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Miami Herald:
"La crisis de Uruguay
dispara préstamo de los Estados Unidos"
Uruguay crisis
prompts U.S. loan
Region's troubles heighten concern
From Herald Wire Services
WASHINGTON - The Bush administration said on Sunday that it is providing
a
$1.5 billion short-term loan to Uruguay, an infusion that should help
its
banks reopen this morning.
The loan, announced after emergency legislation was passed in Uruguay
to
help the nation's battered banks, marked the first time the Bush
administration has provided direct economic support to a country in
financial crisis. The action also served to underscore the
administration's growing concern about the widening economic troubles
in
Latin America.
The announcement in Washington came as Treasury Secretary Paul O'Neill
landed in Brazil on the first leg of a trip aimed at helping to reassure
Latin American officials about the United States' attention to the
troubled regional economy. The financial crisis that enveloped Argentina
early this year -- leading the nation to default on $141 billion in
debt
-- has spread turmoil to Uruguay, Brazil and other Latin American
nations,
causing their currencies to fall in value and raising fears of major
defaults on debt payments, including money owed to U.S. banks.
The $1.5 billion in U.S. assistance will come in the form of a temporary
bridge loan that U.S. officials expect will be repaid in a matter
of days
once the South American nation receives a longer-term package of loans
from the International Monetary Fund, the World Bank and the
Inter-American Development Bank that will bring total assistance to
Uruguay to $3.8 billion.
O'Neill said Sunday night that the loan ''will help Uruguay address
the
intense external pressures it has faced in recent months'' and that
it was
made in recognition of ``the extraordinary actions and commitments
by the
Uruguayan authorities to address these pressures.''
The Bush administration took office pledging to oppose the type of
direct
financial assistance and big bailouts the Clinton administration used
during the 1997-98 Asian currency crisis.
But the deepening economic woes in Latin America have forced a
reconsideration of that stance.
Deputy Treasury Secretary John Taylor, traveling with O'Neill, told
reporters in a conference call Sunday that the administration believed
the
temporary U.S. loan was justified because it would allow the country
to
reopen its banks today without waiting for the IMF loan to be processed.
He said the type of bridge loan Uruguay is receiving had been provided
to
a number of other countries by the United States during the 1980s
and was
different from the long-term assistance the Clinton administration
provided Mexico in 1995 and to other countries during the 1997-98
Asian
crisis.
The administration will tap the Treasury's Exchange Stabilization
Fund for
the loan to Uruguay, and Taylor said that members of Congress had
been
consulted about use of the fund.
During the Clinton years, Republicans in Congress were highly critical
of
the use of the stabilization fund, created during the 1930s to support
the
value of the dollar, to provide billions of dollars in loans to Mexico.
Taylor said the $1.5 billion represented full backing for checking
account
deposits held by banks in Uruguay.
O'Neill said last week that the administration supported more assistance
to Brazil and Uruguay because those countries were following the
appropriate policies to deal with their economic troubles. He did
not
include Argentina in that list.
The IMF is in negotiations with Brazil over an increase in its credit
line, which now totals $15 billion. Published reports have said that
amount could be boosted by $10 billion to $20 billion in an effort
to calm
increasing worries about Brazil's ability to meet payments on its
$264
billion foreign debt.
O'Neill arrived on Sunday in Rio de Janeiro, and he is scheduled to
meet
with officials, including the Brazilian central bank president, Arminio
Fraga, and President Fernando Henrique Cardoso. He is then scheduled
to
travel to Uruguay and Argentina to meet with government officials
there.
The financing package came after Uruguayan lawmakers approved legislation
that would limit certain long-term deposits from being withdrawn for
three
years.
In the growing crisis, most of the nation's banking reserves -- more
than
$2 billion -- had been withdrawn by nervous depositors before the
banks
were closed last Tuesday.
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