Efforts by the US to fight its own financial crisis may cut Latin American governments off from access to credit at a time when they need an estimated $250 billion for financing their 2009 budgets. The US has been issuing huge volumes of Treasury bonds and is running a fiscal deficit that could top $1 trillion next year. The Latin American Shadow Financial Regulatory Committee (CLAAF)—a group of economists including former Argentine finance minister Roque Fernandez and former Venezuelan central bank president Ruth de Krivoy—warns that the massive borrowing by the US government may "crowd out" Latin American and other emerging economies from the credit markets."

The drying up of credit comes as the region is already suffering from other effects of the global crisis, notably a decline of demand for exports. The CLAAF said existing funding through the International Monetary Fund and other financial institutions is inadequate and that "unprecedented resources" are needed. (Financial Times, Dec. 4)

From Weekly News Update on the Americas, Dec. 7

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