WBG Continued to Support Latin America and the Caribbean’s Resilience to Global Turmoil in 2012
July 3, 2012
WASHINGTON, July 3, 2012 - The World Bank Group (WBG) committed $11.8 billion in fiscal year 2012 (July 2011 to June 2012) to support Latin America and the Caribbean’s (LAC) resilience in the midst of global turmoil. This includes resources from the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
The World Bank (IBRD and IDA) maintained its strong support for the region approving $6.6 billion in new loans in fiscal 2012, nearly $6.2 billion from IBRD (the window for middle income countries) and $448 million from IDA ( the fund for poor countries) Support was aimed at generating opportunities for all through programs that increase productivity, create new good-quality jobs, and assist those most in need, while promoting environmental responsibility.
Brazil (with $3.2 billion, the bulk of them to sub-national governments), Mexico (with $1.5 billion), and Colombia (with $660 million) were the largest borrowers in the region. Public administration, transportation, and education received the most funding. Latin America and the Caribbean received the largest share of IBRD’s total new lending at 31 percent, and more than 19 percent of total IBRD/IDA lending.
The IFC, which supports sustainable private sector development through financing and advisory services, committed $4.9 billion to 134 private sector projects in LAC, including $1.3 billion mobilized from other financial sources. Investments in Central America reached an all-time record of $850.2 million, including $206.2 million in mobilization.
IFC’s investments spanned 25 countries in the region with a focus on inclusive growth (49 projects, totaling $1.6 billion in microfinance, health, education, housing), and regional and global integration (68 projects for $2.4 billion supporting South-South investments, regional expansion of companies, trade finance, infrastructure). IFC also focused on innovation, which is essential to increase productivity and competitiveness in the region, with 18 investment projects for $919 million.
During fiscal year 2012, MIGA provided support for three projects in LAC with $353.6 million in political risk insurance coverage. MIGA issued a guarantee covering the construction of Line 1 of Panama City's metro system, and supported projects providing lending services in Bolivia and El Salvador.
LAC continues to grow in 2012
Resilience to recent global turmoil allowed Latin America and the Caribbean to grow 4.3 percent in 2011. The region is expected to continue to grow but at a lower level (3,5%) mainly due to the Euro- Zone debt crisis , the slower than expected recovery in the US and the planned slowdown in China, a key trade partner and the engine behind the solid growth and market diversification of the past few years.
Unprecedented growth and economic stability over the past decade pulled some 73 million people in the region out of poverty. During that same period, Latin Americans’ income inequality has also fallen significantly for the first time. In spite of the global financial crisis, the region remained stable.
Many countries in Latin America and the Caribbean are highly exposed to the global economy but still maintain low vulnerability thanks to healthy levels of foreign reserves and exchange rate flexibility as well as their capacity to respond to external shocks from fiscal, monetary and macro-prudential fronts.