“We are not used to low interest rates”: The International Finance Corporation of the World Bank

For months, the world’s economic authorities have warned of the end of low interest rates. Not surprisingly, in less than a year, the US Federal Reserve has raised its intervention rate from just over 0% to close to 5%. There are no signs of a possible pause.

For the International Finance Corporation (IFC), this shift in monetary policy that seeks to combat inflation – which has also been applied in Latin America – generates tension in economies, but at the same time it represents an opportunity for the private sector to undertake major projects that the public sector cannot develop.

Alfonso García Mora, corporate vice president for Europe, Latin America and the Caribbean, emphasized, “We’ve been coming in for over ten years with very low interest rates, and we’ve gotten very used to them. We could have understood that this was the normal situation and it wasn’t.”

He added that the high cost of financing generated “excessive indebtedness in some countries and in some sectors.”

The situation, according to the executive, may represent an opportunity for the private sector: “With very high public deficit balances, it is very difficult for governments to implement a large part of the investment projects that economies require and therefore need the private sector to come in and help co-finance a large part of these.” projects.”

Epidemic lessons

For the ILO, at the worst moment of the Covid-19 pandemic, Latin America and the Caribbean lost some 49 million jobs, most of which have already been recovered.

“We learned to work differently and be productive differently, and these are lessons. What you have to do is internalize these lessons,” García Mora expressed.

However, he stressed that “Latin America is still far from where it should be in terms of digitization. There is a high percentage of the population that still does not have access to broadband, they do not have access to digital media and this limits their ability to access education, financial services, or health.”