Ilan Goldfajn
President, Inter-American Development Bank
This is where I got the idea that I did not know enough…and I said I need to do more. I need to learn more about it, and this is where I was driven to get to know more than I already had in my studies.
Summary
This week on Leadership Matters, Alan was joined by an experienced economist who has worked in both the public and private sectors, Ilan Goldfajn. Ilan is the President of the Inter-American Development Bank (IDB), an international organization devoted to eradicating extreme poverty. Through his leadership at the IDB, Ilan has championed sustainable growth, climate resilience and social equity throughout Latin America.
Throughout their conversation, Ilan shared his early life, upbringing and influences, his time studying at institutions in Brazil and the United States, his work as the founder of an investment firm and a key decision maker at organizations like the International Monetary Fund (IMF), the Central Bank of Brazil, and the role of international collaboration in driving sustainable and equitable economic development.
Mentions & Resources in this Episode
Guest Bio
Ilan Goldfajn was elected IDB president on November 20, 2022.
Mr. Goldfajn served as director of the Western Hemisphere Department at the International Monetary Fund in 2022, where he helped countries implement IMF-supported programs to address an unprecedented array of challenges. He also contributed to the region’s policy dialogue on climate change with the IMF and oversaw the first Resilience and Sustainability Facility of the institution. Earlier in his career, he worked as an economist at the IMF (1996-1999).
Mr. Goldfajn previously served as governor of the Banco Central do Brasil (2016-2019) and deputy governor (2000-2003). He led the BCB in a period of unprecedented decline in inflation and interest rates in Brazil. He championed the structural “BC+“ agenda and oversaw changes that opened the door to new players in the financial services industry, spurred innovation and digitalization, and started developing the widespread fast-payment system, all of which bolstered efficiency and more inclusion in Brazil’s financial sector.
In 2017, he was elected Central Banker of the Year by The Banker magazine. The year after, Global Finance magazine named him Best Central Banker.
Mr. Goldfajn’s private-sector experience includes key positions at Brazil’s financial institutions: chief economist and partner of Itaú Unibanco, founding partner of Ciano Investimentos, partner and economist at Gávea Investimentos and chairman of Credit Suisse Brazil’s Advisory Board. He has also had several roles as a consultant at top public-sector institutions, including the World Bank, the United Nations and the IMF.
He has an extensive academic career. He taught graduate and undergraduate economics at universities in Brazil and the United States, has worked as an editor of various publications, and has written and published numerous articles and books. Mr. Goldfajn holds a doctorate in economics from the Massachusetts Institute of Technology (MIT), and master’s degree in economics from the Pontificia Universidade Católica and a bachelor’s degree in economics from the Universidade Federal, both in Rio de Janeiro.
Mr. Goldfajn is fluent in English, Portuguese, Spanish and Hebrew. He took office at the IDB on December 19, 2022.
Episode Transcript
Alan Fleischmann
I'm joined today by an internationally acclaimed economist and leader with decades of experience across the public and private sectors. Ilan Goldfajn is the president of the Inter-American Development Bank, the IDB, where he champions sustainable growth, climate resilience, and social equity throughout Latin America. Prior to leading the IDB, Ilan worked at numerous government and international organizations, having held roles as governor of the Central Bank of Brazil, where Ilan was critical in bringing down high inflation and interest rates, and as director of the Western Hemisphere Department at the IMF, the International Monetary Fund, where he advised countries on their post-COVID economic recoveries.
He's also worked with private financial institutions, including as partner and economist at Gávea Investments—or, I guess I’m saying it now in English, you’ll correct me—co-founder and chief economist at Itaú Unibanco, and he's been involved in other things as well. And we’ll have to have you through the Portuguese for me when we get back talking. Ilan, in 2017, he was honored by The Banker Magazine as Central Banker of the Year, and was recognized as Global Finance Magazine's 2018 Best Central Banker.
I'm excited to have him on the show today to discuss his extraordinary journey, his upbringing, his early influences, his career, and the many lessons in leadership he's learned along the way. Ilan, welcome to Leadership Matters. It is such a pleasure to have you on.
Ilan Goldfajn
No, thank you, Alan. It's a real pleasure.
Alan Fleischmann
I’ve gotten very good in my life because I got the Argentine family to do the Spanish part and to fake the Spanish, and I can even do a little Italian, but I learned a long time ago, if I try to do Portuguese, it doesn't come out right. So we'll get into those when we get into like, the real real translations. You'll help me here.
But let's start a little bit about your early life. You were born and raised in Israel before your family moved to Brazil. Tell us a little bit about your early years. What was life like around the house, what your parents did, any brothers or sisters, and anything else about where you grew up and the home?
Ilan Goldfajn
No, thank you. Thank you, Alan. It's a pleasure to speak to you and have this nice conversation. Yes, I was born in Israel, in Haifa. This is in the north of Israel, a very diverse population, very, I'll say, the population is very interactive between the different religions and everything. My parents, Brazilians, they made Aliyah, which means that they immigrated to Israel when they were 18 years old. Spent some time at a kibbutz, which is a socialist way of life. My father basically lasted two years in his kibbutz and said, no more. Then he decided to continue his studies in Haifa, which was the closest city to his kibbutz, and that means this is the reason I was born when he was still studying business, accounting, and economics in this time.
