The New York Times
September 4, 1998
Latin America Tells I.M.F. Economies Are Sound


                WASHINGTON -- Fearful of being swept up in the financial turmoil
                 that has devastated Asia and Russia, officials from nine Latin
                 American nations said Thursday that their economies were
          basically sound and should not be penalized indiscriminately by panicky

          Arriving for the start of a two-day meeting with the International Monetary
          Fund, the officials said that they were not seeking any international financial
          help, and that they were taking the difficult steps needed to weather a
          storm that is threatening to batter much of the world.

          "Latin America is doing its homework," the Finance Minister of Mexico,
          José Ángel Gurria, said. "Markets are certainly overreacting and not
          discriminating at all. Everyone is thrown in the same basket."

          The Clinton Administration praised the progress of many Latin American
          countries. Treasury Secretary Robert E. Rubin, arriving for the meeting,
          said that what transpires in the region was profoundly important to the
          United States and that many Latin governments had "accomplished a great

          Investors paid little heed to those messages. Financial markets across Latin
          America fell sharply Thursday, one day after Colombia devalued its
          currency. Moody's Investors Service, the credit-rating agency, downgraded
          its rating of Brazil's foreign-currency debt, setting off an 8.6 percent decline
          in the main stock-market index there.

          The worries about Latin America are growing as Rubin prepared to meet
          on Friday in San Francisco with Finance Minister Kiichi Miyazawa of
          Japan. Rubin is expected to keep the pressure on Japan to strengthen its
          banking system and do more to pull its economy out of the doldrums and
          help the rest of Asia.

          To the degree that the global financial unrest spreads through Latin
          America, it will only increase the risks to the American economy and to
          investors on Wall Street, where there is wide concern that corporate
          earnings will suffer as growth slows or evaporates in Brazil, Mexico,
          Argentina and other big markets.

          Analysts said the combination of Latin America's checkered economic
          history and the current turmoil in global markets all but assured that the
          region was in for a bumpy ride at a time when investors are looking for the
          safest places to put their money.

          "This is a region with high external debt numbers and a history of default in
          a world that's currently experiencing a flight to quality," Phil Suttle, an
          international economist at J.P. Morgan in New York, said. "In that
          situation it's a tough world for Latin America."

          Officials from Argentina, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay
          and Venezuela attended the meeting, along with Rubin and Finance
          Minister Paul Martin of Canada.

          Some analysts said the fund's unstated agenda might have been to warn the
          Latin nations not to expect much help if they ran into trouble, because the
          I.M.F. has been warning for months that it is running short of money to
          finance further bailouts.

          But I.M.F. officials said they would make clear to the Latin nations that
          money would be there to support countries that took the necessary difficult
          steps to whip their economies and financial systems into shape.