By PAUL LEWIS
WASHINGTON -- Increasingly angry at what they consider the
lenient treatment that Russia received in its $4.5 billion bailout by
the International Monetary Fund, Latin American officials and economists
warned Monday that the programs being offered to protect their own
countries were too paltry.
Mexico's central bank governor and former finance
minister, said that faced with the mounting financial pressures on Latin
America and the rest of the developing world, the $90 billion the United
States wants to give the monetary fund in extra lending money would be
adequate "if things go well, but not enough for a bad scenario."
By some calculations,
he said, the developing world might need $200
billion in new loans by 1999.
came at a seminar here during this year's annual meeting
of the World Bank and the IMF. When Russia defaulted in August on its
huge foreign debts and the United States and other major powers allowed
it to happen, he said, South America's ability to withstand the global
financial crisis was seriously undermined.
"Until then we
were doing fine," he said. "But everything changed after
angered Ortiz and other officials at the seminar was the
strong political and financial backing that the United States and other
major powers gave Russia right up to the moment it defaulted.
"Russia was treated
like a member of the Group of Seven," Ortiz said,
referring to the world's most powerful nations, at whose behest the
monetary fund lent Russia $17 billion. "It was unthinkable it could fail," he
He added that
while Mexico could survive "a period of market instability,
it must be temporary or the situation will be out of control."
Ortiz said Russia's
default made investors around the world wary of all
emerging market countries, including those in Latin America.
Eduardo Aninat of Chile said: "It's the packaging effect.
Analysts don't differentiate between regions, countries or sectors
is being buffeted by external shocks this time, it is not the
source of the shocks," said E. Gerald Corrigan of Goldman Sachs and a
former president of the New York Federal Reserve, alluding to the
Mexican peso's collapse in 1995 and the financial turmoil that it
and officials speaking at the seminar, entitled "Latin America:
a steady ship in troubled waters?" promised that their countries would
continue the free-market-oriented economic reforms they have introduced
in recent years, selling off state-owned companies and encouraging
But they also
insisted that the United States, other important nations and
institutions like the World Bank and the IMF must be ready to help.
finance minister, Pedro Malan, who was greeted with cheers
when he announced the apparent re-election of President Fernando
Henrique Cardoso, pledged the government to impose painful new
austerity measures to reduce the budget deficit. "We interpret the election
as a mandate to do what we said we would do," he added.
He recalled that
early in September the finance ministers and central bank
governors of nine Latin American countries had met with World Bank and
IMF officials in Washington and vowed "to deepen our reform efforts."
In Brazil, consequently,
there would be no changes in the government's
exchange rate policy and no resort to controls on outflows of money even
though the country has seen about $30 billion of its reserves drain away
But he said nothing
about the big financial aid package he is rumored to
be negotiating with Washington, the World Bank and the IMF and which
some officials now say could total as much as $60 billion.
He did evoke
the possibility of a serious breakdown in Latin America's
largest economy -- which is bigger than those of South Korea, Malaysia
and Thailand combined -- by saying the world now has "an historic
opportunity to show how by acting together we could have a successful
experience at crisis prevention."
So far, Latin
American economies have weathered the international crisis
relatively well. The IMF currently expects them to grow at a rate of 2.8
percent this year and 2.7 percent next year, down only 0.6 percent and
1.6 percent respectively on what it predicted last May.
confidence in the region's currencies is vulnerable to the
balance-of-payments deficits that all major Latin American countries are
running. They currently range from 3.6 percent and 4.4 percent of total
output respectively for Brazil and Argentina, to 7 percent in the case of
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