Sustained and consistent reforms are critical to restoring confidence in Latin America Restoring confidence in Latin America

• Pages: 121-122

Page 121

Speaking at the Thirty-Third Washington Conference of the Council of the Americas on April 29, IMF Managing Director Horst Köhler expressed optimism about Latin America's growth prospects. Despite difficult economic times, he said, the people have indicated no desire to return to past authoritarian regimes, and several countries have recently reaffirmed their commitment to a marketbased system. A summary of Köhler's address, delivered at the U.S. Department of State, follows.

Latin America is beginning to recover from a difficult year, Köhler said. In 2002, the region experienced its worst downturn in 20 years, although there were significant differences between countries. Growth slowed in many countries, particularly Argentina and Venezuela, but picked up in Mexico and Peru. The adverse global environment affected many Latin American countries, especially those that relied on financing from international capital markets.

Countries with stronger policies, such as Chile and Mexico, weathered the crisis better.

Agenda for success

The first quarter of 2003 brought additional signs of improvement, Köhler said,Page 122 including export growth in several countries and improved market perceptions.

In Brazil, the new government's macroeconomic policies are beginning to bear fruit, and he welcomed Brazil's successful return to international capital markets for the first time in over a year. He also welcomed Uruguay's recent debt exchange offer, which will help achieve a more sustainable medium-term debt profile for the country. On Argentina, Köhler noted that the IMF stands ready to work with the new leadership on a comprehensive reform program, which will be needed to build on the current stabilization gains and establish a firm basis for sustained strong growth, commensurate with the country's considerable potential. It is these developments, Köhler said, that give him grounds for optimism.

In addition, he noted that new leaders in the region were formulating agendas for increasing longterm sustainable growth while improving social equity. He pointed to three elements that he considered particularly important:

* increasing the economy's resilience to crisis by achieving low inflation, which will require, first and foremost, placing public financing on a solid footing;

* strengthening the institutions that underpin a market economy and implementing structural reforms to raise...