Press Release No. 06/270

Press Release: IMF First Deputy Managing Director John Lipsky's Statement at the Conclusion of his Visit to Chile

December 12, 2006

Mr. John Lipsky, First Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement in Santiago, after participating in a working session on the IMF's Medium-Term Strategy with high-ranking officials from North and South America, and after meeting with the Chilean authorities:

"I would like to thank Governor Corbo and his colleagues at the Central Bank of Chile for hosting and helping us organize this important seminar on some key aspects of the future role of the Fund. My deep gratitude also goes to all participants of the region for contributing to a thoughtful exchange of views. As you know, the Fund is working to update its mandate as the steward of international financial cooperation and stability and to strengthen its capacity to assist member countries in the management of their economies. In this context, we are actively seeking our member countries' views and listening to their concerns, and it is in this spirit that we organized this seminar.

"The improvement in economic performance in Latin America over the past several years has been impressive, testifying to the region's capacity to thrive in the globalized economy of the 21^st century. As we in the Fund set new directions in our surveillance of the global economy and member countries, I was pleased to hear that this region is strongly supportive of the priorities that are emerging from our dialogue: a candid and focused macroeconomic analysis at the country level, with closer attention to financial and capital market issues, and an increasingly cross-country/regional approach. While the external and fiscal position of the region has grown to be strong, history teaches us that this is precisely the right time to consider policies and institutions to promote economic stability and countries' resilience to shocks. In that respect, I was greatly encouraged by our discussion on crisis prevention and response, as Latin American leaders strongly supported our efforts to strengthen the Fund's capacity to help countries shield themselves from sudden changes in the external environment. We plan to deliberately work on all these issues in order to help build a more effective Fund.

"As part of my visit to Santiago, I also had the opportunity to discuss Chile's macroeconomic prospects with Central Bank Governor Corbo and Finance Minister Velasco. The authorities' skillful management of the economy continues to be commendable. Although growth has slightly slowed in the first part of this year, my sense is that this is largely due to transitory factors and I am confident that it will rebound in 2007. The government's economic program is indeed well-placed to effectively manage the current boom in copper prices, further boost Chile's growth potential, and address social needs. I am impressed by the strong consensus that exists in Chile on its exemplary macroeconomic framework, anchored on the fiscal rule and the successful inflation targeting regime; by the focus on education reform, innovation, and the financial system to make sure that Chile continues to compete successfully in the global economy; and by the government's strong commitment to address social needs."