Latin American ministers urge Washington to fix fiscal impasse

Reuters News
Posted: Oct 09, 2013 9:02 PM

WASHINGTON (Reuters) - Latin American finance ministers warned U.S. Treasury Secretary Jack Lew on Wednesday that the uncertainty over Washington's public finances is having side effects in the region and that an eventual debt default would be "devastating."

Colombia's Finance Minister Mauricio Cardenas, who chaired a meeting of finance ministers of the Americas in Washington, told reporters afterwards that Lew gave an upbeat presentation to the group about the U.S. economy's growth prospects.

But the Latin American ministers used the opportunity to send a direct message to Washington to quickly resolve the political impasse over the budget and the looming deadline for raising the debt ceiling.

"We expressed our concern about the collateral effects that we're seeing in Latin America from the uncertainty about the fiscal behavior, in terms of issues like the debt ceiling in the United States as well as in the conduct of monetary policy here in the United States," Cardenas said.

He urged U.S. economic and political authorities to reach a consensus to avoid "an abrupt cut in public spending which could affect the growth of the U.S. economy."

"Also, naturally to avoid a possible default on the U.S. debt which would have devastating consequences on the economies of Latin America."

The finance ministers see it as unlikely the United States will fail to pay its debt obligations, but Cardenas said it was nonetheless "somewhat of a concern" that was expressed in the meeting.

Eyes On The Prizefighters
Ann Coulter

The hemispheric gathering took place on the sidelines of meetings of the International Monetary Fund and World Bank this week in Washington.

U.S. President Barack Obama launched a series of meetings on Wednesday with lawmakers to try to break the fiscal impasse, but there were few tangible signs of progress.

The dispute has shut the government for nine days and rattled financial markets with the threat that the country's $16.7 trillion borrowing limit will not be raised before an October 17 deadline.

(Reporting by Louise Egan; Editing by Lisa Shumaker)