IMF Moves to Stem Financial Crisesgreenspun.com : LUSENET : Unk's Wild Wild West : One Thread
Saturday August 4, 9:01 am Eastern Time
IMF Moves to Stem Financial Crises
International Monetary Fund Announces Billions of Dollars for Argentina, Brazil, Turkey
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON (AP) -- The International Monetary Fund is moving quickly in an effort to keep economic troubles in Argentina, Brazil and Turkey from worsening and triggering a repeat of the 1997-98 Asian financial crisis.
The IMF announced plans to create a $15 billion standby credit line for Brazil and accelerate a $1.2 billion planned loan for Argentina.
In addition, the IMF's executive board announced approval for an additional $1.51 billion loan to Turkey, another country that has been embroiled this year in worsening economic troubles.
The flurry of activity, disclosed late Friday after U.S. financial markets had closed, was viewed as an aggressive effort by the 183-nation lending agency to demonstrate that it was on top of developments and would do what it could to prevent troubles in the three nations from spreading to other developing countries.
In its statements, the IMF praised all three countries for efforts they are making to reform their economies.
The Bush administration, which took office expressing skepticism about the multibillion-dollar IMF bailout packages provided during the Asian crisis, also expressed its support.
Treasury Undersecretary John Taylor, who traveled Thursday to Buenos Aires on an emergency fact-finding mission, said his talks with Argentine President Fernando de la Rua and his economic team had been ``fruitful and detailed.''
``I was happy to hear that the IMF has recommended an accelerated disbursement to Argentina,'' Taylor said in a statement.
Private economists also applauded the IMF's actions. They said the agency had recognized the need to provide reassurance to global financial markets that it was prepared to try to prevent a repeat of the Asian crisis, in which plunging currency values and stock prices in one country quickly spread to other developing nations.
``The moves by the IMF were important to avert what could have been another negative and sizable risk to the global economy,'' said Lynn Reaser, chief economist at Banc of America Capital Management Inc. ``It should help shore up investor confidence.''
The IMF actions were announced after President Bush spoke by telephone Friday with British Prime Minister Tony Blair, traveling in Latin America, and Spanish Prime Minister Jose Maria Aznar.
IMF Managing Director Horst Koehler, who took over the agency last year, said he was recommending an accelerated disbursement of $1.2 billion in loan money for Argentina to be made this month, instead of waiting until September.
Koehler also said he would propose that the first loan of the credit line for Brazil, $4.6 billion, be provided by the executive board in September.
``The Brazilian authorities are strengthening fiscal and monetary policies and implementing their structural reform agenda in the face of a difficult external environment,'' Koehler said in a statement
The accelerated loan for Argentina was being made in an effort to bolster the country's resources as it struggles to avoid defaulting on $128 billion in foreign debt.
There has been growing concern in Washington that a default by Argentina or a forced devaluation of that country's currency would send shockwaves throughout Latin America.
A $1.6 billion austerity program approved by Argentina's Senate failed this week to calm investor anxiety.
Koehler's recommendations for both Argentina and Brazil were expected to win easy approval by the IMF's 24-member executive board.
The board earlier Friday announced approval of another $1.5 billion loan for Turkey, bringing to $10 billion the amount of support the IMF has extended to that country.
The Bush administration has seen its efforts to put in place a more effective early warning system at the IMF overtaken by the spreading problems in Argentina and Brazil.
During the Asian currency crisis, which began in Thailand in 1997, the IMF assembled more than $100 billion in emergency rescue packages for Asian countries and Russia.
However, the support was not enough to keep Russia from defaulting on billions of dollars in foreign debt in August 1998. That sent Wall Street and other stock markets into a nosedive that was arrested only after the Federal Reserve started cutting interest rates to bolster investor confidence.
-- (M@rket.trends), August 04, 2001
IMF Plans Loans for Brazil, Argentina
-- (M@rket.trends), August 04, 2001.
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-- Lars (firstname.lastname@example.org), August 04, 2001.