The scope of multilateral organizations has been under discussion for many years. But now that we are emerging from the pandemic, we are seeing both the need for external financing and the critical role that multilateral institutions can play in helping countries to face global crises and rebuild their economies. The pandemic is probably not the only major crisis that we will face, and so we must prepare now. By 2030, we will need to strengthen the development system, capitalize on it, provide it with more value, and recognize the priority and urgency of that next big global challenge: climate change.
During my first month as executive president of CAF, Development Bank of Latin America, I have emphasized the need to support our shareholder countries to deal with the health crisis and pave the road to economic recovery, while also making a solid commitment to green growth in the region. The pandemic has hit Latin America harder than any other region, accounting for 30% of COVID-19 deaths worldwide.
Latin America was already experiencing difficulties before the pandemic. The end of the super cycle of commodities prices, for one thing, hit the economic and financial health of the region. The result is that the region’s GDP fell 7.1% in 2020, the worst setback in 120 years. GDP per capita fell back to 2010 levels, and public debt surged to its highest level in the century, according to estimates. Put bluntly, Latin America and the Caribbean is now poorer, more unequal and more indebted.
We need to reach a consensus among governments, the private sector, and multilateral institutions to confront our structural and historical gaps, starting by increasing productivity and job creation. In this, multilateral institutions can play a pivotal role in preventing Latin American countries from missing the train of the Fourth Industrial Revolution, which will profoundly change almost every economic sector and industry.
Another key going forward will be the environment. One of the main goals of my tenure will be to make CAF the green bank of Latin America. We are committed to promoting green growth and a circular economy by positioning and financing environmental projects in forestry, water, climate change, waste management, energy efficiency, tourism and sustainable agriculture. We aim to go from 26% green financing today to 40% in 2026. Latin America’s recovery must be green, digital and people-focused.
This makes it essential to earn the trust of investors, both public and private, through signals that reflect the region’s needs and its long-term political and socioeconomic objectives. In this sense, we plan to deepen our activities with the private sector to channel investments and initiatives based on market-based solutions for the region. We will continue to attract investment to support initiatives that promote the rapid recovery of our economies, with infrastructure projects that close digital connectivity gaps, improve competitiveness through tertiary channels and strengthen regional value chains.
Another critical issue is to strengthen CAF’s financial muscle, starting from our shareholder countries. We need to retake our original mandate on regional integration. Integration projects will be supported, especially cross-border trade, logistics corridors, energy efficiency and the digital agenda. CAF will promote pre-investment funds for studies and projects. We will also deepen public and private strategic alliances and seek close coordination with other multilateral institutions.
Overcoming the pandemic was never going to be easy. But I’m certain of one thing, that we must join forces and build consensus if we want to make Latin America a more competitive and prosperous region. We need to make the post-pandemic world more inclusive, productive, diverse and green.