37th REGULAR MEETING OF THE ALIDE GENERAL ASSEMBLY 2007
INCLUSIVE GROWTH: FINANCING, SOCIAL RESPONSABILITY AND CHALLENGES FOR LATIN AMERICAN DEVELOPMENT BANKING
Montevideo, Uruguay, 24-25 May, 2007
Meeting site and date
Meeting of national
Session on institutional
Asociación Latinoamericana de Instituciones Financieras para el Desarrollo
Banco República Oriental Del Uruguay
Inclusive Growth: Financing, Social Responsibility and Challenges for Latin American Development Banking
Because of globalization, the problem of social exclusion of the less favored sectors has worsened in the region, with the result that poverty and inequality have become accentuated. This inequality holds back the growth of domestic markets, limiting the possibilities of selling products and services with a greater value added and the development of local industry, thereby creating a vicious circle. In order for the economy to move toward true growth, those sectors must be incorporated and it is up to the State to act in this regard by drawing on macro and microeconomic policy instruments. It is important, in promoting this inclusive growth, to examine just how development banks, as public policy instruments and in line with their social mandate, are strengthening their commitment to include and incorporate the less favored sectors in their development and financing programs.
In addition, the social responsibility of the development banking system is tied in with its function of promoting sustainable development and sound banking practices and it is considered appropriate at this time to examine the prudential regulation and corporate governance of the development financing institutions through aspects of their environmental financing.
Financial and Social Inclusion: Innovative Experiences in the Development Banking System
Development financing institutions should promote innovative fund-raising programs for advancing social and financial inclusion, particularly among the most poverty-stricken population groups, through plans for incorporating production that are based on financial support and technical assistance.
Several countries in the region have had successful experiences with rural and urban microcredit programs, schemes for promoting business and integrating micro and SMEs into the market, incorporating standardized financial products in production chains, developing financial intermediaries to encourage bank use, and financing education and other social sectors, etc.
Financing Sustainable Development: Plans and Instruments
Environmental and social responsibility as elements of sustainable development have become increasingly important to Latin American development banking, given current international trends and practices. A number of institutions promote environmental credit lines for the benefit of industrial SMEs that are aimed at the adoption of cleaner production methods.
At the same time, an environmental/ social variable is being incorporated into project financing. The Carbon Funds and the use of Clean Development Mechanisms promoted by international financial organizations, which could be the subject of cooperation arrangements with Latin American development banks, are also a significant part of the plans and instruments it is important to understand and be familiar with.
Prudential Regulation and Corporate Governance in the Development Banking System
Prudential regulation is particularly important for development banks because of their unique features stemming from their reason for existing and their social mandate. Given the widespread adoption of Basle 2 and the effects this could have on financial institutions whose lending targets SMEs and other sectors that have problems in acceding to the commercial banking system, it is necessary to look into alternatives for designing and adopting flexible prudential standards that will incorporate the operating methods and unique features of development banks.
At the same time, these institutions must protect their financial and institutional viability and for this reason it is important to promote sound practices of corporate governance.
DECLARATION OF MONTEVIDEO
THIRTY-SEVENTH REGULAR MEETING OF THE ALIDE GENERAL ASSEMBLY
May 24 - 25, Montevideo, Uruguay
“INCLUSIVE GROWTH: FINANCING, SOCIAL RESPONSIBILITY AND CHALLENGES FOR LATIN AMERICAN DEVELOPMENT BANKING”
PRESENTATIONS AND DOCUMENTS
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