MEXICO CITY -(Dow Jones)- Latin America isn't immune to the European debt crisis and should prepare to confront possible turbulence, keeping prudent fiscal policies, International Monetary Fund Managing Director Christine Lagarde said in an article published Friday, just days ahead of starting a tour to the region.
Latin American countries "should continue rebuilding buffers, including by maintaining prudent fiscal policies--this would create room for maneuver should the economic situation turn sour," Lagarde said in an article published on the blog iMFdirect.
Lagarde, whose planned tour next week takes in Peru, Mexico and Brazil, said fiscal consolidation shouldn't come at the expense of needed social programs or investment in education or infrastructure.
"Better to explore the scope for mobilizing more revenues, where tax collections are low, or making spending more focused and efficient," she said.
Lagarde, who will hold meetings with leaders of the three Latin American countries, heads to a region that has weathered the global crisis relatively well, although last month the IMF trimmed its 2012 economic growth forecast for Latin America and the Caribbean to 4% from 4.2%.
"Growth alone is just the first step. The region in general needs more socially inclusive growth," she wrote, adding that historically, "inequality has been the bane of Latin America."
In the article, Lagarde said Mexico needs to implement structural overhauls to unleash economic growth. The second-largest Latin American economy is growing at a steady pace this year, but economic and monetary authorities have called for fiscal, labor and energy overhauls to be able to grow at much faster rates.
The key challenge for Brazil, Largarde said, will be to increase domestic savings to reach higher sustained growth, while Peru would benefit from continued reforms for more inclusive growth while preserving its hard-won macroeconomic stability.
Lagarde plans to meeting with Peruvian President Ollanta Humala on Monday. She travels to Mexico City Tuesday, where she will meet with Bank of Mexico Governor Agustin Carstens, and with President Felipe Calderon.
Arriving in Brasilia on Thursday, Lagarde will have a meeting with President Dilma Rousseff, Finance Minister Guido Mantega and Central Bank President Alexandre Tombini.
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Latin American countries "should continue rebuilding buffers, including by maintaining prudent fiscal policies--this would create room for maneuver should the economic situation turn sour," Lagarde said in an article published on the blog iMFdirect.
Lagarde, whose planned tour next week takes in Peru, Mexico and Brazil, said fiscal consolidation shouldn't come at the expense of needed social programs or investment in education or infrastructure.
"Better to explore the scope for mobilizing more revenues, where tax collections are low, or making spending more focused and efficient," she said.
Lagarde, who will hold meetings with leaders of the three Latin American countries, heads to a region that has weathered the global crisis relatively well, although last month the IMF trimmed its 2012 economic growth forecast for Latin America and the Caribbean to 4% from 4.2%.
"Growth alone is just the first step. The region in general needs more socially inclusive growth," she wrote, adding that historically, "inequality has been the bane of Latin America."
In the article, Lagarde said Mexico needs to implement structural overhauls to unleash economic growth. The second-largest Latin American economy is growing at a steady pace this year, but economic and monetary authorities have called for fiscal, labor and energy overhauls to be able to grow at much faster rates.
The key challenge for Brazil, Largarde said, will be to increase domestic savings to reach higher sustained growth, while Peru would benefit from continued reforms for more inclusive growth while preserving its hard-won macroeconomic stability.
Lagarde plans to meeting with Peruvian President Ollanta Humala on Monday. She travels to Mexico City Tuesday, where she will meet with Bank of Mexico Governor Agustin Carstens, and with President Felipe Calderon.
Arriving in Brasilia on Thursday, Lagarde will have a meeting with President Dilma Rousseff, Finance Minister Guido Mantega and Central Bank President Alexandre Tombini.
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