South America launches rival to the IMF, World Bank

December 11, 2007 - 0:0

BUENOS AIRES (AFP) -- Six South American presidents on Sunday launched the Bank of the South, the region's answer to the World Bank and the International Monetary Fund as a source for development funds.

Presidents Nestor Kirchner of Argentina, Luiz Inacio Lula da Silva of Brazil, Nicanor Duarte of Paraguay, Rafael Correa of Ecuador, Evo Morales of Bolivia and Hugo Chavez of Venezuela -- all political on the left or left of center -- signed the bank into being.
""Motherland Yes, Colony No!"" chanted a group of activists, most belonging to Kirchner's leftist Peronist party, who stood behind the presidents at the signing ceremony at the president's office.
It was Kirchner's last official act as president before his wife, Cristina Kirchner takes over on Monday. Uruguay President Tabare Vazquez was not present at the signing, but will attend Kirchner's inauguration ceremony, an Argentine official told AFP.
Chavez and Kirchner pushed the initiative to create the regional bank in 2006, hoping it will help wean the region off what are widely seen as the negative influences of the IMF and World Bank.
Chavez said the bank was part of a broader ""war"" with the more advanced nations of the north.
""The bank is a political fact and is part of an economic war that is also social and ideological,"" Chavez said.
""We don't have money? We do, but it's deposited in banks of the north, in U.S. treasury bonds ... in euros, in yens. The time has arrived to begin to bring these resources to the region,"" he said.
Chavez earlier blasted the IMF, describing it as ""a curse"" on the region, and slammed its ""shock politics that have spread hunger, misery, poverty and violence to our peoples.""
Key economic sectors
Brazil's Lula said the regional bank ""will finance projects in key economic sectors such as infrastructure, science and technology, and bring more balance to the region.""
Brazilian government spokesman Marcelo Baumbach added that the new institution ""will play a significant role in regional integration and in consolidating the Union of South American Nations.""
Ecuador's Correa said that the Bank of the South will help Latin America break out of its financial chains.
""Its a huge step on the road to Latin American integration. We have a common past, now its time we aim for a common future,"" Correa told reporters.
Bolivia's Morales said the bank would help South America develop its own currency and resist the pressures of international lending institutions that demanded the privatization of state-owned companies in return for their loans.
""With these (new) financial instruments, we can generate equality among our nations. Hope is reborn in our countries with the Bank of the South,"" he said.
The bank will start operations in 2008 with an initial capital of seven billion dollars.
Based in Caracas, the Bank of the South will have regional offices in Buenos Aires and La Paz.
After the bank was signed into being, the economy ministers of the member countries have 60 days to draw up an agreement on how the bank should be run, an Argentine official said.
""The agreement will establish several procedures, including its contribution system and whether the entity will take into account the differences in economic weight of the nations,"" the official said.
The bank will be run by a Board of Directors made up of the economy ministers of member states.
The calendar for the Bank of the South' creation was agreed to in October at an economy ministers' meeting.