Page last updated at 23:23 GMT, Friday, 27 March 2009

Chile tells PM 'we saved for now'

Gordon Brown with Chilean President Michelle Bachelet
Michelle Bachelet endorsed the PM's efforts to seek a global solution

Chile's president has told Gordon Brown how her country "saved in the good times" in order to spend in the bad.

Michelle Bachelet's comments came at a joint news conference as the UK prime minister was in Chile as part of a pre-G20 summit support-building trip.

BBC political editor Nick Robinson said Ms Bachelet's comments echoed Tory criticisms and she appeared to be unaware of how unwelcome they would be.

The Tories said Mr Brown was getting lessons on managing public finances.

Our correspondent said Mr Brown, who is the first UK prime minister to visit Chile, is a particular admirer of Ms Bachelet, who has spent much of her country's copper wealth on relieving poverty, investing in public services and improving education.

The Chilean president had warmly endorsed Mr Brown's leadership of the G20 and his efforts to seek a global solution to global economic problems, our correspondent said.

World leaders will meet next week in London to discuss measures to tackle the downturn. See our in-depth guide to the G20 summit.
The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.

She also called for those countries involved to agree to a co-ordinated fiscal stimulus at their conference in London next week.

But she went on to say that because of decisions made in the good times, Chile had prepared for the bad.

Chile set up two sovereign wealth funds to save and later invest the proceeds of its recent impressive growth.

"I would say that because of our decision during the good times, we decided to save same of the money for the bad times," Ms Bachelet told the news conference in Santiago.

"And I would say that policy today is producing results. So when we develop our fiscal stimulus plan, we could make one that is 2.8% of GDP."

Emerging economies

Ms Bachelet did go on to point out the UK had introduced a stimulus of more than 2% of GDP.

Mr Brown responded by insisting that the International Monetary Fund believed the UK was better prepared than most countries for the economic crisis.

Ms Bachelet's words appeared to echo Tory leader David Cameron's criticism that Mr Brown did not "fix the roof while the sun was shining".

Mr Osborne said: "The president of Chile is right to point out, as we have done, that countries that put aside money in the good years are the ones that can afford to spend that money now without adding recklessly to national debt.

"Gordon Brown is getting lessons from the Latin Americans about sound public finances. You couldn't make it up."

The prime minister has been holding a series of meetings in Chile, one of the continent's best-performing economies.

Emerging economies, which are an increasingly powerful voice within the G20, are unhappy the destabilisation of the banking system in the US and Europe has resulted in economic suffering for the world's poorest countries.

Brown: "Things that people could not have thought possible several months ago are now happening"

During Mr Brown's visit to Brazil, the Brazilian president Luiz Inacio Lula da Silva raised eyebrows when he claimed the financial crisis was caused by "white, blue-eyed people".

Mr Brown has stressed the need to support developing countries through the economic turmoil, proposing a $100bn fund to underwrite faltering world trade.

Earlier, the prime minister said people should not be "cynical" about what could be achieved at next week's G20 meeting and that he was optimistic about the outcome.

His comments followed those of Foreign Office minister Lord Malloch Brown, who said the conference had to produce more than "empty promises".

Lord Malloch Brown, who has been closely involved in preparations for the summit, warned the G20 "can't again engage in meaningless, empty commitments".

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