By Daniela Desantis
ASUNCION (Reuters) -Countries in Latin America should maintain prudent fiscal policies to strengthen their economies amid a swift escalation of trade tensions and policy uncertainty, Nigel Clarke, the International Monetary Fund’s deputy managing director told Reuters on Friday.
“Now is not the time to change policy frameworks or abandon fiscal plans,” Clarke said in a written response ahead of a visit to Paraguay on Friday, where he will launch a regional training program to “strengthen analytical and institutional capacity across the region,” according to Clarke.
Latin America weathered the impact of the COVID-19 pandemic better than expected, he acknowledged, withdrawing emergency support policies introduced during the health crisis in a timely fashion.
Since then, however, countries including Brazil, Chile, Colombia, Mexico, Paraguay, Peru and Uruguay have returned to similar debt levels observed at the height of the pandemic in 2020. That means their economies are exposed to more risk from market volatility, particularly in the United States, at a time when it is more difficult to project global growth.
“Our message to the countries of Latin America and the Caribbean is to continue implementing the necessary structural reforms and to strengthen the resilience of their economies,” Clarke said, adding that trade should be deepened by reducing trade barriers.
The IMF in April revised down its growth estimate for Latin America and the Caribbean to 2.0% from last year’s 2.4% expansion, down from a January estimate for 2.5% growth. That revision was mainly driven by Mexico’s economy, strongly intertwined with that of the United States, as U.S. trade tariffs bite into exports.
Clarke on Friday will launch a regional IMF training program in Paraguay for South America and Mexico to support countries in professional formation and updating data.
The regional training program, hosted by Paraguay’s Central Bank, kicks off on Friday with eight courses spread over the next twelve months, with the first course focusing on macroeconomic and fiscal policies.
(Reporting by Daniela Desantis in Asuncion. Writing by Lucinda Elliott and Rafael Escalera Montoto. Editing by Aida Pelaez-Fernandez and Toby Chopra)
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