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0 The incoming chief of Latin America’s biggest development bank has vowed to improve the effectiveness of its lending and work to boost morale at the institution following a difficult period.
Ilan Goldfajn, who took office as president of the Inter-American Development Bank earlier this month, told the Financial Times the organisation needed to improve lending outcomes after an internal evaluation rated only just over half of its completed projects positively.
The bank would direct more lending towards tackling social needs such as poverty, and pursue greater dialogue between its staff, board and 48 member countries when decision making, he said.
“We are in a polarised world and . . . my election is a symbol of this new IDB that looks for consensus,” Goldfajn said in an interview.
“I think the IDB has quite an important role in social issues,” he added.
Goldfajn, a Brazilian former central bank chief and senior IMF official who is known for his thoughtful, measured style, faces big challenges at the Washington-based IDB.
In its annual report in 2021, the last year for which data is available, the bank’s internal evaluation office gave just 53 per cent of IDB’s completed projects a positive rating. Among those not reaching the benchmark, some had not achieved their objectives or had not succeeded as well as expected, while others needed more time to bear fruit, the IDB said.
Senior staff are also bruised from the turmoil surrounding the tenure of the previous president.
Mauricio Claver-Carone, an American of Cuban descent, was imposed on the IDB by former US president Donald Trump’s administration in 2020 as its first US leader, against the wishes of a number of larger Latin American countries. The bank’s top job has traditionally been held by a Latin American.
He was ousted by the IDB’s governors last September after an ethics inquiry found it was “reasonable to conclude” he had engaged in an undisclosed relationship with a colleague and taken employment actions to benefit her, in violation of the bank’s rules.
Claver-Carone has strongly denied the allegations and maintains he was unjustly persecuted because of his reform agenda at the bank, which involved reshuffling senior staff, promoting Latin America as an investment destination for western private-sector capital and distancing it from China.
“There was quite a bit of conflict in the relationship between management and staff, management and the board, management and member countries,” Goldfajn said, describing the situation he found at the bank.
The new chief has promised to listen to staff and encourage a frank and open exchanges of views. “I think there’s quite an upside on how to be an IDB of dialogue, of coalitions, of building bridges.”
Sensitive to Latin America’s political shift to the left over the past year, Goldfajn said that the IDB’s direct lending, which was about $13bn in 2022, would in future years be aligned with the priorities of the region’s new governments. “I talk about poverty, I talk about food security, I talk about inequality. This is a core IDB role.”
The IDB, whose biggest shareholders are the US, Brazil and Argentina, would prioritise helping to fight climate change and mitigate its effects, he said. The bank would also pursue greater regional integration by funding improved digital and physical infrastructure.
Claver-Carone had aggressively pursued a big capital increase for the bank but Goldfajn, who won the election after US president Joe Biden’s administration swung behind his candidacy, believes the IDB first needs to improve existing lending.
“We need to be very clear on the use of the current capital, current loans, current projects,” Goldfajn said. “Are the projects effective? Are they reaching their goal . . . in terms of social goals . . . gender, diversity, productivity?”
He added: “It is not enough to look at the amount of dollars you are lending. You need to know if these dollars are really measuring what you ultimately would like to [measure] . . . which is the targets of development.”
