Poverty Reduction Efforts in Latin America and the Agenda for the Annual IDB meetings in Belo Horizonte, Brazil

ASSISTANT SECRETARY LOWERY: Thank you very much. I'm not going to speak for very long, just to tell you briefly about what I'm going to be doing on this trip and then I just really am interested in your questions.

I'm going down to the Inter-American Development Bank. It's the annual meetings there this weekend in Brazil and from there I will be doing a trip to Sao Paulo and meeting with a variety of different actors: private sector firms, small to medium enterprises, people that are focused on reducing poverty and housing projects, those type of issues.

And the main thing that I want to try to accomplish on this trip is a few things. First, is I want to listen to folks that are in the region on what are they doing and how is it best to reduce poverty in Latin America. How do you create jobs and how do you spread economic opportunities? And those are the types of things that the Administration really wants to focus on when we listen to Latin America. And I think that that's what my main message is I actually -- we don't have all the answers and we know that. And what we want to do is to listen to Latin Americans and see if they have different ideas and we may like some of them and we may not and how can we assist with those ideas. But that's basically what I'll be trying to do on this trip. And I think I leave on Friday and I get back on Wednesday, so it's a very short trip but hopefully I'll learn a lot during this trip.

And with that, I'm free to take any questions that you might have.

MR. BAILY: Yeah. Go ahead, please, in the front. If you could state your name and organization and just wait for the mike so we can get it on the transcript.

QUESTION: Hi. I am Laura Bonilla for French news agency AFP. I cover Latin American affairs. What are the main challenges of the IDB, now that the IDB has a new President? And I understand the U.S. is interested in stimulating their loans to the private sector and to the small and medium enterprises. Is that correct and what do you expect from this new administration that's taking over the IDB?

ASSISTANT SECRETARY LOWERY: Thank you. I think that the Inter-American Development Bank has a few different things that are key. I would say that priority one is just what you said, which is stimulating or catalyzing development within the small and medium enterprises. And this goes to something that President Lula in Brazil has been very clear on, which is how do you provide economic opportunities across the board and across the region so that job creation can develop?

And I think that is what you see in Latin America, to some extent, is there's an informal sector that needs to kind of move towards the more formal sector. And the reason being is that in the formal sector people aren't scared to grow their businesses, so you need a good investment climate and people have a chance to actually create jobs and create wealth so that they can have a better opportunity at life.

I think the second area of importance is to help with the key social areas, like better education programs and better health care systems. And for the United States we've been trying to be helpful in that by putting some suggestions forward on how to relieve some of the very poorest countries in Latin America of their debts to the Inter-American Development Bank. As you know, there was a big debt relief bill that's been going through for the IMF and the World Bank and the African Development Bank over the last year or so. The Inter-American Development Bank was sort of left out of that and what we've been trying to do is work with the management and the other shareholders, so how can we relieve the debt of the very, very poorest countries?

I think the third area probably would be in how can the Inter-American Development Bank encourage more development on infrastructure issues, small infrastructure issues to help basically expand opportunities for people to get products to market, whether it's in the agriculture sector or to get products to the export markets? Growth in Latin America has been driven a lot by exports and so it's very important for that to continue and for -- I mean, economic growth continue and basically poverty reduction, which is the most important thing can become better.

QUESTION: Yes. I'm Paulo Sotero from O Estado in Sao Paulo, a Brazilian newspaper. I have two questions. Regarding your -- what you mentioned regarding debt relief, I remember President Bush in his visit to Brasilia, mentioned that in his speech when he was -- a speech actually at the hotel before he left Brasilia. And well, we hadn't seen any action at the IDB on that and it seems that it's not on the agenda for Belo Horizonte.

And the second one, I understand that they are having -- they are trying to decide in Belo Horizonte -- they are trying to decide in Belo Horizonte at the governor's meeting to expand the mandate of the IDB to lend to the private sector. But I believe I heard that the United States has some difficulties with some aspects of this since -- so I don't understand fully what the issue is. Could you clarify, please?

