If Banco del Sur (Bank of the South) materializes it will be a great boon to the region which is craving for financial aid for its developmental purposes for some time. Though it cannot substitute International Monetary Fund (IMF) and World Bank (WB) at this juncture, but surely it will serve as a springboard to fulfill all the fiscal needs of Latin America in the future. If Hugo Chavez, the president of Venezuela can iron out differences with Brazil in some bilateral issues, Banco Del Sur will soon be a reality.
The preparatory talks that are going to be held in Rio de Janeiro on 11th December 2007 involve Argentina, Brazil, Bolivia, Ecuador Paraguay and Venezuela. In the meeting, if Mr. Chavez can put Venezuela and the region above him, come January South America will write a new script in the banking history of the region. Every business is started with an intention of making profit and that’s something which comes towards the end of the cycle, if any. Chavez’ argument of lending with lower interests, right from the inception will affect the bank’s performance, profitability and eventually even existence. His vision is commendable yet it would be appreciable if he could fathom the fiscal burden on the bank initially, though Venezuela is providing the major portion of the fund.
If the countries take a holistic approach and the emphasis is laid on the developmental needs of the region, there is hope. Chavez’ plans of distancing WB and IMF would not make any sense because the region needs a lot of aid from such banks in a competitive, globalized economy. It would be welcome if Chavez could channel his energy to study the Chinese way of doing business rather than getting distracted by political developments in the neighborhood.