{
  "title": "Transcript of a Press Briefing by the Western Hemisphere Department",
  "publication": "IMF News, October 8, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2016/10/08/am16-tr100716-transcript-of-a-press-briefing-western-hemisphere-department-whd",
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  "summary": "Latin America and the Caribbean: contraction in 2016 of .6 percent (average for the region).",
  "publishDate": "2016-10-08",
  "sections": [
    {
      "heading": "Regional economic outlook and key projections",
      "content": "- Latin America and the Caribbean: contraction in 2016 of .6 percent (average for the region).\n- Regional recovery expected in 2017 at 1.6 percent.\n- Assessment: recent disappointing results indicate lower potential growth on the midterm and reinforce the need for structural reforms to increase investment, productivity, and competitiveness.\n- External environment:\n  - Stabilization and slight recovery in some commodity prices; more significant recovery in oil.\n  - Loosening of financial conditions for emerging markets since summer 2016.\n  - Weaker-than-expected recovery in the United States noted as a potential negative factor."
    },
    {
      "heading": "Country-specific outlooks — Brazil and Argentina",
      "content": "- Brazil:\n  - Forecasted growth in 2017 of .5 percent, implying a change of almost four percentage points from minus 3.3 percent in 2016.\n  - Forecast assumptions for 2017 include approval of a proposed spending cap by Congress and some kind of pension reform to make the spending cap viable.\n  - If those reforms pass, expected further momentum in confidence, foreign investment, and growth.\n- Argentina:\n  - Forecasted GDP change from a drop of 1.8 percent in 2016 to growth of 2.7 percent in 2017 (change in growth of 3.5 percent).\n  - Inflation outlook published with two numbers:\n    - 23 percent (average for the year as a whole).\n    - 20.5 percent (presented alongside the 23 percent in reporting).\n    - Around 20 percent referenced as the year-end number; IMF clarifies Central Bank targets of 12 to 17 percent for the year and the December-to-December measure is typically used by central banks.\n  - Observations: recent devaluation earlier in the year followed by relatively stable exchange rate; strong wage and price increases have led to a real appreciation in dollar terms and a higher cost of living in dollar terms."
    },
    {
      "heading": "Venezuela and Colombia",
      "content": "- Venezuela:\n  - Described as experiencing the largest negative growth and a continued contraction for a second/third consecutive year with the highest inflation in the world.\n  - Humanitarian concerns emphasized; outlook for 2017 unclear due to lack of Article IV consultation and unclear policy changes.\n- Colombia:\n  - Fiscal reform aimed at replacing revenues lost from the fall in oil prices (about 3/3.5 points of GDP) to maintain fiscal sustainability and comply with the fiscal rule, thereby avoiding deeper spending cuts."
    },
    {
      "heading": "Mexico",
      "content": "- Structural reforms (energy, telecommunications, electricity, natural gas pipelines) are proceeding but take many years to fully materialize in investment and output.\n- Observed outcomes:\n  - Fall in electricity prices and increased investment in telecommunications.\n  - Energy auctions are taking place; pace may be slower due to lower world oil prices.\n- Peso performance:\n  - Peso has not rallied like other emerging market currencies since August 2016; linked to prospects of increased protectionism and U.S. election-related factors.\n- Fiscal policy:\n  - Public debt referenced at 56 percent of the gross public debt (question cited).\n  - IMF recommendation: consider establishing an independent Fiscal Council to enhance transparency and public debate; government had indicated differing views on this proposal.\n  - Government target: reduce public sector borrowing requirement to 2.5 percent of GDP by 2018; current deficit around 3 percent of GDP."
    },
    {
      "heading": "Chile",
      "content": "- Public debt projected by the Ministry of Finance to reach 25.6 percent of GDP in 2017 (highest since 1993).\n- IMF view: not concerned given Chile’s fiscal framework, low debt level relative to region, commitment to gradually lower the primary deficit and stabilize the debt-to-GDP ratio; recommend gradual consolidation using available fiscal space."
    },
    {
      "heading": "Caribbean and Central America — growth drivers and policy challenges",
      "content": "- Caribbean:\n  - Slight rebound in economies oriented toward international tourism; difficulties persist for commodity-tied economies.\n  - Recommendations to diversify and adapt tourism offerings; invest in infrastructure, logistics, renewable energy, and non-traditional services (e.g., medical education, retirement communities).\n  - Fiscal and financial sector challenges remain; some countries undertaking banking sector restructuring.\n  - Case highlight: Jamaica’s IMF program implemented over almost four years seen as strengthening financial stability, gradual growth recovery, and attracting investor interest.\n- Central America:\n  - Recommendation to open fiscal space by eliminating exemptions/waivers that distort resource allocation; reallocate to lower rates and a more level playing field to foster productivity-driven investment and employment.\n  - Advice: when times are good, build fiscal buffers; different countries face different fiscal pressures (e.g., Costa Rica, Nicaragua).\n  - On proposed U.S. legislation to restrict Nicaragua’s access to IDB/World Bank/IMF funding: IMF is monitoring closely and considers implications speculative until outcome is known."
