asK tHe eXPerts
improve the region’s competitiveness and set the
stage for recovery and growth.
This crisis opens the door to new opportunities.
Governments could now review “universal subsidies”
which benefit not only the poor but the middle class
and even the affluent. The region annually spends
between 5 to 10 percent of GDP on subsidies, with
nearly one-third going to the wealthiest 20 percent
of the population—enough to triple (or more) direct
transfer programs for the poor.
The World Bank Group, meanwhile, is increasing
financial support throughout the developing world,
including lending for middle-income countries ($100
billon total from 2009 to 2011), grants and concessional
lending for low-income nations (more than $40 million),
and loans for the private sector through the Interna-
tional Finance Corporation (more than $30 billion).
We made new commitments in Latin America of
up to $13 billion for the fiscal year ending June 2009,
more than doubling our regular lending volume. These
additional resources are critical to sustaining jobs and
social gains, boost ongoing public sector programs
and inject liquidity into countries that need it.
To move this agenda forward, leadership will be
crucial, especially in the context of a dynamic political
year. It is precisely during this crisis and in defining
political junctures that responsible leadership in
maintaining sound economic management combined
with an emphasis on protecting recent social gains
will be needed to cushion the external shock and
facilitate the resumption of growth once the storm
out of this slump?
FRANCISCO GIL DÍAZ
is CEO of Telefónica for
Mexico and Central America and was the secretary
of finance of Mexico from
2000 to 2006.
AP Photo/Dennis Cook
The one fact public policies
should take into account is that
the local effects of the worldwide meltdown are unavoidable.
They can be mitigated, but
attempts to neutralize them through
protectionism will be unsuccessful and
will return to haunt countries that adopt
them like a deadly boomerang.
We should use this opportunity to
launch long-term solutions. The countries
with the weakest currencies will be hardest
hit by the crisis. But falsely propping up a
weak currency would be foolhardy. This
could, though, present itself as an opportunity. Countries should take advantage now
to eliminate tariffs and non-tariff barriers
to trade. They don’t even need to wait for
reciprocity. They can act unilaterally to
resolve them to the optimum tariff: zero.
Doing so would generate productivity gains
and a faster recovery.
Multilaterals must play a new role. The
biggest sinner will not accept IMF
discipline. Therefore resources from the
World Bank, the IMF and the IDB can
address the affected victims. Expediency
is imperative. Given the absence of credit,
the international financial institutions
(IFIs), should adopt a more creative
approach of lending to the private sector.
Their assistance should consist of partial
guarantees. Government should still be
allowed to tap them for new credit, but
their demands should not crowd out
private needs for refinancing.
Emerging economies have remained
mostly outside the sub-prime temptation
but are not immune from the toxic assets
contagion. As governments consider
reforms to regulations and supervisory
agencies, they should look to international
norms and design them with an eye toward
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