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LAC REGIONAL
>> Regional Overview >> LAC Regional Overview
Development Challenge FY2001 Program /
Activity & Budget InformationSummary Tables
Program Summary
Previous Years' Activities
2000, 1999, 1998, 199736
Introduction
The Summit of the Americas, beginning in Miami in 1994, continuing in Bolivia with the Sustainable Development Summit in December 1996, and culminating in Santiago in April 1998, has established the principal agenda of the U.S. Government's foreign policy for the region. The Miami Summit launched major initiatives to address the problems of poverty, quality and equity in basic education and health services, democratic governance, environmental threats and the continuing challenge of regional economic integration. The Santiago Summit deepened and strengthened these commitments with increasing emphasis on a second generation of reforms that are specifically aimed at reducing poverty and inequity, improving basic education, increasing economic opportunity through free trade, and strengthening the rule of law. USAID is involved in carrying out 17 of the 27 action items emerging from the Summit agenda. Our programs pay particular attention to: the improvement in the quality of basic education; greater availability of credit and other financial services; increased access by the poor to secure and marketable land titles; equitable participation in regional trade; and local government strengthening and decentralization.
The Development Challenge
In contrast to the Summit of the Americas agenda-setting process for the hemisphere, which is well orchestrated and built on consensus, several unexpected events have also influenced the mood of the region in a more negative way and have undercut the euphoria coming out of Santiago. USAID is redoubling its efforts to ensure that the momentum achieved in April will be maintained and even accelerated as a result of these crises.
As a result of the financial crisis, for the first time in a decade, there is a falling regional GDP. The high degree of volatility in international finance and trade has reduced the average growth rate in the region from a high of 5.4% in 1997 to 2.1% in 1998 and zero growth in 1999. Other discouraging signs include: low export prices; growing current account deficits; falling short-term capital inflows; and rising unemployment rates. Nevertheless, prospects for 2000 are improving given the signs of recovery in the last two quarters of 1999. Also on the positive side, inflation rates of approximately 10% are at their lowest ebb since the 1950s.
The impact of natural disasters on the Latin America region in 1998 has been devastating. El Nino hit the Andean sub-region especially severely with damages estimated at $7.5 billion. Fires in Mexico and Central America decimated 3.5 million hectares of land, and in Brazil the fire season was the worst on record. In September 1998, Hurricane Georges caused heavy damage to the Dominican Republic of about $1.35 billion; Hurricane Mitch, the most destructive of this century, pounded Central America in late October/early November causing losses of over $10 billion. Predictions are that Latin America will be more susceptible in the future to these natural events, making reconstruction efforts extremely important in mitigating future disasters. While USAID is providing the technical expertise for the overall hurricane reconstruction effort, the Agency is specifically charged with managing the $115 million being implemented by the other U.S. Government agencies.
The financial crisis and natural disasters have put increasing strain on the already fragile democratic institutions in the region. Judicial systems, legislatures, political parties and, in some cases, the presidency remain weak. These institutions are increasingly challenged by the dramatic rise in criminal violence and continuing widespread corruption. In some countries the authority of democratic governments has been severely threatened.
Other Donors
In order to make the most effective use of scarce regional resources, the LAC Regional program typically works through regional institutions, who already have excellent contacts and the necessary political clout to bring about real policy reform. USAID also makes it a point to collaborate closely with other donors, both multilateral and bilateral, and in most instances are able to leverage additional resources. In the democracy arena, USAID was instrumental in the IDB's decision to organize an International Forum for Cooperation on Local Government and is financing the Executive Secretariat to stimulate policy dialogue among donors. Another example is in the micro-enterprise area, where USAID and IDB have signed a Memorandum of Understanding to provide technical assistance to non-governmental organizations that are capable of becoming regulated micro-finance institutions or to banks that want to expand their portfolio into micro-enterprise lending. Our $1.5 million is providing the grant funding for the $10 million IDB line of credit. We have also worked closely with IDB on the $17 million (USAID $5 million and IDB $12 million) Mitch Micro-enterprise Recovery Fund, announced by the First Lady in November 1998. Similarly in education, funds will be used for technical assistance, pilot and demonstration activities, applied research, and project design in support of the IDB's $5 billion Summit pledge. And lastly, with regard to bilateral donors, over the life of the program, Parks in Peril has leveraged over $45 million of non-USAID resources for park management, including $9.4 million in FY98 from European donors.
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Last Updated on: December 12, 2000 |
