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Tuesday, 6 August, 2002, 21:54 GMT 22:54 UK
US finance chief praises Uruguay
Paul O'Neill, US Treasury Secretary
Mr O'Neill is on a whirlwind tour of the region
US Treasury Secretary Paul O'Neill has praised the "sound economic policies" that Uruguay adopted in the face of the country's financial crisis.

In his three hour visit to Uruguay, Mr O'Neill held talks with President Jorge Batlle, economy minister Alejandro Athchugarry and central bank chief Julio De Brun.

Mr O'Neill is on a four day tour of the region and - having already visited Brazil - he is now expected to travel to Argentina, also swept by financial crisis.

Uruguayan food hand-out
Uruguay is awaiting IMF help

HIs arrival in Uruguay coincided with a call for a general strike on Wednesday, in protest at a government freeze on bank deposits.

Last week, the Uruguayan government shut the doors of private and government banks for four days, following a run on deposits.

Over the weekend, the US agreed to provide Uruguay with a $1.5bn emergency loan to help it open its banks on Monday.

When asked why Uruguay received a loan and not Argentina, Mr O'Neill said: "Why Uruguay? Because Uruguay is a country that has followed sound economic policies."

He added: "Even countries that are close by each other are very different and therefore we think the circumstances of each country have to be evaluated separately."

Argentina factor

The US bailout is intended to be nothing more than a sticking plaster, and the cash will be repaid once the IMF comes through with its own funding.

The fact that Mr O'Neill will stay only three hours in Uruguay reflects the country's small economy, as well as the fact that IMF support is taken as read.

Argentine soup kitchen
The worst of Argentina's crisis is over, but worries remain

In Argentina, which has been in the throes of a crisis since late last year, the situation is more complicated.

The worst effects of the financial panic seem to be over, and the new government of President Eduardo Duhalde has held on to power without too much trouble.

But what remains to be established is what longer-term policies the government can put in place to drag the economy out of the stagnation it has suffered since 1998.

Cash support

Although Brazil is by far the least troubled of the three countries on Mr O'Neill's itinerary, it was seen as especially crucial.

Brazil has the biggest economy in the region, is $250bn in debt, and faces a potentially close general election in October.

Brazilian officials hoped Mr O'Neill's visit will help secure financial support from the International Monetary Fund (IMF) in order to tackle a mounting crisis of confidence among international investors.


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