September 11, 1998
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Michel Camdessus, Managing Director of the International Monetary Fund(IMF), said:
"Building on the conclusions of the regional surveillance meeting of economic policy makers in the Western Hemisphere, held in Washington on September 3–4, 1998, and after the discussion today of the World Economic Outlook by the Executive Board of the IMF, I wish to reaffirm the strong support of the international community for the economic reforms being pursued by the major countries of the region, and in particular for their recent policy responses to the ongoing turmoil in financial markets.
"As noted in the communiqué of the regional surveillance meeting, Latin American economies have made substantial progress in macroeconomic performance and structural reform in recent years. This has been rewarded by sustained growth of output and employment, low inflation, and large capital inflows, including direct investments, in most countries of the region.
"Nevertheless, Latin America has been hit hard by the crises in other emerging markets, and in particular market volatility and contagion phenomena. The capital outflows and massive risk premia that have affected, in different degrees, the major countries of the region, do not appear to take sufficient account of either the progress achieved in these economies or their future prospects. However, their policy makers have promptly reacted with important and courageous steps to defend their economies. In this context, it is essential for the efficient operation of the international financial system that private sector investors recognize the important differences among emerging market economies, price their risks appropriately, and avoid overreactions.
"The IMF already has financial arrangements with several countries in Latin America, and according to its mandate, it stands ready to strengthen its financial support and broaden it to other countries, if necessary, to back strong economic programs."
