Journal Issue

In the news: De Rato urges Andean nations to accelerate reforms

International Monetary Fund. External Relations Dept.
Published Date:
February 2005
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Wrapping up the second leg of a four-country Andean visit, IMF Managing Director Rodrigo de Rato on February 17 congratulated Ecuador’s authorities on a strong macroeconomic performance in 2004 and an impressive effort to lower inflation, strengthen the country’s fiscal stance, and reduce public debt. At the same time, he urged the authorities to press ahead with reform efforts to boost prospects for sustained growth and poverty reduction.

In meetings with President Lucio Gutiérrez, President of Congress Omar Quintana, Minister of Economy and Finance Mauricio Yepéz, Central Bank President Angel Polibio Córdova, and other officials, de Rato said that “I am pleased that, through the intensified surveillance of the authorities’ 2005 economic program, we will continue to have a close relationship with Ecuador.” He agreed with the authorities on the importance of adhering to the fiscal responsibility law and taking steps to improve the quality of spending and to create fiscal space for public investment and spending on social priorities.

De Rato also underscored the need for economic diversification, increased competitiveness, and moving forward on social security and civil service reforms to boost growth and raise living standards. In this regard, de Rato said he was very encouraged by steps taken by President Gutierrez to design and implement a poverty reduction strategy and strengthen the country’s social safety net.

Progress in Colombia

A day earlier in Bogotá, de Rato praised “Colombia’s pursuit of sound economic policies” that has allowed it to share fully in the region’s best growth performance in a decade. Meeting with President Alvaro Uribe, Finance Minister Alberto Carrasquilla, Banco de la República General Manager José Darío Uribe, and a wide range of legislative and civic leaders on February 16, de Rato pointed to the clear dividends Colombia has drawn from policies pursued under a precautionary Stand-By Arrangement with the IMF. Growth has steadily increased, while inflation has declined to relatively low levels, the external situation has remained comfortable, and public debt has continued on a downward path.

De Rato welcomed the government’s intention to formulate a successor economic program that is expected to again be supported by a precautionary Stand-By Arrangement with the IMF. In doing this, the government was committing itself to firmly entrenching macro-economic stability, consolidating a sustainable fiscal position, and pursuing key structural reforms to lay the foundation for higher growth, lower unemployment, and reduced poverty.

In particular, de Rato added, the IMF shared Colombia’s belief that “sustained fiscal reforms would improve public savings and create room for expanding public and private investment.” The IMF is committed to working with countries to ensure that infrastructure needs can be met within the context of overall fiscal sustainability.

On to Bolivia and Peru

On the next leg of his Andean visit, de Rato was scheduled to meet with Bolivian authorities in La Paz on February 18. He is expected to focus on the challenge of building a stronger consensus in support of critical measures for Bolivia to secure economic stability and growth. Atop the agenda are likely to be the issues of providing an environment for efficient development of Bolivia’s hydrocarbon resources so as to raise living standards and of bringing down the country’s substantial fiscal deficit and debt.

Finally, in Peru on February 19, de Rato will meet with senior government officials and leaders from a broad range of political parties. Peru had one of the highest growth rates in Latin America in 2004 and is likely to be commended for its economic performance and urged to continue pursuit of fiscal consolidation and growth-enhancing reforms. De Rato is also expected to highlight what can be done to strengthen political consensus for reforms to sustain faster growth and spur poverty reduction.

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