FROM THE OFFICE OF PUBLIC AFFAIRS

Let me express the warm congratulations of the United States as you celebrate forty years promoting social and economic development in our hemisphere.

When Brazilian President Juscelino Kubitschek helped to found this institution in 1959 we knew that a central role of the world's first regional development bank would be helping countries and regions to build the capital they needed for development and growth. That remains true today, only now we know that there are at least three kinds of capital that are vital for lasting and inclusive growth.

First, countries need basic financial capital and a stable financial system through which to allocate that capital. When financial stability is in question - as it has been in many countries in the region at various times in recent years - the IDB has played a key role in helping countries respond to these financial emergencies and in this it has served the region well.

With the storm clouds now more distant and confidence returning, all of us need to remember the importance of building a stronger and more stable global and regional financial infrastructure for the future. As it matures and, more importantly, as the private capital market for emerging markets matures - especially, perhaps, in Latin America - the IDB will need to continue to think about its distinctive role in these efforts. It needs to consider carefully how it can best help countries prevent and respond to crises going forward, and how its comparative advantage will be exploited to maximum effect.

Second, we have learned and re-learned the importance of human capital for development, which surely is accentuated as regional and global economic integration proceeds. In a world where capital, businesses, information and ideas are more and more free to move, a country's most distinctive resource will be its people. And the quality of the investments that it makes in its people will be an increasingly important determinant of a nation's long term economic success.

The IDB for some time has been increasing its focus on human development and poverty reduction. But we can none of us have the kind of hopes we would like to have for this Continent in the early decades of a new century as long as roughly one-third of Latin America's people live in poverty, one-quarter do not have access to safe water, and one-fifth do not have access to sanitation. I am glad to note that the historic agreement to make available sufficient resources for the Fund for Special Operations is a mark of all of our commitment to continuing to strengthen the IDB's capacity to help the countries of this region reduce poverty and broaden economic opportunities in the years to come.

Third, we have come to realize the importance of what has come to be called social capital: the institutions, networks and understandings that go to make the kind of healthy civil society that is crucial for growth. In many ways it means, not just government by the people but government for the people.

That kind of social capital is hard to define precisely and even harder to create. But here at the IDB, we are learning some of the best places to start developing this kind of capital - such as increased transparency, more determined efforts to combat corruption and new mechanisms to devolve power and pave the way for deeper popular participation. To be sure, a very important part of this agenda will equally be increasing the transparency and accountability of the IDB itself, along with other international financial institutions.

I have just visited Bolivia, where the IDB and others are joining together within the framework of the Highly Indebted Poor Countries initiative, which the membership of the IDB recently endorsed to respond to all three problems.

• This initiative reflects the financial imperative that debts that will never be repaid should be relieved.
• It reflects the human imperative that the highest return use for the benefits of debt relief will be investing in human capital - in measurable improvements in key social indicators such as infant mortality, primary enrollments and rates of immunization.
• And finally, it reflects the social imperative that if those investments in people are to work as effectively as possible, they must also provide for greater participation by the people who will be most affected.

For all these reasons, the United States is doing and will continue to do its part to support the HIPC initiative. And have no doubt that we will continue to work with our Congress and the donor community to ensure that the initiative is fully funded.

In these ways and many more, the IDB has made a great contribution to the Americas in its forty years. But as impressive as its accomplishments have been, I know that President Iglesias would agree with me that its best days lie in the future. I look forward to good economic news for the region and new accomplishments for the region when we meet again for the IDB's 41^st Annual Meeting, to be held in New Orleans. Thank you.