Latin Finance - May 2008 - 94
therese rabieh Pension Shock Due As the US slides into recession, Gil Díaz is generally bullish on LatAm in the short to medium-term. He believes growing demand from emerging market powerhouses China and India will likely pick up the slack while the US economy wallows in the doldrums. Further down the line, however, Gil Díaz says the biggest threat facing Mexico and other LatAm countries is a ticking pension time bomb. He adds that Mexico’s private pension system is in good shape and President Calderón’s rejig of public sector pensions last year was a great step toward heading off the crisis. But the pension systems of quasigovernment entities like the Federal Electricity Commission (CFE) and state oil monopoly Pemex are still in dire need of reform. “A lot of us are going to have problems with our pensions in the long term,” says Gil Díaz. Gil Díaz remains well connected in the public sector. He breaks from this interview to banter on the phone with “Don Memo” – Mexican central bank governor Guillermo Ortiz – about skiing and family. As a former finance minister, however, he prefers not to comment on the current administration, other than to refer to his successor Agustín Carstens as a great minister and economist with “extraordinary political ability.” Asked who has done the most good for Mexico’s economy over the last 20 years, Gil Díaz praises Pedro Aspe for pushing privatization as finance minister from 1988-1994 under President Salinas. Going back further, he singles out Antonio Ortiz Mena, who oversaw the legendary growth spurt known as the “Mexican Miracle” as finance minister from 1958-1970. Ortiz Mena died last year. Locals Pick up Slack by James Crombie The bank market reversal against borrowers is tempered by liquidity on the ground, says loans veteran Therese Rabieh. rom her expansive office balcony, Therese Rabieh surveys the booming São Paulo landscape and reflects on advances since she started working in the Brazilian city in 1976. “Companies as well as banks are stronger financially and there is today more confidence in Latin America as a region,” the general manager of Banco WestLB do Brasil, who recently relocated back to Brazil from New York, tells LatinFinance. “This has happened gradually due to stable government, sound monetary policies and the continued ascension of the price of commodities.” A major positive trend, says Rabieh, is the continued growth of Asian economies and their influence on commodities, which ushered an influx of hard currency. However, exogenous factors are much more influential in the loans market, Rabieh’s area of expertise for many years. In an April interview, she notes tightening liquidity and increased cost of funds for lenders, which is driving up spreads for the end user. But she is optimistic. “Once this issue is resolved, hopefully in the not too distant future, the market will return to normality as many companies and banks in Latin America are very sound and the countries – especially Brazil, Mexico , Chile and Peru – will continue to experience stable economies, continued investments and growth,” says Rabieh. The banker notes how stability has underpinned increases in volume and tenors for LatAm bank market borrowers. “The banking sector experienced an incredible consolidation and today we have huge banks that can commit large amount of money to deals,” says Rabieh, adding that financings can be for seven years or longer. “Today we can also count on the participation in this market of the local banks which are doing extremely well and are very liquid,” she adds. Like most observers, Rabieh most fears a sharp recession in the US that affects the Asian markets and subsequently reverses the rise in commodities. “The vulnerability of the region to outside crises is decreasing which is a very positive sign,” she adds, predicting stability for Brazil, Mexico and Chile despite what happens in the US, partly because of Asian – especially Chinese – consumption. LF F Avoiding the Slim Crush Gil Díaz clearly relishes having steered the government’s finances himself under President Vicente Fox. But he seems more relaxed than in his last job, and says that there is a simple explanation for a more laid back composure. “There’s nobody bugging me to spend more,” he says. “You can’t imagine how much less stress that means for me.” “Every ministry, be it communications, health, education or social development has needs that a budget 10 times bigger would not meet,” he says. “Everyone is under pressure . . . where is it all directed? At the finance minister.” A former head of local cell phone company Avantel, Gil Díaz as finance minister often took aim at telecom tycoon Carlos Slim, criticizing his dominance of the market. Being in the driving seat at Telefónica has put him back in the ring with his old adversary, who he must now play at his own game. With Telmex trying to sue the Spanish company for monopolistic practices in Chile, a chummy friendship is unlikely to sprout between the two men in the near future. So after being at loggerheads with one of the worlds richest men while representing the government, what is it like having to compete with him again in the private sector? “It’s like when you’re skiing and there is an avalanche on top of you. You try to ski faster and prey to God that you don’t get crushed,” quips Gil Díaz. LF 94 LATINFINANCE May 2008
