Definition: Banco del Sur (Bank of the South)launched in 2007 with a capitalization of $7 billion from its seven members: Venezuela, Argentina, Bolivia, Brazil, Ecuador, Uruguay and Paraguay. Not joining are Chile, Peru and Columbia.
Banco del Sur plans to finance infrastructure projects like the $20 billion Gasoducto del Sur gas pipeline which will run from Bolivia to Argentina. It will also provide emergency assistance for natural disasters. (Source: Global Finance, "Banco del Sur Takes Off," January 2008, “Chavez Banks on Regional Support,” May 2007)
Venezuela, Argentina and Ecuador are behind this effort to replace the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB) in Latin America. IMF loans to Latin America have decreased from 80% of its portfolio to less 1% as countries like Venezuela and Argentina have repaid their loans. Venezuelan President Hugo Chavez used oil dollars to accelerate this trend, loaning Argentina the $5 billion it needed to pay off the IMF. (Source: Global Finance, “A Bumpy Ride,” May 2007)
In fact, Argentina's President Christina Kirchner used resentment against the IMF to help her win the 2007 election. Many in South America feel the IMF used loans to influence the economics and politics of the area. For example, the IMF forced privatization of the oil industry in Venezuela in the early 1990’s as part of its loan requirements. In response, Chavez was elected on a platform of restoring the profits of these natural resources to local control, which he accomplished last year.
The IDB has been accused of funding infrastructure development, like the Cana Brava Dam, which destroys local communities and the environment to benefit multi-nationals. (Source: BiCeca, “Belo Horizonte: IDB annual meeting tip sheet," March 28, 2007)