The master.

Luis Alberto Moreno, a pragmatist at heart, is also clearly a superlative manager. To become president of the Inter-American Development Bank (IDB), the main development agency for the region, the 52-year-old Colombian had to compete against true heavyweights, some with significantly more experience, including Prime Minister of Peru Pedro Pablo Kuczynski. Moreno, who was Colombia's ambassador to the United States under both the Pastrana and Uribe administrations, was key to mending relations with the superpower after a diplomatic breakdown during the Samper years; he managed to arrange US$4 billion in aid in the process. The new head of the IDB, in office since late 2005, spoke with LATIN TRADE Spanish Editor Andres F. Velazquez about the region's economic profile now and the challenges facing the bank.

How much longer do you think Latin America will enjoy its current economic state?

Judging by what I hear from economists, we estimate that there's no reason to think that 2006 and 2007 won't continue to be good years, economically speaking, supposing of course there is no drastic change at the international level.

What changes have occurred at the institutional and macroeconomic level among the region's governments that led to this?

In general terms, there are economic teams and a very good technocracy as a result of so many years of highs and lows. In most of the countries there is a deep understanding that leads to a kind of orthodoxy.

In macroeconomic terms, what do governments in the region need to do?

The big challenge is growth. In one sense everything is working to the region's advantage. There's an increasing flow of remittances, lots of foreign investment--although less than is desirable--trade has grown and yet the countries themselves are not really growing. This to me suggests the need to strengthen and improve institutionalism.

What do you think of the fact that foreign direct investment is declining in spite of the high prices of raw materials?

The important thing to consider is the subject of investment in general. Foreign investment doesn't replace domestic investment but instead complements it. In the U.S. stock exchange you find companies posting earnings of 15% to 20%, and that's difficult to beat. Combine that with the fact that the United States has no country risk, and you get lower investment in emerging economies. Yet, lately, to the degree that U.S. interest rates rise we're starting to see more movement among portfolio investors.

What initiatives can the IDB undertake in order to help countries exchange raw materials exports for value-added goods?

We have several kinds of initiatives, some that improve the investment climate in the country, and we're joining countries that have entered into free trade agreements to help them introduce the next level of reforms that are required, such as customs and sanitary regulations, and of course we're helping many sectors of the economy through financing from the private-sector side of the bank. We don't pick winners or losers. Nor do I think, given the openness of economies now, that countries themselves can pick them.

What types of projects get priority for financing from the bank?

Our mandate calls for 50% of the bank's credit be dedicated to social projects. For the rest, there's a lot of emphasis on private-sector efforts, such as public-private alliances that fundamentally have to do with infrastructure, especially multi-country projects such as a highway that might connect three countries. Also we focus on energy projects. All of these types of investments demand resources on the order of $80 billion to $160 billion a year.

How is the IDB affected by populism in Latin America, for instance the policies of Venezuela's Hugo Chavez?

People have a lot of opinions about free trade. At the Mar del Plata [Summit of the Americas meeting] most of the countries wanted to move ahead with free trade although there will always be some that want to move faster than others. There are some countries that feel that the time is not right and some that want to advance quickly, and that's reasonable.

What do governments in the region need to improve, in your view?

I think the main one is inequality. We need to close the huge gap between the rich and the poor, to meet that challenge which all countries face, the challenge of this century. I don't think there are any other issues that matter.

If you were a foreign investor, would you put money into Latin America now?

It's hard to imagine a better time to do so. There's growth, markets are much more secure. I think the conditions are right for a lot more investment in Latin America, and I think we'll begin to see it happen.