San Salvador, June 30, 2008 - In El Salvador, 31 percent of small and medium-sized business have difficulty obtaining the necessary financing due in part to banks imposing the same financial disclosure requirements they demand from large companies. These requirements are daunting for new and small businesses, and the financial system must help small business compete. With a global economic downturn and commodity price shocks threatening economic growth for Latin American and Caribbean countries, greater transparency and accounting in both private and public sectors is needed to create jobs and fuel further growth. At the second Conference on Accounting and Accountability for Regional Economic Growth, known by the Spanish acronym CReCER, in San Salvador June 11-13, more than 400 attendees were urged to continue efforts to bring modern accounting standards to the region to improve access to credit, expand foreign investment and avoid major financial crises that have recently roiled the global financial system. World Bank Managing Director Juan Jose Daboub said during his latest visit to the region that greater transparency and accounting would improve access to credit and boost regional job creation, especially for small to medium enterprises, which he described as “the cornerstone, the engine of the economy.” “Transparency is not a slogan,” said Daboub, adding that corruption saps the global economy of an estimated $1 trillion annually, hurting business performance and reducing wages. Transparency is key to rooting out corruption, a persistent obstacle to growth. A World Bank business research found 40 percent of companies in the Americas—more than 75 percent in some countries—pay bribes to obtain state contracts or public services. For the public sector, transparency and efficiency help governments provide citizens with the best services given available resources. This creates “targeted” programs that are more efficient and verifiable by government and the general public—a process known as “managing for results.” During the conference, Chile’s government was praised for accountability reforms that collect and analyze data on public programs. The government of Chile uses the data to develop its budget in line with the priorities of the moment and also to know where to focus the attention of the administration, devoting more time to underperforming programs and less time supervising those already successful. “The Chilean citizens appreciate this new level of transparency in the allocation of their taxes,” said Daboub. Finally, the participants called for better education, training and human capital development in general, with the improvement of overall educational quality a major regional challenge. Inter-American Development Bank Vice President for Countries Otaviano Canuto reiterated that “sustainable development in the region depends on significantly greater awareness of the importance of sound accounting practices and audits as well as greater transparency by the state in the use of public resources.” He urged attendees to work together to strengthen national accounting systems and financial reporting to boost investment and sustain growth, as well as increase small business’ access to credit and increase public sector transparency to better manage public resources. International Federation of Accountants President Fermin del Valle said that Latin American and Caribbean countries have reached “an ideal time” to advance auditing and accounting reforms. After a year and a half of meetings with auditors and regulators around the region “there has been a significant cultural change,” del Valle said, with broad acceptance of the need to move towards international standards. To adopt these reforms, ideas and resources are needed to effectively implement the reforms. Top
Contact: Karla Ma. Villanueva
kvillanueva@worldbank.org | 
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