Recommendations for the IDB

The Center for Global Development and CLAAF have six recommendations for the new president of the Inter-American Development Bank. Their 2nd suggestion:

Achieving market-led growth in Latin America and the Caribbean requires a pivotal role for the private sector. However, many factors hinder the funding of private projects in the region, including: the presence of market failures that inhibit investment and innovation, the continuing large involvement of the state in fundamentally private productive and financial activities, the persistence of regulatory and legal problems, and deficiencies in corporate governance. All these factors constrain the development of financial markets. Given that the IDB has no restrictions on lending to the private sector and subsovereign entities, such as municipalities, it is time to expand and modernize its private sector lending and to more aggressively explore the potential for direct lending to subsovereigns.