Caribbean finance ministers discussed plans to create a new regional fund to help small, cash-strapped island countries such as Dominica.
Finance ministers from Grenada, Antigua, Montserrat, and Trinidad and Tobago considered the proposed Eastern Caribbean $272 million (U.S. $100 million) fund at the meeting Friday along with other top officials including Prime Minister Owen Arthur of Barbados.
Last month, Trinidad and Barbados pledged EC $27 million ($10 million) each to Dominica to help ease the poorer nation's financial troubles.
The island of about 70,000 people has a budget deficit of EC $82 million ($30 million) and domestic debts totaling EC $217 million ($80 million).
Dominica's prime minister, Pierre Charles, addressed Friday's meeting of the Caribbean Community's Council for Finance and Planning, saying other countries also face economic troubles and that a coordinated response is needed.
Dominica's financial troubles also threaten the other economies in the Organisation of Eastern Caribbean States, since the seven members share a common currency and central bank.
Caribbean leaders have said Dominica would be the first recipient of aid through the regional "stabilisation fund."
It remained unclear how soon the fund could be established. Caribbean leaders have said money for the fund, which would provide loans and grants, could come from various Caribbean nations and interest on reserves held by central banks.
In the past year, Caribbean economies have been hurt by the U.S. recession and a downturn in tourism. Farmers of bananas and other crops also have had to cope with drought and the gradual elimination of European preferential trade quotas.
The seven members of the OECS are Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines, and the British territory of Montserrat.
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Grenada shuts down four more banks in cleaning up offshore financial industry
The government said Friday it had shut down four more banks in efforts to clean up Grenada's offshore financial industry and have itself removed from an international blacklist of tax havens.
Finance Minister Anthony Boatswain listed the four banks as ICS Placement Co. Ltd., IC Mutual Ltd., Alpha Windward and Leeward Ltd., and Commercial Asset Placement Ltd.
Grenada has revoked licenses from a total of 36 offshore banks since it began reviewing the industry in February 2001. There are just nine banks left in the Caribbean island country's offshore industry.
The review is part of Grenada's effort to have itself removed from the Financial Action Task Force's list of countries deemed uncooperative in fighting international money laundering. The task force is a part of the Paris-based Organisation for Economic Cooperation and Development.
Grenada has since pledged to comply with OECD standards of transparency by tightening tax laws and bank reporting requirements.
The task force was set up by the Group of Seven industrialised nations to identify and pressure governments that have secretive banking laws believed to offer a haven to criminals for hiding illegal funds.
Countries that do not comply with OECD standards on tax reporting face sanctions by OECD members.
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World Bank Approves $50-Million Loan for Peru
World Bank President James Wolfensohn and Peruvian President Alejandro Toledo signed a $50-million loan agreement for Peru on September 13, the World Bank has announced.
The loan for Peru's National Rural Water Supply and Sanitation
Project, approved by the World Bank board on August 29, will fund
improved access to water and sanitation to approximately 900,000 low-income residents of rural areas and will also improve the capacity of another 400,000 people to better manage their existing systems, according to a World Bank press release.
The World Bank is currently funding nine projects in Peru at a cost of $425 million.
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Appointment of former regulator to Banamex raises eyebrows in Mexico
Grupo Financiero Banamex, the top foreign unit of Citigroup Inc., has hired a former regulator who was involved in the Mexican government's controversial bank bailout.
The appointment of Javier Arrigunaga, former head of the bank-bailout trust Fobaproa, has raised concerns at a time when Mexican banks are resisting audit attempts by Fobaproa's successor, the federal deposit insurance agency IPAB.
The reaction to Arrigunaga's appointment shows that political wounds linked to the massive $70 billion bank rescue remain open.
Banamex was the largest financial group in Mexico at the time of the 1995 peso crisis. Many believe that without regulatory support, Banamex probably couldn't have widened its competitive edge over its Mexican rivals in the wake of the crisis.
That advantage was a factor when Citigroup purchased the company for $12.5 billion a year ago, Mexico's largest foreign corporate purchase.
The move infuriated many legislators who complained that while Banamex owners cashed out, taxpayers were left holding the bag.
Arrigunaga, now in charge of legal affairs and compliance at Banamex, worked for 16 years at Mexico's central bank. He also participated in crucial negotiations that led to a $20 billion U.S. bailout package for a government that was virtually bankrupt after the devaluation of the peso in late 1994.
Arrigunaga was also general counsel of the Bank of Mexico, and headed Fobaproa from 1997 until its dismantling in late 1998.
Regulations require that former government officials wait at least one year before taking positions in the private sector in areas where they had influence in their public role οΎ— something Arrigunaga has done.
To avoid potential conflicts of interest, he said he won't participate in any process related to the Fobaproa notes or their swap into IPAB-issued obligations.
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Venezuela denies new tax on foreign exchange purchases, will try to strengthen sagging currency
Venezuela is not planning to impose a tax on foreign exchange purchases or establish exchange controls, local daily El Universal reported Friday.
"Those are rumors by enemies of the government," central bank director Domingo Maza Zavala was quoted as saying. He couldn't be reached for further comment.
Commerce Minister Ramon Rosales, meanwhile, dismissed the possibility of exchange controls, saying "we know who is speculating" against the dollar, but he didn't elaborate.
Venezuela's economy shrank 7.1 percent in the first half or 2002. The bolivar has lost more than 46 percent against the dollar this year amid rising political tension as President Hugo Chavez's opponents launch efforts on several fronts to oust him.
Maza Zavala said on Thursday the government could move next week to ease the bolivar currency's slide against the U.S. dollar.
Citing a rapid depreciation, he said that the bank would wait at least until the weekend to decide whether to strengthen the bolivar. One way to accomplish that objective, he said, would be to tax dollar purchases.
Maza Zavala said Venezuela's "economic fundamentals are solid" but that private sector investment is needed to jump-start the economy and stabilize the exchange rate.
The bolivar closed Thursday at 1,477 to the dollar, compared to 763 per dollar on January 1. Venezuela abandoned strict exchange controls in February to stop spending tens of millions of dollars to support the bolivar.
An April coup that briefly ousted Chavez and continuing political instability have led Venezuelans to send capital abroad, weakening the local currency. Venezuelan media speculated Thursday that the government could soon impose exchange controls.
Chavez fed that speculation by denouncing what he called a "conspiracy" by opposition business interests to accelerate depreciation and destabilize his government.
He said his administration is prepared "to defeat currency speculation."
Planning Minister Felipe Perez has said the bolivar should strengthen to 1,350 bolivar by year's end. Private analysts, however, see it dropping below 1,600.
