IMF Camdessus: "Certain" Lat.
Am. Will Avoid Crisis-Report
Dow Jones Newswires
PARIS -- International Monetary Fund Managing
Director Michel Camdessus in an interview to be
published Wednesday said he is convinced Latin
America won't suffer from a widespread financial crisis
like the ones which have hit Asia and Russia.
In an interview in the French daily Le Figaro,
Camdessus said he had recently met with Latin
American central bankers. "Each one planned to
reinforce his macroeconomic balance and banking
system...That anti-crisis method is the proper one and
we will continue to support it by all means. I therefore
am certain that Latin America won't fall," Camdessus
said.
Camdessus did admit that "the crisis is spreading, but I
don't think...were in a free-fall scenario leading to
worldwide deflation."
In order to limit the damage, Camdessus called on
countries to undertake "more rigorous macroeconomic
management" and saw the need for "international
cooperation to promote the stability and organization of
international markets."
Camdessus also called on European governments not to
use the crises as an excuse to relax budgetary controls.
"It seems to me that the budget cutting effort in 1998 and
in 1999 is too timid nearly everywhere in Europe," he
said, calling also for greater flexibility in European labor
markets.
Although he said he didn't expect Latin America to suffer
a generalized crisis, Camdessus did indicate his
willingness to support Brazil and other Latin American
countries to fend one off.
"We're helping them to transform their banking systems.
If needed, and if they ask us, we will bring out financial
support," Camdessus said.
Brazilian Finance Minister Pedro Malan said last week
that Brazil was negotiating a package of a "preventive,
not rescue" nature with the IMF.
Looking at the Russian crisis, Camdessus sand "the
Fund can only support economic strategies that include
fighting inflation as a key element of a rebound."
He said that while there will certainly be a rise in inflation
in Russia, "the question is whether the government will
have the will to contain it energetically. What I hear of
the new government's declarations is pretty
encouraging."
However, he reaffirmed that the IMF will help Russia
only "if it brings proof of its will to help itself."
In general, to fight the current crisis in Asia, "growth is
indispensable, the social and banking systems need to be
reinforced."
Camdessus noted that Japan and the rest of Asia suffer
from similar problems. "Like other Asian countries,
Japan has an organizational problem between the state,
banks and companies which implies a structural change,
but also a profound cultural change."
Camdessus also elaborated four rules to avoid future
crises and discussed IMF reforms.
His rules included "making transparency the golden rule
of the new (international monetary) system."
He also called for reinforcing national banking systems
across the globe and said capital flow liberalization
should be "ordered."
"The crisis countries too often liberalized the most
volatile capital flows - short term capital" whereas they
should encourage instead long-term direct investment.
Camdessus also said the private sector "must me linked
to crisis prevention and solution" via good conduct rules.
"I think were are tending toward putting in place good
conduct rules, based on the best standards of the most
advanced countries. From there they must be spread as
widely as possible and their application verifies. It will be
an important task for international organizations," he
said.
On IMF reform. Camdessus said finance ministers "must
become more actively implicated in our work" and take
more decision-making responsibility. To that end,
Camdessus also reaffirmed his support for turning the
IMF interim committee into a decision-making body.
-By Alan R. Katz; 331-53.00.03.03; akatz@ap.org |
