Americas economic leaders shore up crisis response
03 Jul 2009 22:33:33 GMT Source: Reuters
(Recasts, adds quotes) By Rodrigo Martinez and Terry Wade VINA DEL MAR, Chile, July 3 (Reuters) - Finance ministers from the Americas and multilateral lenders sought to shore up responses to the global economic crisis on Friday and pave the way for a vigorous recovery. The event in Chile was the second gathering of finance ministers from the Americas after one last year in Mexico. The International Monetary Fund said it is becoming more optimistic about the world economy in 2010 despite rising unemployment. Economists in the region say Latin America could also return to growth sooner than other regions because it is rich in commodities exports. Chile, the world's No. 1 copper producer, has won praise for building up savings from high metals prices during boom times and using the cash for an economic stimulus package. Others have made similar moves, and Peru, Colombia, Mexico and Brazil have won high marks for having sound economic policies. "If the first challenge is recovering from the crisis, it's just as important to stick with our strategic bets on future development because the post-crisis world will be extremely competitive and we have to be prepared," Chilean President Michelle Bachelet said. Still, smaller countries in the hemisphere, or ones that went into the crisis with little savings and high debt loads, are having a tougher time. Mexico and Colombia, both of which adhere to mainstream policies, have asked the IMF for credit lines worth billions of dollars to backstop their economies if they worsen. "There is no solid reason to do revisions of Mexico's ratings," Finance Minister Agustin Carstens said of speculation it could be downgraded by credit-rating agencies as its economy shrinks an estimated 5.5 percent this year. Officials from the World Bank, IMF and the Inter-American Development Bank were also at the meeting amid calls for quick roll-outs of infrastructure programs to create jobs and boost future growth. Canadian Finance Minister James Flaherty said his country's financial system is healthy and has withstood the crisis better than most, thanks in part to a strong regulatory framework. He appeared to encourage other countries to make sure their regulations were appropriate. A wave of financial deregulation in the United States over the past two decades has been blamed for contributing to the global financial crisis. MULTILATERALS NEED CASH Nicolas Eyzaguirre, the IMF's director for the Western Hemisphere, said Latin America's economy could shrink more than 2 percent this year. But he said the global economy has started to return to normal after being weaker than expected in the first half of this year, and that the United States may be in positive territory next year. "The (global) recovery has started to materialize with some more vigor than we thought, in such a way as to change the 2009 outlook downwards a bit, but improve it some for 2010." World Bank President Robert Zoellick said that economic risks still remain and that the poverty-fighting institution may need to raise additional capital if countries keep asking for loans to combat the global recession. The IADB is also working to raise funds. IADB President Luis Alberto Moreno said he wants to "loan as much as possible to countries that need so much now." Finance ministers agreed that raising more funds for multilaterals would be crucial to help pull out of the crisis. They also committed to avoiding protectionist trade policies. For Honduras, the World Bank and IADB have said they have paused some loans to pressure the interim government to give power back to ousted President Manuel Manuel Zelaya after a military coup on Sunday that has been widely condemned. "The legitimate government of Honduras is that of President Manuel Zelaya," his Finance Minister Rebeca Santos said in Chile. (Writing by Terry Wade; Editing by James Dalgleish)
Supporters of Honduras' ousted President Manuel Zelaya shout as they pass in front of the Congress building during a march in Tegucigalpa July 2, 2009. Honduras' ousted finance minister Rebeca Santos ...
