The Japanese government may announce next week a $500 million contribution to a U.S.-proposed fund to encourage private investment in Latin America and the Caribbean.
The announcement is expected at the Inter-American Development Bank's annual meeting, to be held in Nagoya, Japan.The $500 million would match President Bush's proposal that the United States provide $500 million for the fund over the next five years.
When Mr. Bush unveiled his Enterprise for the Americas Initiative last June, he called on Japan and European countries to join in financing the fund for a total of $1.5 billion.
The Bush initiative also would grant foreign debt relief for Latin America and the Caribbean and lay the basis for a Western Hemisphere "free trade zone."
The proposed investment fund would reward Caribbean and Latin American countries adopting policies to foster more private investment. It would finance technical assistance, worker retraining and education, and small enterprises in those countries.
A Japanese contribution could be a major step toward the fund's realization because the U.S. Congress may condition its approval of the fund on other wealthy countries contributing to it.
The fund would be managed by the Inter-American Development Bank.
Meanwhile, said Enrique Iglesias, the bank's president, the bank plans to make its first "investment sector" loans to countries carrying out private investment reforms.
The first four countries likely to receive this financing are Chile, Colombia, Jamaica and Uruguay, he said.
In another move to promote private investment in Latin America and the Caribbean, the bank is considering making loans directly to private enterprises in the region. Invariably, it lends to governments or financial intermediaries.
The bank, Mr. Iglesias believes, could particularly play a role in helping finance infrastructure projects undertaken by private companies.
This year, he estimated, the bank may lend as much as $5 billion, a record high and over $1 billion more than last year. For the first time, it also will help ease the region's foreign debt burden directly.
Together with the World Bank and the International Monetary Fund, the Inter-American Bank shortly will assist the reduction of Uruguay's commercial bank debt. Other such joint operations may follow for other countries, Mr. Iglesias said.
Overall, he detects some "moderately optimistic" signs for Latin America, including the end of a debt crisis in some major countries.
Bank staff economists estimate that the region may resume economic growth this year, after last year's contraction. They project a 3 percent growth rate in 1991 and an average 4 percent annual growth over the next three years.
Mr. Iglesias cautioned that such estimates are less than firm because of uncertainties in Brazil and Argentina.