We spent a few first years around there. We moved to another city called Ramat HaSharon, which is closer to Tel Aviv. It was a new city at the moment, where people were living, and they basically built a house with my sister that was born in the kibbutz, and then my brother, Rami, my sister Tami, they're all Jewish names, Rami, Tami, and Ilan.
And soon in his career, he was offered to work outside of Israel as a commercial attaché to the government of Israel in Mexico, actually. So he was like you, he was speaking Portuguese, and they asked him to speak Spanish, the opposite of you. But you know, when you speak Portuguese, you can speak Spanish, but the opposite is much more difficult. So he spent his life, his first years working in Mexico, four years, where we spent a bit of our childhood, and then we went back to Israel. And then after two years, he decided to go back to Mexico for another two years where I did my bar mitzvah, which is the 13 years religious symbolic passage of a Jewish child to become an adult. But then, when I became an adult, after 13 years old, my father decided to go back to Brazil, where he was originally from, family and everybody. So he went back, and then the rest is history, which means that I spent, I arrived in Brazil at 13 years old. Always spoke Portuguese, pretty fluent, because my parents would speak Portuguese at home, because they were both Brazilians.
So that was the beginning, and it was an interesting back and forth, which makes me, I will say, quite adaptive to changes, to different languages, and different personalities and different environments.
Alan Fleischmann
Many, many, many different cultures, too. And your younger siblings were younger, so they obviously even had less of the exposure, I guess, but probably similar influences as well.
Ilan Goldfajn
Yeah. But my sister is older. She was born in the kibbutz before they left the kibbutz.
Alan Fleischmann
Oh, okay.
Ilan Goldfajn
So she's two years, two years and nine months older, and our brother is almost two years younger.
Alan Fleischmann
Are they still in Brazil now?
Ilan Goldfajn
My brother, yes. My sister is a professor at the University of Amherst, Massachusetts.
Alan Fleischmann
Oh, wow. Okay, not too far—closer, at least.
And any highlights from your experiences in high school? Did you have any teachers or anybody that actually kind of influenced you to be more interested in economics or getting involved in more of the private world?
Ilan Goldfajn
No, I actually spent a good part of my high school playing soccer. I was always part of the team. Either I was in Brazil, playing a lot of soccer, and then I played a lot of, even at MIT later, I was not only the captain but also the manager and everything of the soccer team at MIT economics. And then at the IMF, I also played soccer quite a bit, as the IMF was playing the other organizations around Washington. So I will say that my high school was not very academic. I really always liked math and more exact sciences, but this was something that came with me, but was not something that somebody invested in me, or something like that. I really liked it. I was a more sporty guy than academic guy.
Alan Fleischmann
Yeah, that's so amazing. And then what made you decide to go to the Federal University of Rio, right? Was that right? It's called the—
Ilan Goldfajn
Well, because I liked two things, and I didn't know how to combine them. You know, in Brazil, when you apply to undergraduate studies, you actually have to decide your major at the beginning. It's not that you go to a general social science or something like that, and then after two years, you decide two minors. You basically decide, I'm going to study economics or communication or anything at the start. I was quite young when I was—I don’t know why I was so young when I applied to undergrad, but I was 16 years old, and at 16, I applied, and I basically applied for very simple reasons, not very deep. I liked math, and I really liked history, and I couldn't find myself just doing history or just doing more exact science. So I said, well, economics looks like a good compromise where I can do some economic history, and it's also a more rigorous mathematical social science. So that's, that's where I went.
Alan Fleischmann
Did you like it?
Ilan Goldfajn
Yeah, since the beginning, I liked it in the Federal University of Rio de Janeiro. It was more of an economics of a history background, like of a history of economic thought. So they will really read Keynes in its original and Adam Smith and all of these classic economists, but instead of reading what they meant or the new models based on them, you actually had to read the originals and have to interpret what to do, including other types of classic economists, from the classical to the neoclassical to the heterodox, the more orthodox. So, I got a good sense of very different lines of views. And that also helps me today because I can understand when somebody comes to me with a completely different approach to economics that I can say, well, I can relate to that. I may not agree, but I can relate to where he or she's coming from.
Alan Fleischmann
The intersections of so much as economics, and you just decided you wanted to get your master’s. Did you decide at the time you wanted to get your PhD too, or did you decide–
Ilan Goldfajn
No, it was just a master’s at the Catholic University of Rio de Janeiro. Basically, at that time, they were very involved in policy because the government was there, the economics was a mess, there was hyperinflation, no growth, a lot of instability. So those economists were very much called by the government to try to help. They were very involved as part of the ministries; they were very influential because this was the main issue of Brazil at the time. Those were the '80s, beginning of the '90s, and you had to give something. So I was looking at them and said, well, that’s what I want to do. I want to do policy. I want to use the knowledge I’m learning to do that. And I really wanted to—these guys were, at that time, closer to policy than the Federal University. Those are the guys who were really doing stuff. So I decided that I didn’t know enough about policy-oriented economics. So I said, I need to do a master’s. I need to go to PUC. I need to go to the Catholic University and really learn about policy.
