9 January 2009
While the international financial institutions report sharp lending increases due to the global financial crisis, concerns over lack of transparency and accountability remain.
The World Bank and Inter-American Development (IDB) have announced dramatic increases in lending to Latin America in the wake of the global credit squeeze triggered by the U.S. financial collapse. Crowded to the margin in recent years by demands for financial independence backed by high commodity prices and steadily growing reserves, the World Bank, IDB and International Monetary Fund (IMF) are happily back in business. The majority of South American economies had lowered their exposure to IMF influence, with new Stand-By agreements falling to only two in 2007 (Peru and Honduras, both of which expire in early 2009). In 2005, 80% of IMF's $81 billion loan portfolio was to Latin America. By early 2008, Latin America represented only 1% of the IMF portfolio with nearly all its $17 billion in outstanding loans to Turkey and Pakistan. Prior to the crisis, the total outstanding debt to the IMF in Latin America had fallen dramatically to about $700 million. Their fortunes tethered, the lending portfolios of the international financial institutions (IFIs) had also declined prior to 2007.
Read the full Info Brief:
Global crisis is good news for IFIs in Latin America By Vince McElhinny, Bank Information Center, January 9, 2009 (Acrobat pdf, 2,771 KB)