Caracas, 11 Jan.- A group of experts of the Latin American/Caribbean region and the Asia-Pacific will be meeting in Tokyo on the 11 and 12 of January to carry out the joint effort being made by SELA, IDB, and the Japanese Ministry of Finance to define proposals and actions aimed at implementing "indispensable reforms" needed in the international financial system.

The Inter-American Development Bank (IDB) and the Institute of Monetary and Fiscal Policy (IMFP) of the Ministry of Finance of Japan are sponsoring the meeting in order to seek formulas to overcome the impact of the financial crisis which took off in July 1997 and to look into the possibility of cooperation actions between these two regions, beyond the framework of this crisis.

The opinion expressed by the Permanent Secretary of SELA, Ambassador Carlos Moneta, is that once these crises "destabilize economies and the domino effect sets into motion, they are able to modify, in very small spurts of time, worldwide flows in international trade and investment."

"The external policies for the next decade have no choice but to include a mechanism to manage the formulation and implementation of systemic risk factors."

Upon analyzing the situation, Moneta underscored the "very high cost" the countries of Latin America and the Caribbean have had to assume as a result of the Asian crisis. In the short term, this cost stems from the turbulence that shook the stock market and monetary spheres while the cost in the medium and long term is based on the fact that Asian economies’ speed of recovery also influences the region’s export and trade flow.

Economic growth forecast for the region, which had been prepared before July 1997 (this latter being the date the crisis broke out) indicated that the principal economies of Latin America, as a whole, could reach a 5% growth rate. New estimates indicate that the growth rate could be close to 3.1%.

And the outlook for 1999 is that with Brazil’s intention of implementing an adjustment program coupled with the restrictive policies that are expected to implemented by the region in general, growth will fall even further by approximately 1.5 points vis-à-vis 1998.

According to a study prepared by SELA, this means that the total cost of the international financial crisis for the period that comprises 1997-1999 will increase to the equivalent of a four-point drop in production growth of the main economies of the region.

Moneta expressed "concern" that the "serious and costly efforts being made by the governments of Latin America and the Caribbean and the Asia-Pacific to stabilize and spark growth could be affected by factors that have no relation whatsoever to their economic realities and that international mechanisms to prevent and avoid such situations do not exist to deal with these circumstances."

The meeting will be carried out in two parts. An International Round Table will be held during the first stage. The round table will analyze the Financial Crisis in the Emerging Economies: comparative experiences and possibilities for cooperation in Latin America/Caribbean and Asia." The participants will include experts and representatives of central banks, ministries of economy, finance and trade, stock exchanges, chambers of commerce, banks and enterprises of both regions.

Only the members of the Forum will be participating in the second stage, which will be directed to analyzing the results of the discussions. Subsequently, a document including the proposals made will be prepared and made available to the governments of Latin America/Caribbean and the Asia-Pacific.

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