Institutions and governments must act with “transparency” and in times of crisis, focus their policies on the poor, heavily affected by the war in Ukraine or inflation, he declared. Axel van Trotsenburgdirector of operations of world Bank.
“We need transparency in many areas of public life,” said van Trotsenburg. “Expenditures should be transparent and also how the government is financed,” she said.
In many regions, the World Bank finds “institutional weakness, including corruption,” he explained.
It is important that “everything is made public, so people know what the terms are, how much it costs, what the content is” of each thing, recommends the manager.
As a lender, the World Bank has come up against a serious opponent in developing countries: China, with contracts suspected of including opaque confidentiality clauses. Van Trotsenburg advocates again “the greatest possible transparency”, if possible “total”.
Inflation
In Central America, where he is traveling this week, the WB runs into another problem of equal importance: poverty, which may worsen due to the consequences of the Russian invasion of Ukraine, in a context of strong inflation.
“I want to emphasize that Central America is a place with high levels of poverty, which affects 30% of the population, and inequality in the distribution of income among the worst in the world,” he remarked.
The war in Ukraine affects Latin American countries unequally. In general terms, in the energy sector it benefits exporters and hurts importers, and it has repercussions in the agricultural field because both Ukraine and Russia are large producers of fertilizers.
However, the expansive wave reaches everywhere, due to its effect on prices.
“What is very important – and I want to emphasize it – is that those who pay it disproportionately are the poor” because the situation drives up food prices, he said.
The World Bank recommends that governments “prioritize and focus on the most vulnerable groups so that they can at least cushion the negative impact” of price increases.
Inflation has been eroding citizens’ pockets since before the war, due in part to supply chain disruptions caused by the pandemic.
Latin America has an average annual inflation rate of 8%, with extremes of more than 50% in Argentina, more than 10% in Brazil, and endemic hyperinflation in Venezuela.
“I always called her the worst enemy of the poor, because she makes the poor poorer still,” Van Trotsenburg concludes.