MercoPress. South Atlantic News Agency

Chile asks G8 liquidity support for development banks

Minister Foxley has fears about some countries in the region

Chile called for a quick response from the international community in face of the global financial crisis and emphasized that country members from the G-8 should increase contributions to the Inter American Development Bank (BID) and to the Andean Promotion Corporation (CAF) thus helping with more liquidity for the region.

"We hope that BID and CAF are in a position to award credits faster and of larger volume to help combat the negative social impact of the financial crisis", said Chile's Foreign Affairs minister Alejandro Foxley during the Mercosur Council meeting in Brasilia which has also invited associate members. Chile's Finance minister Andres Velasco said that the region and specifically Mercosur and associate members, needs to address two common issues: one to ensure liquidity, particularly for those countries which for some reason or other did not accumulate sufficient liquidity previously, and secondly "no back stepping to trade integration both regional and global". "The crisis should help us to understand how critical it is consolidate the counter cycle role of fiscal policy, accumulating resources in times of bonanza which should help us soften the impact of external shocks in difficult times, as those we are undergoing", added minister Velasco. In effect Velasco pointed out that those countries in the continent which took advantage of the economic and fiscal bonanza "to reduce public debt and accumulate reserves are precisely those which can address this period of unprecedented international financial turbulence". Velasco finally emphasized that two major challenges for the region refer to ensuring "financial stability, as important as ever" and price stability, "which is the foundation for future social and economic development". G8 refers to the group of seven highly industrialized countries plus Russia.