Bank of the South: Only needs to be approved
The
finance ministers concluded the negotiations. The seven members will
make an initial capitalization
of 7,000 million dollars. Another agreement between Argentina and
Brazil.
For
the Mercosur News Agency (APM)
Finally,
we can say that the Bank of the South is now ready.Last Friday, May
8, in Buenos Aires, the Ministers of Economy and Finance of
Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela
finished defining the terms of the statute of the future entity. Now
it is time for the presidents and parliaments of each country to
ratify the agreement. The fine print of the agreement states that the
seven partners will provide initial capital of 7,000 million dollars.
To reach that figure, Buenos Aires, Brasilia and Caracas contribute
with 2,000 million, Montevideo and Quito 400 million and Assumption
and La Paz, 200 million each.
Concerning
the operation of Banco del Sur, each country will have one vote in
the directory. However, for project approval over 70 million dollars
will require the support of two thirds of capital injected into the
bank.
This
is how one of the areas most
difficult to resolve was defined: the “weight” of each country at
decision time. In this manner, for this type of project, they will
count of the vote of two
of the most important contributors: Argentina, Brazil and Venezuela.
The
central bank’s headquarters will be in Venezuela, and will have two
subs, one in La Paz and one in Buenos Aires. The credits awarded by
the Banco del Sur will be for infrastructure and social projects, as
reported in a press conference after the ministerial meeting.
Argentine
Economy Minister Carlos Fernandez said that what was agreed upon has
“terms [that] are acceptable, so it can be quickly approved” by
the Legislatures of each country. In
regards the difficult moments when agreements are reached, Fernandez
said “the creation of the Bank is more valued in the context of the
international financial crisis.” For his part, Brazilian Minister
Guido Mantega added that “we are taking another step in regards to
regional financial integration.”
In
addition to Mantega and Fernandez, present were Luis Alberto Arce
Catacora (Bolivia), Maria Elsa Bitel (Ecuador), Dionisio Borda
(Paraguay), Álvaro García (Uruguay) and Alí Rodríguez Araque
(Venezuela).
The
Bank
of the South project was formally launched by leaders of the seven
countries on December 9, 2007. The original idea was proposed by
Venezuelan President Hugo Chávez, who in 2004 offered to form a
financial institution using its own reserves for its own regional
projects.
The
best response to the crisis
Mantega
and Fernández, who were in charge of the press, argued that the
launch of Banco del Sur is the best response to the global financial
crisis, and therefore should be operational "soon."
In
addition, the operation of the entity will serve to slow the progress
of the new International Monetary Fund (IMF), which seeks to once
again become the largest lender in the region.
However,
Banco
del Sur will not function as a lender in the style of IMF, but is
intended to finance development projects in key sectors of the
economy. The aim is to improve competitiveness and to combat poverty
and exclusion. That is, governments have an important resource to
avoid the traditional demands of the Fund’s neoliberal gurus.
One
of the issues of concern for the Ministry of Economy of the seven
countries is the funding to pay maturing debt. As noted above, the
Bank may not finance the South countries to pay debt. However, it is
possible that in the future they may opt for this option if the only
other possibility that remains is the IMF.
Agreement
between Argentina and Brazil
The
trip to Buenos Aires by Guido Mantega served to discuss other
outstanding issues between his country and Argentina.
Apart
from the advances of the Bank of the South, the ministers of
Argentina and Brazil announced an agreement whereby the countries
will exchange foreign currency in local currency amounting to 1,500
million dollars. With this, it aims to strengthen the international
monetary emergency.
Mantega
said that Brazil is willing to reach agreements in the same tone with
the rest of the South American governments. "These swaps can be
used as such or kept as a reserve currency, as Brazil did when it
received 30,000 million dollars from the U.S. Federal Reserve,"
he explained.
With
this, it is suggested that these funds will be "freely
available," to be used to strengthen the monetary reserves or
for financial purposes.
For
his part, Fernandez noted that the "currency swap" (well
known to such agreements) will be assessed by the technical teams
next week. This is to implement "a simple mechanism, with
operation by the central banks," said Fernandez. Argentina
signed a similar agreement with China for foreign exchange in local
currency amounting to 10,000 million dollars. As Mantega said, this
kind of treaty is to "reinforce each other amid the global
crisis.”