    },
    {
      "heading": "Paraguay",
      "content": "- IMF adjusted growth projections rank Paraguay among the more dynamic economies (third-most dynamic in the region referenced).\n- Strengths: consolidated macroeconomic conditions, access to international financial markets, strengthened banking system, and infrastructure investment supporting countercyclical forces.\n- Recommended priorities: continued infrastructure and energy investment (critical for a land-locked economy) and a social inclusion agenda emphasizing education to foster inclusive growth."
    },
    {
      "heading": "Fiscal and monetary policy guidance",
      "content": "- Fiscal policy:\n  - Many economies exhibit a countercyclical fiscal position with primary deficits higher than midterm expectations.\n  - Guidance: use fiscal space where available for gradual adjustment, protect social expenditure, and return to sustainable long-term fiscal positions; countries with higher debt and costs should pursue faster fiscal consolidation.\n- Monetary policy and exchange rate flexibility:\n  - Flexible exchange rates have helped mitigate external shocks and act as countercyclical buffers.\n  - In many countries, a contractive monetary stance is no longer required as inflation moves back toward targets (examples cited: Chile and Colombia).\n  - Central banks generally reference December-to-December inflation measures as the annual metric."
    },
    {
      "heading": "Investment, confidence, and channels for recovery",
      "content": "- Investment trends:\n  - Argentina had one of the lowest investment-to-GDP ratios last year; significant capital stock rebuilding needed.\n  - Market interest in investing in Argentina noted, but conversion into real capital formation remains uncertain; agricultural sector among early sectors attracting investment.\n- Role of policy reforms:\n  - Structural reforms are long-term processes; persistence and full implementation are essential to realize benefits.\n  - For Brazil and Argentina, policy changes are expected to generate positive impulses beginning late 2016 and into 2017, contributing to regional improvement in growth and confidence.\n\nTranscript of a Press Briefing by the Western Hemisphere Department, October 7, 2016, IMF Communications Department\n\n---\n\n\n References\n\n- Argentina and the IMF\n- Brazil and the IMF\n- Chile and the IMF\n- Mexico and the IMF\n- Nicaragua and the IMF\n- Paraguay and the IMF\n- República Bolivariana de Venezuela and the IMF\n- United States and the IMF\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2016/10/08/am16-tr100716-transcript-of-a-press-briefing-western-hemisphere-department-whd"
    }
  ],
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    "Published: October 8, 2016",
    "Latin America and the Caribbean: contraction in 2016 of .6 percent (average for the region).",
    "Regional recovery expected in 2017 at 1.6 percent.",
    "Assessment: recent disappointing results indicate lower potential growth on the midterm and reinforce the need for structural reforms to increase investment, productivity, and competitiveness.",
    "External environment:",
    "Brazil:",
    "Argentina:",
    "Venezuela:",
    "Colombia:",
    "Structural reforms (energy, telecommunications, electricity, natural gas pipelines) are proceeding but take many years to fully materialize in investment and output.",
    "Observed outcomes:",
    "Peso performance:",
    "Fiscal policy:",
    "Public debt projected by the Ministry of Finance to reach 25.6 percent of GDP in 2017 (highest since 1993).",
    "IMF view: not concerned given Chile’s fiscal framework, low debt level relative to region, commitment to gradually lower the primary deficit and stabilize the debt-to-GDP ratio; recommend gradual consolidation using available fiscal space.",
    "Caribbean:",
    "Central America:",
    "IMF adjusted growth projections rank Paraguay among the more dynamic economies (third-most dynamic in the region referenced).",
    "Strengths: consolidated macroeconomic conditions, access to international financial markets, strengthened banking system, and infrastructure investment supporting countercyclical forces.",
    "Recommended priorities: continued infrastructure and energy investment (critical for a land-locked economy) and a social inclusion agenda emphasizing education to foster inclusive growth.",
    "Fiscal policy:",
    "Monetary policy and exchange rate flexibility:",
    "Investment trends:",
    "Role of policy reforms:",
    "[Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)",
    "[Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)",
    "[Chile and the IMF](http://www.imf.org/external/country/CHL/index.htm)",
    "[Mexico and the IMF](http://www.imf.org/external/country/MEX/index.htm)",
    "[Nicaragua and the IMF](http://www.imf.org/external/country/NIC/index.htm)",
    "[Paraguay and the IMF](http://www.imf.org/external/country/PRY/index.htm)",
    "[República Bolivariana de Venezuela and the IMF](http://www.imf.org/external/country/VEN/index.htm)",
    "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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