February 9, 2024
The Inter-American Development Bank (IDB) held a high-level dialogue during the 37th meeting of governors of IDB member countries of the Central American isthmus and the Dominican Republic on February 5-6 in Antigua, Guatemala. The gathering with ministers of finance and economy from the region was part of preparations for the IDB and IDB Invest Annual Meetings, which will take place on March 6-10 in the Dominican Republic.
The work sessions, led by IDB President Ilan Goldfajn and including IDB specialists, assessed the current regional context and challenges, while identifying policy options for addressing them. The meeting is a space for dialogue with the region’s ministers about which priorities should guide the development agenda in upcoming years and how the IDB can deepen its support to the countries through financing, knowledge and technical assistance.
President Goldfajn also presented the new regional program “América en el Centro” (“America at the Center”) to the region’s most senior economic officials. The program seeks to address the shared challenges of the Central American isthmus and the Dominican Republic, and was developed at the request of the IDB governors.
“América en el Centro” has three pillars: productivity and economic integration, climate adaptation and resilience, and social development for youth. It aims to mobilize expertise and resources from other donors and from the private sector, as well as to form a technical committee with representatives from the region’s finance ministries or treasuries to oversee progress and results.
“The objective of this new program is to strengthen regional integration and bolster the social development, inclusive growth and resilience of Central American countries and the Dominican Republic, as well as leverage resources from donors and the private sector,” explained the IDB president.
A resilient economy, but with challenges
President Goldfajn also noted the resilience of the Central American economy in the face of external difficulties, while underscoring its unresolved structural challenges.
Despite growth over the last decade, social disparities and high poverty rates persist in the Central American isthmus and the Dominican Republic. One challenge is stagnant productivity, resulting in an export sector that is highly dependent on a few commodities. Another is low investment, with an infrastructure gap that exceeds 50% of GDP, compared to the average of 30% for all of Latin America and the Caribbean. On the other hand, approximately 30% of Central America’s population is young, exceeding the overall average for Latin America and the Caribbean.
President Goldfajn added that “the countries of the Central American isthmus and the Dominican Republic, like the other countries in Latin America and the Caribbean, are now part of the solution to the world’s problems. The region offers major opportunities in areas such as the environment, climate change, diversity, foreign direct investment and sources of renewable energy.”
Impact on the region’s development
The countries of the Central American isthmus and the Dominican Republic received $4.7 billion in IDB Group financing for the public and private sectors in 2023. This has enabled countries to expand access to public services and education, strengthen public security, and boost support for small and medium-sized enterprises, climate resilience and regional integration.
From 2020 to 2022, IDB Group support has benefited nearly 2.5 million students through educational projects. It has helped more than 10 million people access improved health services and enabled approximately 300,000 households to enjoy better water and sanitation and energy services. In addition, more than 600 kilometers (372 miles) of roads have been built or improved, enhancing regional integration, trade and the movement of people and goods.
In 2023, IDB Invest supported impact investments and mobilized private-sector resources in areas such as resilient infrastructure; clean energy; digital connectivity; sustainable tourism; business ecosystems and jobs, especially small businesses and their supply chains; and foreign trade.
IDB Lab, the institution’s innovation laboratory, has focused on financial inclusion for vulnerable groups; digitalization of micro, small and medium-sized enterprises; and promoting technologies and innovations in areas such as health, nature-based business models, essential infrastructure services, climate resilience, the circular economy and the silver economy.