Canada remains something of a mystery to many Latin Americans, but the country's reputation is growing among the region's governments and business elite, opening the door to greater investment opportunities, said Luis Alberto Moreno, president of the Inter-American Development Bank (IDB).
Prime Minister Stephen Harper's decision to focus Canada's development strategy on South and Central America and the Caribbean, combined with big investments by Canadian financial services firms, oil-and-gas companies and miners have given Canada an important foothold in a region that has long looked to the United States as its primary economic partner, Mr. Moreno said.
Canada also is benefiting from the government's ability to follow through on trade agreements. In June, Canada passed a free-trade pact with Colombia, adding to a list that already included Chile, Costa Rica, Peru and Panama. The U.S. government has completed agreements with Colombia and Panama, but the administration has been unable to win enough support to get congressional approval.
"It speaks volumes that Canada can not only do trade agreements, but approve them," Mr. Moreno, a former Colombian economy minister, said in a telephone interview from Calgary, where he spoke at luncheon organized by the Canadian Council of the Americas, the Latin American Research Centre and Calgary Economic Development. "It's an example to the U.S. Congress on how to do trade agreements."
Mr. Moreno's appearance was timed to herald the IDB's 2011 annual meeting, which will bring ministers, central bankers and officials from 48 countries to Calgary in March. The Harper government made the bid to host the event as part of its effort to amplify Canada's place in Latin America. The IDB's annual meeting has been held in Canada only twice before.
The Washington-based IDB was created in 1959 to alleviate poverty in Latin American and the Caribbean. Canada, which joined the IDB in 1972, is one of 22 richer countries that own a stake in the bank but do not borrow from it. The IDB approved loans and grants worth $12-billion (U.S.) in 2009.
Mr. Moreno used his speech to praise the Harper government for tossing a lifeline that allowed the IDB to meet demand for loans through the financial crisis. Like the World Bank and other development banks, Mr. Moreno's institution found itself up against its lending limits as the recession caused unexpected demand for credit when private sources dried up. Canada increased its "callable capital" in the IDB by $4-billion, a move that cost the federal government nothing up front because callable capital is a promise of cash rather than an actual infusion.
But that promise allowed the IDB to continue issuing loans without jeopardizing its credit rating or violating its lending limits. It also bought time as the IDB's member countries completed a capital increase, a negotiation that ended earlier this year with a promise to bolster the IDB's capital base to $170-billion from $100-billion.
"Canada has not gotten enough credit for its leadership in this process," Mr. Moreno said, according to a copy of his prepared remarks.
The IDB estimates the Latin American economy will expand by as much as 5 per cent this year even as the U.S. and other big economies struggle. That's a result of growing domestic demand in most countries, providing an opportunity for Canadian service providers willing to expand, Mr. Moreno said.