ASSISTANT SECRETARY LOWERY: Of course. As to your first question about President Bush what -- I believe he said back in, I think it was November -- was that he thought that there needed to be greater amount of debt relief in Latin America. And what he asked is that people like President Moreno of the IDB, but also working with the shareholders, Secretary Snow, Treasury Department and the other shareholders come up with a plan to make that happen. We actually put forward some of our ideas as to how this could work in a sound financial way. The IDB management has looked at those ideas and has created a committee to kind of look through them. What I expect to happen in this weekend in Brazil is that for us to kind of hopefully make -- get a set of principles or to work and discuss together because, look, there is -- the IDB's financial structure compared to some of the other ones, like the World Bank and the IMF, very different financial structure. And so getting through the technical details of this will be very difficult. It's not something that’s going to happen in a matter of two or three months. So there actually has been progress, but it's getting, you know -- going further with it is going to take a little bit of time. I think the main thing is trying to find a solution that works for everyone with, obviously, the biggest beneficiary as being the poorest countries.

In terms of your second point on the private sector, the IDB has been -- this has been a tough issue in the Inter-American Development Bank because of the way it's structured. And this is probably our number one priority is how do you get the IDB to work more effectively with the private sector and on a more comprehensive way. And the thing that I think that we've tried to focus on is small to medium enterprises because that's where job creation is, that's where most of the people will get a better chance at growing their businesses and what -- the package that the IDB has put forward doesn't really address some of those issues which is understandable, though they're taking it in bites and so that is one of our big concerns.

But we're working very closely with management as well as with some of the other shareholders to see if we can get to something that, you know, we're happy with. But I think that we're going to want more going forward, mainly because of what we've heard from a lot of Latin American leaders and from their people, which is provide more opportunities for those that are -- you know, who have the least opportunities, really. And we think that you can do that through small and medium enterprise development, not necessarily through big infrastructure project development.

QUESTION: Thank you. Sonia Schott from Radio Valera Venezuela. I would like to hear from you. Is this -- will it be the first meeting on that respect on poverty? There will be another meeting from that respect and if you are going to use some experience from other regions who are also facing poverty or the fight against poverty? Thank you.

ASSISTANT SECRETARY LOWERY: I think it's a good question. I think that it's always important to learn from others, whether it's other regions or your same region. I mean, one of the things that drives me over -- I used to work a lot in Africa and it used to drive me crazy that everybody would say, Africa this, or Africa that. Well, every country in Africa is very different. I think in Latin America most of the countries are quite different as well. And so -- but if there are programs and projects that are being learned and worked well, whether it's another -- like if there's a project in Brazil that is working well, can it be duplicated or can it be used somehow to create lessons for a project in Colombia? I don't know but I think that that's something we should explore, or maybe there's some things that have happened in Korea that we can use.

Some of the things that we've tried to think about are the small and medium enterprises, for instance. What we've seen in Eastern Europe is that's really been a very beneficial thing to people in countries like Poland and Slovenia. Are there lessons to be learned there that can be utilized for something like the Inter-American Development Bank in Latin America? So, yes -- my answer is, yes, we should be learning from each other.

MR. BAILY: Go to the back.

QUESTION: Thank you. Scott Miller from the Washington File. You spoke briefly about the broader goals for the IDB moving forward. I was wondering about specifically this weekend if you think there are any different outcomes that the United States would be looking for, specifically from this meeting in terms of -- any deliverables, any announcements you hope to make at the end of the meeting?

ASSISTANT SECRETARY LOWERY: I think the main deliverable I hope we can have is a private sector strategy; it won't be a comprehensive one, but a private sector strategy that we and the other shareholders are comfortable with going forward. I'm hoping that we can get a way forward to answer the gentleman's question about debt reduction, maybe a more formalized process. And I would like to see, related to the first comment I just made, some sort of a way forward on small and medium enterprises, putting maybe some more timelines down and a roadmap, so that we know that there's going to be recommendations on how to increase and make improvements in that area. So those are the things I think I'd be looking for.

MR. BAILY: Any other questions? No other questions? Thank you very much for coming.