Alan Fleischmann
That’s awesome. And when you were doing all this, did you have any professors that inspired you, any mentors along the way?
Ilan Goldfajn
I think at the master’s level, I started having more of the mentors because they had to advise on my thesis, tell me what to do for my thesis, what are the issues to write about, how to write them. So one of them was a professor at the Catholic, he’s not with us anymore unfortunately, he’s Dionisio Dias Carneiro, a Brazilian from Catholic, and he was very much interested in students. He was someone who was really curious about evidence, about knowledge, and really liked to talk to students much younger than him and advise them. He was interested in the results, and he really liked evidence. He would discuss about facts and evidence; he would look at it, and that really taught me to be rigorous, to push for being more rigorous and looking at the evidence. My thesis was more on monetary policy at the time; this is where I started getting interested in central banking and monetary policy because I thought it was more applied, more policy-oriented. Interest rate—how is it formed? When do you need low or high interest rates? How can you transmit the policy of the central bank to the rest of the economy? What is the influence? What’s the transmission mechanism? So I wrote my thesis a little bit about that, on liquidity, some financial qualities you have from assets, which liquidity. So that was one of my first, first professors that was quite important.
Alan Fleischmann
And was he the professor who also encouraged you to go to MIT? For you to go from Brazil to MIT, that was a big deal, I imagine.
Ilan Goldfajn
Yes, but that was also important because at Catholic, everybody had—not everybody, but most of the professors had their PhD outside of Brazil. So contrary to the Federal University, where most of the professors were actually, they had their studies and PhDs in the country, in local universities, at the Catholic, which was the university most connected to the U.S. universities, you had some Harvard PhDs, you had some people that had come from MIT, some went to Stanford, some of them went to Princeton. So they had quite a few connections. And more importantly, they understood where the profession was going in the Anglo-Saxon world of England and the U.S. Of course, there were some who still went to France, some went to Spain, but most—95% or more, 99%—would go to either U.S. universities for PhDs, or London School of Economics, Cambridge, Oxford. So those were more the Anglo-Saxon parts.
They were very, very connected. They had made studies, and this is where I got the idea that I did not know enough about economics, that I had to learn a lot more than I had, even though I had already years of undergraduate, and then I had also some years of a master’s. And I said, well, I don’t think I know enough. I need to do more. I need to learn more about it, and this is where I was driven to get to know more than I already had in my studies. So I applied to universities, I was lucky to be accepted by quite a few of them, and at the time there were two professors at MIT who were very policy-oriented and very linked to Latin American economies, and they would come and give their advice. One of them was Rudy Dornbusch. He talked a lot about exchange rate volatility and about what is the best exchange rate policy, and he would advise all these governments. So I basically admired how he was so connected to the real world, having knowledge come from science, from the academics.
And the second professor, who was the director of the department, was Stanley Fischer, who went on to be the deputy managing director at the IMF—and that’s another part of my career. But Stanley Fischer, so they both called me at the time and said, well, you were accepted. I know you were accepted in other places, but here’s what we want to do. And we basically got the first option of a lot of our students. So I went to MIT. I remember that Denise, my wife, was a very young student. I had never thought about studying in the U.S. I applied, and suddenly, out of nowhere, I got a call from Dornbusch and from Fischer.
Alan Fleischmann
Amazing two people to get a call from, by the way. Yeah, when you consider it, that says a lot about you, Ilan, that you are getting calls from them recruiting you.
Ilan Goldfajn
Yeah. She was like, oh, so she calls to somebody, goes, well, this is Professor Stanley Fischer. I want to talk to Mr. Ilan Goldfajn, and she says—and she basically answered, you’re kidding me. I mean, of course, please stop playing with us. No, no, no, it’s me. I really want to talk to him, because he was accepted here. And that was the story. I went to MIT at that point.
Alan Fleischmann
How long were you at MIT?
Ilan Goldfajn
I was at MIT for four years in Boston. I spent five years because—
Alan Fleischmann
You were at Brandeis, right? And when you went to MIT, did you study with Dornbusch? Did you study with Fischer?
Ilan Goldfajn
Yes, of course, yeah. They were my advisors. I actually did something because Fischer, after two years, left for the World Bank—
Alan Fleischmann
Yeah.
Ilan Goldfajn
And he was, it was the World Bank or the IMF, because he was the chief economist at the World Bank, and then he was a deputy managing director. I know that in the middle of my studies, he left, and I just kept bugging him. Here’s my thesis. Here are my chapters. Advise me. I know you’re far away. You need to advise me, so I continued in contact with both of them. Rudy Dornbusch was at MIT all the time, so that was not a problem.
Alan Fleischmann
Both are obviously extraordinarily well known for so many reasons and public life as well.
