Sunday, June 28, 2009

IMF Communique Re. Meeting in Antigua, Guatemala

“Finance ministers, central bank governors, financial sector superintendents, IMF management and staff, and representatives of other international financial institutions met in Antigua, Guatemala, over the past two days to discuss key policy issues facing the region. The conference focused on the effects of the global crisis on the economies and financial sectors of the region, the policy responses that have been implemented in these countries, and lessons learned to guide future reforms."

“This year’s conference took place against the background of an unprecedented global financial and economic crisis. While the region has not been significantly affected by financial channels, where the crisis originated, economies in the region have been affected as a result of their strong external linkages with the United States and other advanced economies. Conference participants agreed that these shocks pose complex policy challenges, yet stressed that Central America is in a better position to weather the storm today than in the past."

“Participants discussed the impact of the global crisis on the financial systems of the region. While the crisis generated a significant reduction in foreign funding, financial systems in the region have held up well, in part because of a relatively low reliance on external credit and limited exposure to “toxic” assets and also due to the quick response of the authorities."

“Participants noted that the growth outlook in the region will continue to be affected by external developments, and highlighted that the region has adopted appropriate policy measures to mitigate the impact on growth and poverty. In particular, they stressed the increase in conditional cash transfers to vulnerable segments of the population; higher infrastructure spending; and the expansion in funding for health and education programs. Participants also emphasized the beneficial impact on inflation from lower commodity prices, which has allowed greater flexibility to monetary policy in some countries to help mitigate the impact of the crisis on domestic economies. They also welcomed the backing of multilateral lenders in providing increased funding and asked for continued support."

Read the full IMF communique here.

Honduran President Arrested

Troops in Honduras have arrested the president ahead of a referendum on plans to change the constitution.

President Manuel Zelaya's secretary said he had been taken to an airbase outside the capital, Tegucigalpa.

Mr Zelaya, elected for a non-renewable four-year term in January 2006, wanted a vote to extend his time in office.

The referendum, due on Sunday, had been ruled illegal by the Supreme Court and was also opposed by Congress and members of Mr Zelaya's own party.

A reporter for the Associated Press news agency said he had seen dozens of soldiers surround the president's house on Sunday morning and about 60 police guarding the house.

Two air force fighter jets screamed over the capital, reported Reuters news agency.

'Coup plot'

The arrest comes after President Zelaya defied a court order that he should re-instate the chief of the army, Gen Romeo Vasquez.

The president sacked Gen Vasquez late on Wednesday for refusing to help him organise a referendum.

Mr Zelaya also accepted the resignation of the defence minister.

In an interview with Spain's El Pais newspaper published on Sunday, Mr Zelaya - an ally of Venezuelan President Hugo Chavez - said a planned coup attempt against him had been thwarted after the US refused to back it.

"Everything was in place for the coup and if the US embassy had approved it, it would have happened. But they did not," Mr Zelaya said.

"I'm only still here in office thanks to the United States."

Mr Zelaya's arrest took place an hour before polls were due to open.

Ballot boxes and other voting materials had been distributed by Mr Zelaya's supporters and government employees throughout the Central American country.

Rumours swirled in the Honduran media about the president's fate.

"We're talking about a coup d'etat," Rafael Alegria, a union leader and Zelaya ally, told Honduran radio Cadena de Noticias, reports AP. "This is regrettable."

He reportedly said shots had been fired during the president's arrest.

Meanwhile, Honduran radio station HRN said Mr Zelaya had been sent into exile, and possibly flown on the presidential plane to Venezuela.

On Thursday, the Honduran Congress approved plans to investigate whether the president should be declared unfit to rule.

"We have tried to avoid breaching a constitutional order and sidestep a coup," said Congressional President Roberto Micheletti, a member of Mr Zelaya's own Liberal Party.

Earlier, UN Secretary General Ban Ki-moon had urged Honduras' leaders to "act with full respect for the rule of law and democratic institutions".

The political crisis has stoked tensions in Honduras, an impoverished coffee and banana-exporting nation of more than 7 million people.