Saturday July 4, 05:45 PM
Latin America poised for quick exit from crisis: IDB
VINA DEL MAR, Chile (CHILE.SN - news) (AFP) - Latin America and the Caribbean are well placed to emerge from the storm buffeting much of the global economy, multilateral lenders said here Friday while meeting with regional ministers.
The finance ministers gathered at Vina del Mar in Chile agreed to seek "a more active role from multilateral lending institutions" for the crisis but also for after the crisis, said Chilean Minister Andres Velasco.
Velasco cited a World Bank report that estimated a financing shortfall of 350 to 635 billion dollars per year for emerging countries, of which Latin America accounted for 115 to 180 billion.
"The international situation continues to be our main concern and the focus of our efforts. However, we have seen that financial markets are stabilizing," said Velasco.
The Inter-American Development Bank (IDB) meanwhile said it would increase its capital base by 6 billion dollars to help Latin America and the Caribbean tackle the global financial crisis.
The funds came from Canada's offer to increase to 4 billion dollars its contribution to the regional lender, the bank said in a statement.
Two more billion dollars would come from a change in an internal norm at the bank that had limited the amount of the loans depending on contributing countries.
Another priority identified by the ministers meeting in Chile was better integrating the continent, its infrastructure and its transportation, Velasco said.
Latin American merchandise exported to the United States, he added, is 47 percent more expense than transportation costs over the same distance for goods sent from Europe to the United States.
"There is no doubt that the big surprise for everyone is that Latin America and the Caribbean will be one of the regions that can most quickly exit the crisis," said IDB president Luis Alberto Moreno.
"It depends how the international recovery goes but, still, all the projections point to Latin America beginning to show better results."
But the outlook is not universally bright.
The proximity of some countries to the US epicenter of the crisis is likely to delay their recovery, most notably Mexico -- one of Latin America's chief economic engines.
While many economists had hoped Latin America's domestic markets had grown sufficiently independent to avoid contagion from a US-led slowdown, an International Monetary Fund (IMF) official said slow growth in the developed world would still hurt the region's growth outlook this year.
"For Latin America, we have had to lower (growth forecasts), because other destination markets, like Europe and Japan, and capital flows have not normalized at the pace that we had hoped," said Nicolas Eyzaguirre, who heads the IMF's Western Hemisphere operations.
The Washington-based lender predicted the economies of Latin America would contract, on average, by over two percent this year.
The IMF has forecast that growth in 2010 will rebound into positive territory, growing 1.6 percent.
But the World Bank warned the region also faces major challenges ahead, with 181 million people living in poverty and 73 million in extreme poverty.
Moreno, meanwhile, said there had been "significant progress" to achieve the first increase in the bank's capital since 1994.
The bank, he said, had obtained "a clear mandate from its governors," who met Thursday in Santiago, to complete by December studies on raising capital for Latin America and the Caribbean to tackle challenges such as climate change and poverty.
The governors will meet again in October in Madrid, Moreno said.
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