Bank of the South kicks off with US$20.000 millions

Caracas, Venezuela, 26 April, 2008.  On Friday 25 April 2008, the Ministers for Economy or Finance of Bolivia, Brazil, Ecuador, Uruguay, Paraguay and Venezuela held a meeting at Montevideo. In the absence of the Argentinean Minister Martin Lasteau who resigned ealier, they gathered to decide the initial capital for the Bank of the South. They agree to set it at US$20.000 millions in three phased contributions. The initial financial contribution would be of US$7.000. Each country would participate in the contribution scheme according to their economic strength.  Argentina, Brazil and Venezuela would provide the initial sum in the first phase. Then, Uruguay and Ecuador would provide their financial contribution. Paraguay and Bolivia which are going through difficult economic times, would contribute last.

The Bank of the South will have its main headquarters in Caracas with two other subsidiaries in La Paz and Buenos Aires. It is expected to start working by the end of 2008. The Bank of the South is an initiative of Venezuelan President Hugo Chavez Frías. Its main purpose would be to finance social and infrastructure programmes of their members.

Initially, President Chavez proposed the Bank as an alternative to the Bretton Woods institurion,that is, World Bank and IMF. However, later analysis within its founding members concluded otherwise. Brazil had always rejected such approach. No wonder that Colombia- an regional ally of the Bush administration- had showed some interest in becoming a founding member of the Bank of the South but later declined to join it. Furthermore, in the Montevideo meeting, Venezuelan Minister for Finance, Rafael Isea, stated the Bank of the South would not be a regional opposing alternative to IMF and World Bank but would function on its own right as a new source of financing projects.  Apart from Venezuela, no other country in the region has decided to leave IMF or World Bank yet.

Sources: Telesur, El Universal, VTV,  El País, Economist,

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