Latin Finance - May 2008
Table of Contents for the Digital Edition of Latin Finance - May 2008
Latin Finance - May 2008
Contents
20 Years in Review
Markets Outlook
Awards - 20 Years of Excellence
Roger Thomas
Jose Olympio
Roberto Setubal
Bill Rhodes
William Rhodes
China and Latin America
Michael Pettis
Mohamed El-Erian
Nicholas Brady
Pedro Pablo Kuczynski
Brazilian Investment Banking
Maria Helena Santana
Fernando Henrique Cardoso
Henrique Meirelles
Arminio Fraga
Andres Velasco
José Pablo Arellano
Codelco
Eduardo Elsztain
Julio Torres
Mark Mobius
Larry Summers
Charles Dallara
Martin Schubert
Claudio Loser
Francisco Gil Diaz
Hans Humes
Francisco Gil Diaz
Therese Rabieh
Nina Shapiro
Enrique Garcia
Angel Gurria
Susan Segal
Martin Krause
Alberto Benavides
Hans Schulz
Lee Buchheit
Latin Finance - May 2008 - Latin Finance - May 2008
Latin Finance - May 2008 - Cover2
Latin Finance - May 2008 - Contents
Latin Finance - May 2008 - 2
Latin Finance - May 2008 - 3
Latin Finance - May 2008 - 4
Latin Finance - May 2008 - 5
Latin Finance - May 2008 - 6
Latin Finance - May 2008 - 7
Latin Finance - May 2008 - 8
Latin Finance - May 2008 - 9
Latin Finance - May 2008 - 10
Latin Finance - May 2008 - 11
Latin Finance - May 2008 - 12
Latin Finance - May 2008 - 13
Latin Finance - May 2008 - 14
Latin Finance - May 2008 - 15
Latin Finance - May 2008 - 16
Latin Finance - May 2008 - 17
Latin Finance - May 2008 - 20 Years in Review
Latin Finance - May 2008 - 19
Latin Finance - May 2008 - 20
Latin Finance - May 2008 - Markets Outlook
Latin Finance - May 2008 - 22
Latin Finance - May 2008 - 23
Latin Finance - May 2008 - 24
Latin Finance - May 2008 - 25
Latin Finance - May 2008 - 26
Latin Finance - May 2008 - 27
Latin Finance - May 2008 - 28
Latin Finance - May 2008 - 29
Latin Finance - May 2008 - 30
Latin Finance - May 2008 - 31
Latin Finance - May 2008 - 32
Latin Finance - May 2008 - 33
Latin Finance - May 2008 - 34
Latin Finance - May 2008 - 35
Latin Finance - May 2008 - 36
Latin Finance - May 2008 - 37
Latin Finance - May 2008 - 38
Latin Finance - May 2008 - 39
Latin Finance - May 2008 - 40
Latin Finance - May 2008 - 41
Latin Finance - May 2008 - 42
Latin Finance - May 2008 - 43
Latin Finance - May 2008 - 44
Latin Finance - May 2008 - 45
Latin Finance - May 2008 - 46
Latin Finance - May 2008 - 47
Latin Finance - May 2008 - Awards - 20 Years of Excellence
Latin Finance - May 2008 - 49
Latin Finance - May 2008 - Roger Thomas
Latin Finance - May 2008 - Jose Olympio
Latin Finance - May 2008 - Roberto Setubal
Latin Finance - May 2008 - William Rhodes
Latin Finance - May 2008 - China and Latin America
Latin Finance - May 2008 - 55
Latin Finance - May 2008 - Michael Pettis
Latin Finance - May 2008 - 57
Latin Finance - May 2008 - Mohamed El-Erian
Latin Finance - May 2008 - 59
Latin Finance - May 2008 - Nicholas Brady
Latin Finance - May 2008 - 61
Latin Finance - May 2008 - 62
Latin Finance - May 2008 - Pedro Pablo Kuczynski
Latin Finance - May 2008 - Brazilian Investment Banking
Latin Finance - May 2008 - 65
Latin Finance - May 2008 - 66
Latin Finance - May 2008 - 67
Latin Finance - May 2008 - 68
Latin Finance - May 2008 - 69
Latin Finance - May 2008 - 70
Latin Finance - May 2008 - Maria Helena Santana
Latin Finance - May 2008 - Fernando Henrique Cardoso
Latin Finance - May 2008 - 73
Latin Finance - May 2008 - 74
Latin Finance - May 2008 - Henrique Meirelles
Latin Finance - May 2008 - Arminio Fraga
Latin Finance - May 2008 - 77
Latin Finance - May 2008 - 78
Latin Finance - May 2008 - Andres Velasco
Latin Finance - May 2008 - Codelco
Latin Finance - May 2008 - Eduardo Elsztain
Latin Finance - May 2008 - 82
Latin Finance - May 2008 - 83
Latin Finance - May 2008 - Julio Torres
Latin Finance - May 2008 - Mark Mobius
Latin Finance - May 2008 - 86
Latin Finance - May 2008 - Larry Summers
Latin Finance - May 2008 - Charles Dallara
Latin Finance - May 2008 - Martin Schubert
Latin Finance - May 2008 - Claudio Loser
Latin Finance - May 2008 - Hans Humes
Latin Finance - May 2008 - 92
Latin Finance - May 2008 - Francisco Gil Diaz
Latin Finance - May 2008 - Therese Rabieh
Latin Finance - May 2008 - Nina Shapiro
Latin Finance - May 2008 - Angel Gurria
Latin Finance - May 2008 - 97
Latin Finance - May 2008 - Susan Segal
Latin Finance - May 2008 - Martin Krause
Latin Finance - May 2008 - 100
Latin Finance - May 2008 - Alberto Benavides
Latin Finance - May 2008 - Hans Schulz
Latin Finance - May 2008 - 103
Latin Finance - May 2008 - 104
Latin Finance - May 2008 - 105
Latin Finance - May 2008 - 106
Latin Finance - May 2008 - 107
Latin Finance - May 2008 - 108
Latin Finance - May 2008 - 109
Latin Finance - May 2008 - 110
Latin Finance - May 2008 - Lee Buchheit
Latin Finance - May 2008 - 112
Latin Finance - May 2008 - Cover3
Latin Finance - May 2008 - Cover4
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