Latin America: Once A Risky Bet, Now EU's Hero?

The International Monetary Fund used to bail out deadbeat nations in Latin America. Now, in a role reversal, the IMF's new director, Christine Lagarde, is seeking the region's help in containing Europe's worsening debt crisis. Officials in Brazil, now the world's seventh-biggest economy, say they're putting together an IMF loan. And Lagarde says the whole region can provide Europe with lessons on how to manage the economy.

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Latin America governments once went bust with alarming frequency. And the International Monetary Fund was there to impose austerity measures. Now, in a role reversal, the IMF's new director, Christine Lagarde, is seeking assistance from a new Latin America – one with fast-growing economies and big foreign reserves. She says Latin America's help, along with that of China and other big, emerging economies, may be needed in a Europe whipsawed by the debt crisis. NPR's Juan Forero spoke with the IMF chief in Sao Paulo, Brazil.

JUAN FORERO, BYLINE: In the past, the visit of an IMF director sent shudders through Latin America. But there was jovial give and take when Christine Lagarde spoke with an audience full of Brazilian entrepreneurs at a local TV network.

(SOUNDBITE OF LAUGHTER)

FORERO: There was a serious side. Lagarde warned that recession in Europe could be bad for exports from Brazil and elsewhere. The businessmen ultimately wanted to know whether Brazil would weather Europe's economic storm.

CHRISTINE LAGARDE: I think Brazil is in a much better situation than many other countries.

UNIDENTIFIED MAN: Why?

FORERO: Lagarde tells the businessmen it's because you've been there in the middle of a spiraling crisis. In her first trip to the region, Lagarde also told NPR that Brazil had the prudent fiscal management to avoid the European contagion.

LAGARDE: When we look at Brazil, from the IMF perspective, we see a very well-oiled, macroeconomic and monetary policies.

FORERO: She's talking about such policies as a flexible exchange rate and checks on inflation. In the past, those kind of fundamentals were sorely missing across the region – when one country after another defaulted. The biggest basket case was Brazil. People here also thought of it as a sleeping giant.

(SOUNDBITE OF MUSIC)

FORERO: A new TV ad - which pictures a giant rising from the mountains around Rio de Janeiro, sleeping no more - captures Brazil's new sense of itself. Now, Brazil says it'll provide a loan package to the IMF's $400 billion war chest. Combined with help from other emerging giants, it could go a long way to helping Europe, Lagarde says.

LAGARDE: Brazil is in the top 10 of the IMF members, so it's hardly surprising that it is, you know, playing a significant role.

FORERO: But Lagarde says it's not just about money for Europe. Her tour through Brazil, Mexico and Peru was about discussing ways to keep the region's economy humming.

LAGARDE: It's often the case that when one part of the world is not doing so well, the other ones are going to drive the bus and take the global economy forward.

FORERO: And so, she says, it's essential for Latin America to continue what she called its very sustainable, well-balanced path.

Juan Forero, NPR News, Sao Paulo.

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