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Latin American Leaders Call for Economic Aid

October 19, 1998|From Associated Press

OPORTO, Portugal — Latin American leaders warned Sunday that the looming collapse of their economies would usher in a worldwide recession, dragging the top industrialized nations down with them.

The leaders, whose developing economies are menaced by an unfolding financial crisis that already has rocked Asia and Russia, said they were the world's last line of defense against "a grave global recession."

They urged the rich G-7 nations and international financial institutions to adopt "urgent measures" to restore stability to financial markets and help pull Latin America back from the brink.

The measures included the creation of a contingency fund, administered by the International Monetary Fund, which could be channeled promptly to nations like those in Latin America that have set tough structural reforms in motion.

Otherwise, "the difficulties which affect some will become a crisis for all," they said in a joint declaration at the end of a one-day summit here.

The Ibero-American summit's final declaration, which also referred to regional cooperation measures in various fields, was signed by the 19 Latin American countries, Spain and Portugal.

The declaration addresses the world's seven richest nations. The Group of 7 is composed of the United States, Japan, Britain, Germany, France, Italy and Canada.

Spanish Prime Minister Jose Maria Aznar berated wealthy European Union countries for turning their back on Latin America and failing to recognize the potential scale of the threat.

The U.S. and Europe should cut their interest rates further to kick-start growth and dampen speculative flows, Portuguese Prime Minister Antonio Guterres said.

The Latin American leaders pledged to pursue internal economic reforms, including potentially unpopular austerity packages, to fend off the encroaching financial crisis.

However, they said the IMF and the World Bank also must help check the spread of the turmoil by deploying financial resources more swiftly and focusing more on prevention.

The most urgent case is Brazil, the continent's largest economy and a potential bulwark against creeping recession, which is awaiting news of a $30-billion IMF rescue package.

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