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In the news: Promoting prosperity in Latin America and the Caribbean

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
June 2005
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A May 29-30 roundtable seminar in Santiago, Chile—sponsored by the IMF and the UN Economic Commission for Latin America and the Caribbean (ECLAC)—highlighted a growing convergence of views on what needs to be done to sustain and strengthen the current growth momentum, create jobs, and attack poverty and inequalities in the region.

The seminar, which had before it a recent IMF staff study, “Stabilization and Reform in Latin America,” drew a distinguished group of participants, mainly from civil society organizations across the region. Speakers, including President Ricardo Lagos of Chile, Inter-American Development Bank President Enrique Iglesias, ECLAC Executive Secretary José Luis Machinea, and IMF Managing Director Rodrigo de Rato, pointed to the need for strong country ownership of policies that combined macroeconomic sustainability with better-targeted and enhanced social and equity programs, while recognizing that the IMF and other international financial institutions should continue to play important partnership roles.

In his remarks, de Rato emphasized that current favorable economic conditions provide an excellent opportunity to move decisively to tackle vulnerabilities and structural challenges that have long compromised the region’s performance. He urged country authorities to remain focused on fiscal consolidation and debt sustainability, and to entrench the hard-won gains of low inflation. And he underscored the importance of renewed efforts to increase trade openness, improve flexibility in labor and product markets, strengthen the soundness of financial systems, and adopt wide-ranging governance reforms.

Seminar participants agreed that continued opening offers the only practical response to globalization and that responsible fiscal policy and flexible exchange rate management are essential anchors for macroeconomic stability. Increased private investment, faster productivity growth, and higher-quality public spending will also be needed to spur higher growth. Growth alone, however, is insufficient for the sharp reductions in poverty that are needed: in addition, reforms must tackle deeply engrained social issues, improve human capital, and strengthen social safety nets.

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