MercoPress. South Atlantic News Agency

IMF: Latam must ensure liquidity and price stability

Latin America's governments will have to watch carefully their financial systems liquidity and try to ensure gains in eliminating inflation, said on Friday Anoop Singh, the International Monetary Fund Director for the region.

"We are looking at several priorities" for Latin America in the coming months said Singh, first "preserve the correct and efficient functioning of financial systems" avoiding lack of liquidity risks and secondly "preserve the ground gained with effort in the field of inflation". "Many countries have built considerable cushions of international reserves which could be used in the event of exceptional and temporary shocks" said Singh during a press conference in the IMF main office in Washington which will be holding its annual mid year assembly together with the World Bank over the weekend. In a context in which "the fiscal situation of Latinamerican nations probably will be under stress", it will be necessary for governments to have a "public expenditure strategy far more precise to ensure basic needs (such as social expenditure) can be satisfied and at the same time contain additional fiscal demands". But Singh said that the region's countries should not have trouble financing their 2009 budgets despite the current credit crunch and global financial crisis. "I do not see that this may create problems for governments in the short run. For most governments the short-run needs for financing are solved". The situation is different for the region's private sector, Singh said, while noting that Latam's firms do not depend on foreign capital as much as those in other regions. However Singh reiterated IMF head Dominique Strauss-Kahn offer: "we are ready to extend our assistance, including financial assistance, as far as it is necessary". According to the IMF World Economic Outlook, Latin America is set to grow by 3.2% in 2009. This is less than what was expected just a few months ago, "but it is a lot better than prospects for the world's leading economies". Singh underlined that the governments in the region - with which he claimed to be in daily contact - are taking adequate steps to keep the crisis under control and are all committed to fighting the current problems. Although the IMF is expecting a rise in inflation to reach double-digit figures in many countries, Singh said he is calm because all governments are aware of the fact that the rise in the price level should be fought. "If there is anything I am impressed with it is how the region is absolutely determined to erase the history of high inflation and periodic crises," Singh said. "There are no differences across the region, be it Chile, Venezuela, Brazil or others. There is a clear intention to lower inflation. Some manage better and others less so, but nobody likes it."