Washington Post, Thursday, August 1, 2002; Page A01 Economic Crisis Swells in S. America
By Anthony Faiola Washington Post Foreign Service MONTEVIDEO, Uruguay, July 31 -- Several additional South American countries have been swept up in what is becoming the region's worst economic crisis in two decades, igniting fears of a replay of the Latin American financial collapses of the early 1980s. The crisis, which analysts had hoped would be contained to Argentina's financial meltdown six months ago, has now spread to its neighbors Brazil, Uruguay and Paraguay. It has threatened to engulf other politically unstable economies in the region as well, including Bolivia and Venezuela, where analysts predict deep recessions for this year. But this week, investor flight has particularly hit Argentina's immediate neighbors. In Brazil, Latin America's largest economy, government bonds have fallen to half their face value in recent weeks because of fears of a government default. The Brazilian real, in a tailspin that has lowered its value against the dollar by 19 percent this month, today touched its lowest point since going into circulation as the national currency in 1994. Paraguay has come face-to-face with the prospect of a banking collapse and a deepening recession. Here in tiny Uruguay, dubbed the "Switzerland of Latin America" for its rock-solid financial system, government officials trying to stave off a debt default are seeking an immediate loan from the International Monetary Fund, the U.S. Treasury and other major foreign lenders. To ease the pressure, the Uruguayan government was forced to close banks Tuesday for the first time in 20 years. It decided today to extend the banking holiday until Monday. The closure left many Uruguayans lining up in front of ATMs. "We're becoming another Argentina," said Maurice Lopez, 45, a Montevideo store clerk who waited today to withdraw cash from an ATM. "I can't believe it has come to this." full: http://www.washingtonpost.com/wp-dyn/articles/A28776-2002Jul31.html
