Enterprise for the Americas Initiative promotes economic growth - statement by Assistant Secretary for Inter-American Affairs Bernard Aronson - Transcript

US Department of State Dispatch, June 29, 1992

Debt. As Latin American nations move toward a future of more open economies, many face a daunting legacy of the past - debt. Though economic growth helps to reduce debt, debt service costs often soak up the resources needed to make economies grow.

Under EAI, countries that receive investment sector loans from the Inter-American Development bank or make other significant investment reforms become eligible for debt reduction. So far, we have reduced the official debt of Bolivia, Chile, and Jamaica to the United States by over $260 million. (Under other authority outside EAI, we also reduced $1.28 billion in bilateral debt with Bolivia, Guyana, Haiti, Honduras, and Nicaragua.) These reductions can have substantial impact in countries which owe much of their debt to the United States - in El Salvador's case, over $650 million; in Costa Rica, $458 million.

Congress did not appropriate any funds for debt reduction in this fiscal year. EAI debt reduction will be one of our top priorities in fiscal year 1993, and we urge your approval. It can bring enormous benefits in encouraging economic reform and freeing scarce central government resources for programs that address pressing social needs.

Environment. When Bolivia, Chile, and Jamaica reduced their debt, they also signed environmental framework agreements. These agreements set up jointly administered environmental funds; the capital for these funds comes from local currency contributions equal to the interest payments on the debt and from other donations. The three countries are in the process of establishing the commissions that will administer the funds, which should total $32 million over the life of the debt-reduction agreements. By the end of the year, these commissions should be in a position to begin funding environmental projects.

EAI'S Place in

Hemispheric Relations

Continued support for the EAI is vitally necessary if we are to continue encouraging the bold reforms of leaders throughout the hemisphere, such as President Collor of Brazil, who is facing the difficult challenges of fiscal and constitutional reform; President Cristiani of El Salvador, who is turning to the economic tasks of reconstruction; President Gaviria of Colombia, who is opening his economy at the same time he is combatting guerrillas and the drug cartels; and the leaders of the Caribbean Common Market (CARICOM), who are beginning to confront the complexities of real economic integration.

In many cases, these reforms carry short-term political costs, while the benefits of growth come later. Now that these countries are adopting the kind of policies the United States has long urged under administrations of both parties, our continued support is essential.

But EAI's importance is more than economic. It fits into a larger context of a new partnership President Bush is building with Latin America and the Caribbean in an era where democracy is the norm. This economic partnership could not exist without the foundation of shared democratic values.