Ilan Goldfajn
And if you think about it, those were very policy-oriented economists coming from the university, having a very important academic background, very respected academically, but spent part of their career in policy, and that's what made me go to the policy part. I was studying, but I wanted to understand things better. My undergraduate was not enough. The master’s was not enough. I needed my PhD to understand things better, but to do them for what? To help people in terms of economic policy and get into—
Alan Fleischmann
It goes back to what you said earlier about what you liked: playing a role in making history, it sounds like. You enjoy math, you enjoy the finance side, so the intersection of economics actually proved true. Your interest and your intuition seemed to be very much in sync.
Ilan Goldfajn
Yes, kind of a boring choice. I always chose economics in undergraduate, economics in master’s, and then in PhD, always economics. I moved a lot from heterodox to orthodox, from one university to another. But always economics—that was the most stable part of my life, because the rest I kept moving from countries.
Alan Fleischmann
From different worlds.
And then Brandeis—did you enjoy it there? You tried Brandeis a bit, and then you went back to the Catholic University of Rio, if I recall correctly, too. Did you enjoy being a professor, teaching?
Ilan Goldfajn
I mean, when you finish a PhD, you basically enter the job market, which is primarily an academic job market. That’s the normal path that most students take. I had to stay another year in Boston at least, and I wanted to because my wife, Denise, was completing her PhD in psychoanalysis, in professional psychology, and she was also expecting our first child, Gabriel. So it wasn’t time to move. She needed to finish her PhD. She was expecting. So that year, I taught at Brandeis, which is a great university—it’s a Jewish university. I felt very good there. I taught PhD economics and in the international business school. I went back to visit; it’s a wonderful place to start my career.
Alan Fleischmann
It’s a wonderful university, still very much so. Then, after Brandeis, did you finish your PhD while you were teaching? Or did you finish the PhD when you were in Brazil? Did you finish it before you went back? Or I know the IMF came soon after.
Ilan Goldfajn
No, no, I spent eight years in the U.S.
Alan Fleischmann
So you went from Boston to Washington?
Ilan Goldfajn
Exactly. So Boston, then Washington. I was at Brandeis and we stayed in the same house.
Alan Fleischmann
That was probably the easiest commute you ever had.
Ilan Goldfajn
Yes, exactly. So, then I went to Washington.
Alan Fleischmann
So then it was amazing, you weren’t out of your PhD program for very long when you went to Washington. So, what did you do at the IMF at that point?
Ilan Goldfajn
Well, that goes back to Stanley Fischer. He was the deputy managing director. And as you know, the IMF is structured in a way that you had Michel Camdessus, who was the French managing director, but the agreement is that the second in command is a U.S. citizen. Actually he was born in Rhodesia but became a U.S. citizen, Stanley Fischer. He was essentially the intellectual core of the IMF at the time, setting policies, guiding things. He created a research department, a unit that, for the first time, specialized in emerging market issues. And I thought, well, that’s what I want to do. I want to do policy, I want to work on emerging market issues. They were creating this unit, Stanley Fischer was there—my professor and advisor, he’s advising while he’s running the world..
Alan Fleischmann:
He didn’t get a day off from you?
Ilan Goldfajn
No, I didn’t give him any day off. Then suddenly he was creating this unit, and I thought, this is where I want to go.
Alan Fleischmann
That’s amazing. So, were you the first in that new area dealing with emerging markets in the Southern Hemisphere?
Ilan Goldfajn
Yes, there were about five or six of us. We researched financial markets in emerging economies, how they work, what is different from advanced economies is anything different, we did a lot of research on that. During my time at the IMF, I published more than I did at any other time, because I wanted to write, to be part of the public debate—or, really, the academic debate. One of my thesis papers was accepted in a respected academic journal, and we published several of them. That was my three years at the IMF.
But, before I left in ’97, an important crisis occurred, though not in Latin America. Latin America crisis had passed with the Mexico crisis in ’94–’95, the “Tequila Crisis.” But we had the Asian crisis, a very different crisis, where you’ve got one affecting Thailand, Korea, and Indonesia. When that hit, they asked, who here is versed on emerging markets? And they looked to our research unit. So, this Latin American guy who came from MIT and they say okay, you’re coming to the Asia department now. I was sent to Indonesia in the middle of the crisis as part of an IMF mission, and that was my first very important mission experience, working through a crisis case, which was President Suharto losing his grip, a country with a lot of capital flight, and challenges after years of growth. It was a formative experience where I learned a lot about how to deal with crisis management. I was very young so I was part of the team, and I saw how decisions were made.
Alan Fleischmann
That’s amazing. How many years had you been in Washington at that point before you went back to Brazil to become the deputy governor?
Ilan Goldfajn
That’s also an interesting story. I always kept in contact with my professors at the Catholic University, and some of them went to work at the Central Bank. Two of them—Chico Lopes and Gustavo Franco, who was the president of the Central Bank—called me in 1999 after President Cardoso’s first term. The exchange rate was undervalued, and had to be floated. And then it was called a Brazilian crisis. The president of the Central Bank knew we had to float the currency, so he called me and said, Ilan I know you are at th eIMF. I need new blood here, I need you to come as one of my deputies.
