there is concern among economists and financial operators in Latin America. “A fragile financial system in the United States increases the global risk of a recession. This drives investors away from risky assets and emerging market assets are considered risky,” Peruvian economist and academic Alberto Arispe, a former manager of the Lima Stock Exchange.
“This spreads to other countries, and with less investment, potential withdrawal of capital, these countries grow less, they may have less flow of dollars, which weakens their economies. The most solid ones will endure, but the weakest economies may have problems,” added Arispe, current manager of the stock firm Kallpa Securities SAB. The IDB governors will have closed-door meetings over the weekend, after two days of seminars for experts, officials and businessmen.
– world Bank –
In order to meet with Latin American ministers, the candidate designated by US President Joe Biden to head the World Bank, Ajay Banga, is in Panama. The outgoing World Bank president, American David Malpass, will end his term early, clouded by doubts about his position on global warming.
Traditionally, the candidate nominated by Washington becomes the new president of the World Bank, an organization that also finances many projects in Latin America and the Caribbean. The IDB, created in 1959 and headquartered in Washington, is also one of the main sources of long-term financing for the region.
