Several nation leaders in Latin America seem to be waking up to the fact that International Monetary Fund (IMF) and World Bank (WB) loans aren’t truly benefiting the majority of people there, so they are joining forces to create Banco del Sur. Venezuela, Argentina, Brazil, Bolivia, and Paraguay have become the founding members to Banco del Sur , which is promoted as an alternative to the IMF and WB. The bank which is to begin functions in 2008, is being promoted as coming from Latin America, for Latin America. The idea originated with Venezuelan president Hugo Chavez and is being largely funded with Venezuela’s oil money.
Lack of faith in organizations like the IMF and WB started to gather momentum in Latin American during the 1990s, and this perspective was further solidified after Argentina disregarded IMF advice and defaulted on their loans, which lead to economic recovery. Those opposing this regional bank proposal argue that it is only one more ploy by the emerging left in Latin America, still IMF loans have steadily been declining in the region during the last decade; they currently stand at around $3 billion after being at $50 billion just five years ago. Latin American countries have also been turning to other regional initiatives such as the Andean Development Corporation (CAF) for loans.
Some former and current employees of the IMF and WB explain that maybe this is a wakeup call to these institutions to make more of an effort to customize the services they provide throughout the world. Apparently the IMF has been impacted enough about this to have had to sold some of their gold reserves. This also means that the USA treasury is affected as well, since they are the largest IMF shareholders.
I would like see the Banco del Sur actually succeed and create some wealthy competition.
“… there is life after the IMF, and it’s a very good life.” –Nestor Kirchner, Argentine President
You can read more about this from an article in the Christian Science Monitor, and an article in Upside Down World.
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