For me, it was an incredible opportunity. I was only three years out of school and wanted to work in policy. My thesis was on monetary policy, and this was a great opportunity. I told them I’d talk to my wife and get back to them at the beginning of the next week. I talked and we said we had a great life in the US, but we could move being a deputy at the Central Bank at only 32 or 33 was huge. It was a major opportunity for me. But it was a problem. When I got back to him, he got sacked. The currency floated and actually was overshoot, and they end up changing the central Bank Governor. They changed the Central Bank governor, and the job wasn’t there anymore. We’d already decided to return to Brazil, so we said, oh my god. So that decision was maintained.
I ended up returning to the Catholic University as a professor and consultant, working on projects with the UN, the World Bank, and as a consultant for the IMF while teaching at the university in Brazil. So, I moved back from an academic role at Brandeis to policy at the IMF, then was offered a job at the Central Bank, only to return to academia in Brazil, to one year and a half later, in mid-2000, Arminio Fraga, the new Central Bank governor from the IMF, reached out and asked if I’d take up a new role. Can you come to the Central Bank? And I said of course. I was 34 years so., and I became deputy governor under Fraga in the Central Bank administration. And that was another two years. It was a wonderful experience. Brazil was not in the best shape.
Ilan Goldfajn
Yes, Brazil was stable in some ways, with fiscal policy resolved, things were okay. But then we got the 2001 shocks, Argentina, very big devaluation with our neighbor. Then there was an energy crisis. And then you had changing governments from 2002–2003, and that was when Lula was elected.
Alan Fleischmann
And then did you stay longer with Lula?
Ilan Goldfajn
Yes. We basically engineered Central Bank independence. We offered both governments a transition, I warned for several months and then Lula administration, passing the baton to the new directors, while the central bank governors had already changed leadership from Fraga to Morelus, and he took over for Fraga. And we had an important job, we were academic and the policy, and the importance of the central bank at the time. They wanted to put their own directors, I recommended a few for them. Some of them from the Catholic University too, which was a great school of creating policy makers. So some of them that are friends of mine until today, they ended up replacing me and the other directors. And I think they did a great job under the administration.
Alan Fleischman
And you were, you were deputy governor for how long?
Ilan Goldfajn
Three years.
Alan Fleischmann
Three years. Well, it sounds like amazing time. Also, everyone thought when President Lula came to power, that he was going to be very, he wasn't going to be pro-strong economy, right? There was either Kardos, the Contrast was extraordinary. but he ended up being a lot more focused on it than people thought, right? Am I wrong?
Ilan Goldfajn
Yes, you're absolutely right. And I think at some point we realized that they will not explode the economy,
Alan Fleischmann
Yeah, all that fear.
Ilan Goldfajn
Yeah, all that fear, and. so at some point, I thought, in a very, in a very reserved way to my colleagues, they say, you know, guys, they're not crazy. And you know, lately, one of the advisors, my communication advisor at the central bank, when I gather them and I say, these guys are not crazy, he wrote the book. Now he just published under the transition to Lula, because we got another transition to Lula now, right? So he used this opportunity, a new transition, to write about the previous transition. And he cited me, and the name of the book is called, They Are Not Crazy. And he got it from a quote he got from my days there, when we realized that they are going to be more responsible than the markets feared.
Alan Fleischmann
I love that. And then, when did you decide to leave? Why did you decide to leave?
Ilan Goldfajn
I think we decided to leave first, because it was only three years, and I was, I had this always, this, this far under me to do different things. I was an academic already. I was in policy for three years. The government is changing. Some of my mentors will say, look at government. It's a revolving door. this revolving door in the sense of, there's only one opportunity for you to leave, because if you don't leave, they will keep you there forever, because you're going to have experience, the door will pass once, and then it will be round like that.
So end of the story I said, well, there's a new government. There's a new governor. They want to put their directors. I'm going to help them to do the transition. I'm going to help them recruit the best people available, and then I will go to the private sector. And that's what I did. I went to work for the private sector for the next 13 years of my life. So I spent 13 years in the private sector. So nobody can accuse me of only working in the public sector and academics, because I spent 13 years, and you mentioned it correctly in Portuguese, is Gávea, Ciano, Itaú. I think you mentioned it correctly in your accent–
Alan Fleischmann
Yeah. Oh good, There you go. And when you and you went there with Gávea, did you create it? Or is that something –
Ilan Goldfajn
Remember I mentioned that the governor, and at the beginning with Fernandez Ricardo, was Armenia Fraga. He was a very sophisticated financial guy, also from the Catholic University. And he invited me and said, I dot know whether you come to talk to be my chief economist there at Gávea. You'll be responsible for the macro part and for the risk part. Be one of my partners. I was a small partner, I was not one of the major main partners. But I was a respected partner, responsible for all the macroeconomic evaluation of other countries, including Brazil, but also take the risk part also into my realm, which means that I will take into account whether the risk was well measured, whether we are doing good work in risk control, if our investments are – this was a financial institution which will do investments. So it's called Gávea Investments, and basically they invest in Brazil for one of their funds, and they invested overseas with their international funds. And that was a novelty in Brazil at the time, because most of the Brazilians will not invest in the channels, in their institutional channels outside of Brazil through the domestic financial system.
Alan Fleischmann
That's amazing. And then, did you enjoy being in the private sector?
