In addition, governments of the region should also take a careful look at existing social policies so that they are aimed at reducing poverty and improving the access of the poorest groups of the population to quality education and health services. In his concise and well-focused document, launched before the 2005 Annual Meetings, Mr de Rato addressed the fundamental strategic question for the Fund: Given the purpose of the Fund, as set out in Article I of Articles of Agreement, what is the relevance of the Fund in today’s global economy and financial markets? In our opinion, the Fund has a privileged position to contribute to more effective management of global macroeconomic and financial risks around the world. This process involves taking several steps simultaneously: •  Identify threats to global macroeconomic and financial stability and to member countries;  •  Quantify its effects on key variables such as exchange rates, relative prices, and real outputs, etc. ;  •  Identify economic and financial vulnerabilities at global, regional and country level;  •  Manage implied risks by making better analyses and developing better understanding of institutional and market mechanisms so as to absorb, cushion, transfer, hedge, strengthen the resilience to such risks, and ultimately, minimize their potential impact;  •  Continue surveillance of risks and vulnerabilities. In our opinion, continued surveillance of macroeconomic and financial stability is a shared responsibility of the Fund, member countries, and private sector institutions of the international financial system, especially those participants of systemic relevance.

Vittorio Corbo: The Fund’s medium-term strategy – a view from Latin America and a dialogue with high-level officials Keynote speech by Mr Vittorio Corbo, Governor of the Central Bank of Chile, at the High-level Seminar “The Fund’s Medium-Term Strategy: Considerations for a New Liquidity Instrument for Crisis Prevention and Effective Surveillance. Dialogue with High-Level Officials”, organized by the International Monetary Fund and the Central Bank of Chile, Santiago, 11 December 2006. *  *  *  Latin America has benefited substantially from the fast growth experienced by the global economy during the last four years and from domestic policies that have contributed to enhanced macroeconomic stability. External current accounts and primary fiscal balances are in surplus, exchange rates are more flexible, and inflation is no longer a major issue as it was for several years and after surpassing the average of 400 percent per year during the 1990s. Likewise, the structure of public debt has become less vulnerable, characterized by lower shares of short-term and foreigncurrency debt in most countries as compared with the early 2000s. At the same time, there is renewed appreciation in the region that a solid commitment to maintaining macroeconomic stability is a necessary condition to achieve high and sustainable growth rates in the medium term. A distinguished feature of the region is that fiscal revenues are highly dependent on natural resources. In the current favorable context for commodity prices, primary fiscal surpluses have clearly shown positive numbers, averaging around 4 percent of GDP of the region.