Officials from Venezuela and its allies have denied rumours
that the Bank of the South is dead.
Bolivian and Ecuadoran authorities confirmed yesterday that
plans for the bank are moving forward.
Argentina, Brazil and Venezuela agreed to put up $2 billion
each in initial funding. Bolivia, Ecuador, Paraguay and Uruguay
are also members, but will put up much less capital.
The goal is to launch the bank in the second half of this year,
after a meeting of finance ministers scheduled for May.
But the countries involved recognize that there are still a
number of hurdles to clear, such as the capital outlays of the
four smaller countries. The financial crisis might hamper the
Noel Aguirre, Bolivias planning minister, told Emerging
Markets that setting up the bank is one of our
priorities. He said it is part of a process to develop
regional mechanisms that allow different kinds of
Ecuadoran officials share this position. Pedro Delgado, an
Ecuador Central Bank official, told Emerging Markets:
Ecuador is committed to regional integration strategies.
The Bank of the South is an integration process that we believe
is important to support.
Maria Viteri, Ecuadors finance minister, voiced support
for the bank while also suggesting that the IDB refocus
its efforts. As a regional organization, the IDB needs to
start looking south, to look from below, she said.
Other officials acknowledged the problems still in front.
Armando Laguna, Venezuelas ambassador to Peru, told
Emerging Markets that the extent of the financial crisis could
have an impact.
There could be some setbacks because of the crisis, but
we are still confident. Laguna said. The faster we
can create the bank, the faster countries in South America will
have a new mechanism to get out of the crisis.
The banks supporters have failed to bring Chile, Colombia
and Peru on board, and doing that now looks much tougher.
Colombia, which had given partial agreement, decided late last
year that it could not commit to the bank under the current
Colombian finance minister Oscar Zuluaga told Emerging Markets
that it is more important to shore up existing multilateral
Under the current circumstances, it is important to
strengthen the IDB and the CAF. An option like the Bank of the
South right now would require much more effort, Zuluaga
Apart from its push to get the Bank of the South going,
Venezuela is also working on its other regional bank
initiative: the Bolivarian Alternative for the Americas (ALBA).
ALBA Bank was officially set up in 2008 and Laguna said it is
for example providing mini-loans to farmers in Nicaragua with
1% interest rates and two-year grace periods.
This is not a traditional bank like the Bank of the
South. It is aimed at supporting projects that can guarantee
food security or energy in the member nations, he said.
Honduras is the most recent recipient of Bank of ALBA funds,
receiving $50 million from Venezuela to fund a series of
projects, from housing to farming cooperatives.
Bolivia, Cuba, Dominica, Honduras and Nicaragua are ALBA
members along with Venezuela.