The president of the Inter-American Development Bank (IDB), Colombian Luis Alberto Moreno, warned yesterday (14) about the growing possibility of a decade lost in Latin America due to the coronavirus pandemic.
Moreno, who on September 30 will step down after 15 years at the IDB, the main source of financing for the development of Latin America and the Caribbean, said that the debt will be a theme for the recovery of the region, which with 8% of the world population concentrates about one third of the covid-19 cases on the planet.
“For me, the most important issue will probably be the debt problem,” Moreno said during a virtual forum organized by the Atlantic Council think tank, when asked about the role of the United States and the international community in supporting the region’s recovery.
In this sense, Moreno warned of another decade lost in Latin America, in reference to the 1980s, when the region was forced to tighten its belts to comply with the payments of the debt generated with international entities.
Moreno explained that years later, during the 2008 financial crisis, the debt / GDP ratio in Latin America was just under 40%. Most of the emerging markets were responsible for driving the growth of the world economy.
The situation, however, is very different now, explained Moreno, not only because the contraction of GDP is “tremendous” worldwide, but also because the region is more indebted.
The debt / GDP ratio “was around 58% at the beginning of last year,” said the IDB president, who projected that “it could reach 75% in the next 18 months”.
“We will have an over-indebtedness that, if we look back, to the 1980s, it was really this over-indebtedness that was not resolved until much later, which essentially meant a lost decade for Latin America”, he analyzed.
“While countries are struggling to control the spread of the pandemic, the expansion of poverty, unemployment and, especially, the increase in debt, both at home and at governments and companies, is enormous,” said Moreno.
“We will start to see the effects in the coming years,” he continued.
For the IDB president, the covid-19 crisis “will undoubtedly” continue to be a challenge for Latin America during 2021 and probably 2022.
Moreno, a Colombian born in the United States, will be replaced in the IDB presidency on October 1 by the American Mauricio Claver-Carone, an aide to President Donald Trump, elected on Saturday for a five-year term.