Ilan Goldfajn
I enjoyed being in the private sector. I really liked the fact that things that the private sector tends to be very agile, much more agile than in the public sector. Where you can have a decision in the private sector where you say, you sit down in a meeting with the partners, and you make a decision, and the next day, you start implementing. So there are processes, but the processes are more agile. They make it happen. there’s less bureaucracy.
And in governments, because of the politics, of course, and because of the fact that there are a lot of different interests of the society that are represented in government, then you need to be agreed. You need to build bridges. You need to build processes. You need to be very concerned and very mindful of the transparency, of the accountability so things get to be quite slow and not always as fast as in the private sector.
The private sector has learned that it needs to be very transparent too. So that is also something that has brought me together the importance of transparency, of accountability, of ethical and moral work, and all of these values that are very important. Independent if you are in academic or you are in public sector, in the private sector; there are some values that go across the three sectors.
Alan Fleischmann
Great. Do you miss being in the public sector?
Ilan Goldfajn
I miss the importance and the scale of the public policy. When you are in public policy, you change the lives of millions of people if you do it correctly, that you never forget. So people that are in the private sector their whole life and spend a few years in the public sector, they never forget, and they say the best job was when they were treasured secretary, or when they were governors, or they were undersecretaries, because this is where you shape policies, and you are able to really do changes in a scale that is much harder to do in the private sector.
Of course, in the private sector you can do it. You can have an invention that is so important to change the life of everybody, and we have antibiotics, or the iPhone, or the internet, or whatever. Although the internet was a public thing also in the beginning. But in the public sector, when you decided that you're going to be reforming the financial system, or being more inclusive, or including millions of people in the financial system, or raising interests or lowering interest rates or recovering from a pandemic, or whatever, you really influence the employment, the income, the poverty, the distribution of income of so many people. So that purpose never left me after the central bank.
Alan Fleischmann
Love that. Was that a hard decision for you to move on?
Ilan Goldfajn
Well, I spent, I mean, when you're in the private sector, you think about your family, you think about what you're doing to do a good job. When you think about your family, you mean that we need to have some savings for retirement. In the public sector, I never had any salary that could allow me to save even one cent. It was always very low salaries. So in the 13 years that I worked at the private sector, it allowed me to have some savings that allowed me to go back to the public sector later, in a way that I felt more comfortable, both financially, both secure, both in terms of family, but also being able to have experience in how does the private sector think? What are the drivers? What do they need? How can they invest more? How can they help development, for example.
Alan Fleischmann
I love that. And then you could actually speak multiple languages there, literally, because of that as well, I imagine, because you could actually talk about the private sector's perspectives as well as the public sector needs as well.
Ilan Goldfajn
Exactly. So I can talk to the public sector about the private sector needs, and I can talk about the private sector, that they need to have a more realistic and more moralistic view about the public sector. One thing that I learned is to respect people in every place. So when you are in private sector, people say, well, those public sector guys, they don't work. They are bureaucrats. They are not really like us,
Alan Fleischmann
Hardly working. They're not working. They don't care.
Ilan Goldfajn
They don't care. And I would say, no, you're completely wrong. And really, public sector, they will talk, be careful about the private sector guys, they only care about profits. They want to take advantage of you, you're in the public sector. That's the only thing they care. And I say, not really, not always. Yeah, that's, that's not a good characterization.
And then they, both public sector and private sector, will say, well, you know, these academics, they live in the tower, in their academic tower, they do the abstract thing. They don't know nothing over the real world. There's nothing they can do. And I was an academic, no, they're good, very good work. That's very helpful for the policy, and it's very helpful for what we do.
So I learned something that is very important today, is to respect everybody and to be able to build bridges between different sectors and different people. And that goes back to my early days when we were moving from Mexico to Israel to Brazil to other places, to be able to adapt to talking English to Spanish to Portuguese, to be able to be in a world today that Is very fragmented, but to be an agent of cohesion, an agent of trying to build bridges, and that's, I think it's something that we all need today in a multilateral world, but not only in the multilateral but in general. And that's where you start to learn from the different experiences.
Alan Fleischmann
Well, it's amazing because you have the experience with, with Gávea. You have the experience also with Ciano Investments, and then you were Chief Accountant partner, as I mentioned earlier, with Itaú Unibanco. I mean, you had all that experience. And then you returned to the Central Bank of Brazil after that. So it's amazing. You speak multiple languages, and you speak multiple languages, and you speak the language of public-private life in multiple ways.
Ilan Goldfajn
And it's when you are 13 years in private sector, and you have this fire on you, on public sector work, on doing policy. When they offer you a job as a governor, you take it. That's right, you take it. There's no money in the world that will not make me take this job to be a governor of the central bank, to do policy. It was wonderful. They were also three years, and it was very nice and very interesting, but –
Alan Fleischmann
You're credited with lowering inflation and interest rates, which obviously is very apropos to today's times, at a critical time for the economy there. But obviously today people will credit you as when you were governor as that being one of your great achievements around that period.
