MercoPress. South Atlantic News Agency

Good prospects for 2004.

Latinamerica must insist with “more popular and less populist reforms” to fully recover economic expansion according to the International Monetary Fund, IMF.

Raghuram Rajan, head of the IMF Research Department said that after three years of slow growth, "prospects are good for next year with clear signs of recovery", based on a better performance of the world economy.

However Mr. Rajan also warned that Latinamerica is in a crossroad, with the political and financial climate in the region "becoming less hopeful and more of a challenge".

Regarding the evolution of the area's main economies, Brazil, Mexico and Argentina, Mr. Rajan said Mexicans must insist with reforms; Brazil's "prospects are good after a difficult year" and similarly for Argentina that last September managed to reschedule 21,6 billion US dollars of multilateral debt until 2006. However the IMF official warned that "we're all looking to see what happens and if Argentina eventually manages an agreement with private creditors".

All multilateral organizations such as the IMF, World Bank, Interamerican Development Bank, United Nations Committee for Latinamerica coincide in a moderate optimism for the region in 2004 when expansion is expected to be in the range of 2,5 to 4%, well above this year's 1 to 1,5%.

Economists argued that a stronger world economy plus greater trade and the return of investments coupled with low interest rates should benefit Latinamerica. However better economic prospects are conditioned to the political scenario with worrisome examples of social tension in Venezuela and Bolivia.

Mr. Rajan insisted that the main challenges for the region are to continue in the growth path, taking into account the increasing international competition and therefore the "need for reforms", among which a more dynamic banking system, fighting corruption, improving wealth distribution and helping the poor.

However Mr. Rajan was quick to point out that "poverty is of more concern to the World Bank, our job is rather to recommend financial stability", therefore discarding suggestions that the IMF would begin to focus poverty.