Brazilian economist will lead regional development bank

Latin American governments on Sunday selected Brazilian economist Ilan Goldfajn to lead the region's largest development bank in the wake of a misconduct probe that led to the firing of the previous president.

Governors from the Inter-American Development Bank's 48 members selected Goldfajn to lead the Washington-based multilateral lender from a slate of five candidates nominated by Argentina, Brazil, Chile, Mexico and Trinidad & Tobago.

It follows the firing in September of Mauricio Claver-Carone, who had been the first American to lead the bank in its 63-year history. He was removed after an ethics probe found he likely carried on an intimate relationship with a subordinate. He denied the allegation.

The Inter-American Development Bank is the biggest multilateral lender to Latin America, disbursing last year a record $23 billion to alleviate poverty made worse by the coronavirus pandemic in the region. The U.S. is the largest shareholder, with 30% of voting rights.

The new president will be tasked with bolstering economies that were hit by the coronavirus pandemic are now suffering from weakening currencies, increasing foreign debt and capital flight spurred by inflation and rising interest rates in the U.S. and Europe.

Last month, the IMF slashed its forecast for growth across the region to 1.7% in 2023 — down from an estimate of 2% made in July.

Gaspard Estrada, director of the Political Observatory of Latin America and the Caribbean at Sciences Po in Paris, said that the return of a Latin American to the helm of the bank should help reduce the polarization that surrounded Claver-Carone's election and make the task of securing additional resources easier.

“It's logical that normality will return,” said Estrada.

Goldfajn previously was president of Brazil's central bank and chief economist at several major Brazilian financial institutions. He took a leave of absence from his current job as the Western Hemisphere director at the International Monetary Fund to compete for the position. He was nominated by Brazil's outgoing President Jair Bolsonaro.