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Gold/Mining/Energy : Gold Price Monitor

GDXJ 114.20

-0.4%

Dec 18 4:00 PM EST

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To: IngotWeTrust who wrote (87356)	6/25/2002 3:52:09 PM
From: long-gone	Read Replies (1) of 116815

Fair Use - Educational repost: IMF OK's $1.5 Billion Loan for Uruguay Tue Jun 25, 2:18 PM ET By Mark Egan WASHINGTON (Reuters) - The International Monetary Fund ( news - web sites) on Tuesday approved $1.5 billion in additional lending to Uruguay to help it weather a recession exacerbated by an economic meltdown in neighboring Argentina. The new loan is in addition to a two-year credit approved in late March and increases Uruguay's total loan to about $2.28 billion. The IMF said $508 million of cash is available immediately, with a further $650 million available through the end of the year pending further reviews. Uruguay's economy contracted 10 percent in the first quarter of 2002, hammered by a run on banks, a dive in consumer spending and sharp ripple effects from Argentina's prolonged economic crisis. Last week Uruguay allowed its currency to float freely against the U.S. dollar -- something Montevideo said was prompted by Argentina and Brazil's exchange rates "heaping major uncertainty" on its own currency. One top IMF official last week described Uruguay as a "classic contagion case" suffering a larger economic impact from the crisis in Argentina and market jitters in Brazil. Uruguay is seen by many investors as the front line in the wider battle of Latin American nations to avoid spillover from growing troubles in regional powerhouses Brazil and Argentina. The current round of economic woes in Latin America was sparked largely by Argentina's economic meltdown. Starting with the IMF cutting off access to a $22 billion loan last December, Argentina's situation deteriorated with a botched devaluation and a default on its $140 billion debt load. As well as the new IMF loan, Uruguay has recently also won $500 million in aid from the Inter-American Bank, and the World Bank ( news - web sites) has pledged to lend it $400 million over two years. Uruguay's problems have been compounded by a string of downgrades from credit-rating agencies, which expressed concern that Argentina's financial mess had sent Uruguay's bank deposits and reserves tumbling. Highlighting the severity of the problems in Uruguay, last Friday its central bank took control of the country's No. 3 private bank, Banco Montevideo, hit by a systemwide run on deposits amid contagion from the Argentine crisis. Uruguay's banks have suffered a nearly 29 percent drop in deposits in U.S. dollars through May amid a spreading lack of confidence in the banking system as a chaotic four-year recession in Argentina has put banks there on the brink of collapse. story.news.yahoo.com

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