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Much sooner than we expected a week ago, the multilaterals (or International Financial Institutions -- IFIs) must be ready to step in with emergency lending. The Inter-American Development Bank (IDB) in collaboration with Andean Development Corporation (CAF) and the Fund for Latin American Reserves (FLAR) announced yesterday a new $9.3 billion facility to help Latin American countries withstand the turmoil in financial markets. The global crisis that began in the United States has already taken its toll in the region in the form of sharp unexpected depreciations, tumbling equity markets and bankrupticies.
The new facility is very different from past emergency lending. Three characteristics stand out: it will channel liquidity to the private sector through the banking sector; borrowing countries will not be required to have a previous agreement with the IMF, and the fund will not have the typical conditions, such as lowering fiscal deficits and tightening monetary policy. These differences are a clear recognition that this time countries in Latin America are the victims of something they did not cause.
Good for the IADB, CAF and FLAR for acting quickly and with the right kind of instrument!
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
There are two good reasons to harness the market power of iconic brands. First, policymakers and researchers with evidence-based arguments on migration are struggling to combat the hateful rhetoric of the tabloids. Second, the private sector has an important role to play in ensuring global economic prosperity. Among other things, it should use its power to fight the misinformation, ignorance, and hate directed towards the world’s most vulnerable people.
Rory Stewart MP gave a wise speech about how Britain can play a role in global peace and stability. In my brief response to the Minister, I suggested twelve policies which are within our control which would help create conditions for stronger, more peaceful, more prosperous countries to thrive, and so reduce the risks of future conflict and instability. Here they are.
Emerging market currencies have seen a lot of action over the last few months. India’s rupee has fallen 20% against the dollar, the Indonesian rupiah and the Brazilian real are floundering after falling 15%, and Turkey’s lire has slipped 10%. I invited CGD senior fellows Liliana Rojas-Suarez and Arvind Subramanian to explain what’s driving the fluctuations. Since these economies have mosty been performing pretty well—consistently growing faster than the rich countries—to the untrained eye, the currency slides seem dramatic and unexpected.