Ilan Goldfajn
I mean, I was lucky to have to come with very high inflation to very low inflation, actually, to inflation on target. That allowed us to reduce interest to record low. Never experienced in Brazil, and also, was able to modernize the financial system in terms of the fintechs and the technology and the automatic payments and all of that. So I will say that there was part of it which was hard work, part of it, which was experience, because I had also experienced before the central bank as a deputy governor. Also, I knew about the private sector, so I knew what I wanted to do, Also, because in academics, I knew what academics were telling at a major issue. So you start and you hit the ground running.
So I did three years then moved on. However, I want to tell you part of it is luck depends on the shocks. You can do the best you want, but if you get a very bad shock, it's very difficult to get results, because people do not condition your result on the difficulty you face. They just take it at face value. Say, well, this is what you gave us, lower inflation, higher inflation, higher interest, and low interest. You don't want to say, relative to what it could be, this is what you've done. This discount or relative does not exist. So part of it, I was lucky that the shocks I was confronted were enough for me to deal, because there are some shots that are very difficult to deal. And –
Alan Fleischmann
And it sounds like an amazing team that you worked with as well. but it is cited as an extraordinary time, and others try to emulate it as well. And then in 2022, you came back to Washington –
Ilan Goldfajn
Yes. So I had done everything I wanted in Brazil,
Alan Fleischmann
And you were there during COVID. You were doing the whole COVID period pretty much,
Ilan Goldfajn
Yeah. So I had the COVID. I left this little bank. I was at the Board of–
Alan Fleischmann
Swiss Bank.
Ilan Goldfajn
Yes, so I was basically managing one of the most important international institutions in Brazil at the time. But at the time I was saying, Well, I spent my years as the governor. This thing of purpose is still there. I want to do something which has a larger scale that can give me more of a reach toward the people. I want to do something that I can go back to this purpose. So I saw on somebody called, well, there is this position open, has the director of Western Hemisphere at the IMF. And I had left the IMF years ago at the beginning of my career, and I remembered IMF. I said, well, I know the IMF. I know how it works. I can work at IMF. I know now I will be back at the top as one of the directors. But –
Alan Fleischmann
And you also continue with your focus on the Southern Hemisphere, and on, this case, the Western Hemisphere,
Ilan Goldfajn
Western Hemisphere, about the Western Hemisphere into Brazil and all of that. So I, so I came and started working there.
Alan Fleischmann
And that must have been a very interesting time coming in post-COVID as well and that's where you were, all the way to IDB, where you are the president of the Inter-American Development Bank. You're doing an extraordinary job. Not easy, but you have all these countries, both in the hemisphere and around the world who are, I guess your board of governors as well.
Ilan Goldfajn
I was elected there. I was probably one of the few that were nominated by government and then had to be accepted by the government that was elected because they are the IDB election of the IDB, happened exactly between one government and the other. The election was in the middle, so I had, and, you know, today we have more right parties and left parties, and they sometimes do not talk to each other, so I had to be approved by both the right and the left. And it happened. It's probably one of the, if you ask me if there are any miracle in my life, that's probably the only miracle. But I got the support from the right and the left in a difficult climate.
Alan Fleischmann
You became the consensus candidate for folks who actually wouldn't sit at the same table together even to discuss it, which is a pretty amazing feat in every way. And what's also amazing, when I think about your time since you take took over, I think of climate change, issues that you've taken very seriously, social inequality issues, which goes back to your lifelong commitment to how to use the tools of the private sector and public sector to actually, you know, create pathways for equality. and reform. And you've reformed the institution even more so since you took over as well.
I imagine that has been not so easy, highly complex. And I'm just curious, you know, when I think of you, I think of you as a great leader, because you're extraordinarily accomplished, but you come at everything with a great deal of humility. And I'm wondering, are there lessons of leadership at the Inter-American Development Bank that you've applied that you would recommend to others who are dealing with complex constituencies and maybe even multinational challenges?
I was just saying how you probably have some great lessons of leadership that you would share with folks, because you are dealing with a very complex stakeholders across multiple, multiple countries, both throughout the hemisphere, certainly as your key constituencies, but you've got other partners like the US and elsewhere in Asia and everywhere else that become part of the IDB platform. And I'm just curious what advice would you give, I was just saying, how I think of you as a confident leader, but one who deals with things with a great, great deal of humility. There's an EQ that comes with your IQ. And what kind of advice would you give to those who are dealing with complex environments?
Ilan Goldfajn
Well, I think we, first, of course, hard work, and be focused and if you really have this purpose, that you want to help people or affect people in a good way in a large scale, you need to be always focused on that. So when I came to the IDB, I said, well, we need to care about impact, but we do have actually impact. And then the topics you mentioned are there, the climate, social issues, the growth and productivity. Now we are embarking in this impact plus reforms at the IDB, IDB Impact Plus, which is basically the private sector has a very important engine of growth through the IDB Invest and IDB Lab. So we pushing that because this is what the Latin American Caribbean needs. They need the private sector to push growth and productivity, but we do need the 65 years of experience of the public sector IDB. So this combination of a very important public sector IDB with this new life of IDB Invest in the private sector, the combination is very powerful.
