Alejandro Werner, IMF’s new Director of the Western Hemisphere, says he expects the economic growth in Latin America to remain strong in 2013, but he has asked the governments in the region to focus on ‘growth-enhancing and employment-generating’ policies to reduce poverty and income inequality.
Werner, who left BBVA Bancomer to join the IMF in January this year, says large capital inflows were generating some volatility in some domestic financial markets.
“The IMF has to work closely with policymakers in these countries to help them design policies that will put them on a path of higher growth and declining debt-to-GDP levels,” Werner stated in an interview given to IMF’s in-house publication IMF Survey Online.
The IMF’s executive said he would work with Brazil and Mexican governments to help them strengthen their fiscal and regulatory frameworks. “I think we have to assist them in the design of policies conducive to increase their savings rates, continue reducing their debt-to-GDP levels, both public and private, and help them transition from a more commodity-based growth strategy to one that is more self-sustaining and based on services, manufacturing, and construction,” he said.
According to the IMF, Latin America has made significant improvements in income inequality and poverty reductions in the past 10 years. However, the Fund says, the region still has one of the highest poverty rates and income inequality in the world.
The World Cup and Olympics in Brazil as well as the IMF-World Bank Annual Meeting in Peru -scheduled to take place in 2015 – would provide a great opportunity for the region to showcase its economic achievements, he said.