The future is at stake: the IDB should be more than a financial institution

In March 1971, during his inaugural speech as President of the IDB, Antonio Ortiz Mena wisely pointed out that the incipient 1970s would imply new challenges that would be added to those not completely solved during the first 10 years of the IDB’s existence. More than half a century later, Ortiz Mena’s logic is still true: new development challenges are accumulating, while the old ones have not yet been solved.

It is no longer just a matter of fighting poverty and inequality or finding mechanisms to ensure sustained growth in the region. Today the IDB cannot renounce its founding objectives, but neither can it forget to include in the equation the challenge of climate change and the necessary promotion of racial and gender inclusion. The bank must contribute to the reduction of regional disparities at the same time as we reduce the digital gap. The idea of development today implies a much broader and more complex agenda than in 1960.

It is necessary to transform this institution into a flexible and innovative development bank. The diversity of needs in the region requires an institution capable of adapting to them. Small countries require different treatment than medium-sized and large countries. The forms of trade integration in the southern part of the continent differ from those found in the center or in the north. Climate change is a challenge that concerns the entire region, but the effects are different in the pampas, the Caribbean, and the Amazon. The bank must be able to respond to the needs of the region despite the complications that this diversity demands.

The Covid-19 pandemic, with all the pain it caused, should serve as a warning signal, because it not only showed the precariousness in which a significant percentage of the population of this hemisphere lives, but also exacerbated inequalities of all kinds. The most obvious effect was on access to health care, as the pandemic had a greater impact on the poorest, who suffered higher rates of hospitalization and death. Unfortunately, this tragic effect was not the only one. Confinement translated into learning losses that also had a regressive bias: children in households without access to electricity or the Internet, or without adequate electronic tools, were the most affected. Here the digital gap manifested itself in all its crudeness and its impact will only be quantified in the long term. If there is one thing we should have learned from this terrible experience, it is that we cannot continue doing the same thing and expect different results.

And we need to go further: the IDB must see itself as more than a financial institution. The IDB’s capabilities allow it to provide the necessary leadership to reach agreements, find new development strategies, guide efforts in long-term processes and provide solutions to short-term problems. The IDB must spearhead the intellectual leadership that will make possible to face the changes that are already taking place in the world, keeping in sight the original mandates of reducing disparities and fighting poverty as the driving force behind all its actions.

The future is at stake. At its origin, the IDB set an agenda that is still valid despite the profound transformations we have experienced in recent decades. Part of the challenge for whoever heads the IDB in the coming years is to emulate its founders long term perspective. As Antonio Ortiz Mena once said, “institutions like ours, that expect to function for an indefinite period of time, must try to look to the future if they want to stay useful.”