And if you look at what we have said about my life, public and private, that's exactly what we need to do here, to both talk the same language as you say. I never talk, I never say, same language. But now that you have taught me, those are languages, and now they are talking the same language. They talk the same language at IDB. Maybe we will make the region talk at the same language, and that is very important. We have a lot of reforms, we have a lot of changes and bringing the private sector life to the IDB. But I'm also taking the purpose of the public sector to the private sector IDB for the IDB Invest.
Alan Fleischmann
Because it is true when you think of the IDB and you're emphasizing it, I think of private sector ingenuity and partnership with public sector ingenuity, and the idea that maybe together, if we come up with the same agenda and sit across the table from each other, we can actually get these done. But it's all about that, all about the impact and all that as well. Yeah, and I mean, and articulating similarly, right, making sure people have the same mission, the same goal, same principles, too. And you do a lot of convenings right with private sector as well, as well.
Ilan Goldfajn
Well, we have the BID for the Americas, which is our new program that we created in our mandate to bring companies to the region. So we go across the US and we pitch for the U.S. Companies and say, BID is in Spanish the IDB. So BID for the Americas, come to the Americas. We have 12,000 contracts per year. We have 4.4 billion just infrastructure projects. We have all these services and all of that. We can be your bridge to Latin America and the Caribbean, and then we tell the countries that we are their bridge to the rest of the world, which are–
Alan Fleischmann
What’s so powerful about that is you're trusted, yes. So, for a private sector, for a CEO, or for a top team who don't know how to navigate in the Americas, partnering with the IDB, and, you know, I've talked about these things, working with the IDB allows you then to know that you can navigate with the right people in the right way and the right sequencing as well.
Ilan Goldfajn
And that's the reason we do the new business model of IDB Invest, which is Originate to Share. What you just spoke about is exactly the model. What does it mean to Originate to Share? We originate the businesses. We deal with the government, with the private sector, with the economies of the region. But we don't want to keep the businesses all in our balance sheet. We want to share it with the private sector. We don't want to distribute everything. We want to keep skin in the game, but we want to share it.
Alan Fleischmann
Yeah, that's a great thing. And then also make sure that there, there's a commonality, I guess, across countries, for the same purpose, the same vision, the same impact. I'm curious, if you were to describe what the IDB does today, and what you would want people to know five years from now, is there a difference, or is it the same? Is it more the same?
Ilan Goldfajn
No, I think it's different, and I think we are moving in the right direction. I want them to think about the IDB not only as the major financial development bank, which IDB is, but also as the one that has the larger impact on the region, that helps shape the future of the region, that will help Latin America and the Caribbean open to the world. Today, the region is relatively closed. We need to open it to the world. We need to put Latin America as part of the solution of the global challenge being climate or food insecurity or biodiversity, everything can come from Latin America. And, in a world where supply chains are being reformed because of the fragmented world, I believe that Latin America could be a very important part of the supply chains.
Alan Fleischmann
I love that. And obviously, then you play the role of the great catalyst and the great convener by doing that. And then again, it's all about trust as well. Well. I think that's exciting. So anyone who's listening, who wants to look at Latin America, who has businesses that they want to bring to the region, they should look to IDB Invest, right?
Ilan Goldfajn
So if you are a company, you talk to our BID for the Americas people, but also IDB Invest. If you are a startup, talk to our BID Lab. If you want to invest in governments with governments, go to the public IDB, but we are all together because we have our one window to receive everybody.
Alan Fleischmann
So the startups, we go to BID Lab.
Ilan
If you're a startup.
Alan
If you're a startup. And IDB Invest if you're a bigger company?
Ilan
Exactly.
Alan
Okay. And then if you want to be public company, then you go to the public side?
Ilan Goldfajn
No, if you want to deal with governments.
Alan Fleischmann
Deal with governments, got it. Got it.
Well, this has been very exciting. I knew we'd need more time, by the way, Ilan, this is, this is very exciting. Your journey has been amazing. But it is true when I think of you, I think of someone who speaks multiple languages, literally and figuratively, because you are living the intersection of public, private and civil society actually, that you bring in you also bring in culture. There's a lot about IDB that brings in the culture for the region as well, which is very important too.
You've been listening to Leadership Matters. I'm your host, Alan Fleischman, and we've just spent the last hour with Ilan Goldfajn, the president of the Inter-American Development Bank, the IDB, which is truly the great bank for the region, for the Americas. It's also, as you're hearing, a great opportunity for those in private sector to actually partner so that you can work with the public sector and with other private industry companies throughout the region.
It's such a pleasure having you today. Your life has been extraordinary. I really wish we had more time, so we may have to have you back on and talk about these different initiatives Because, if you're interested, we'd love you to do it, because it is amazing what you're doing. It's amazing.
Ilan Goldfajn
Very good. Thank you, Alan, and I really love your idea of different languages. And thank you for spending the time here talking in one language, English, but in several languages still.
Alan Fleischmann
Yeah, we covered it, but we covered a bunch of languages. You definitely have them and honestly, it is exciting what you're building at the Inter-American Development Bank, and really drawing from your extraordinary experiences, and obviously building a great team along with you. So congratulations on that as well.