Horst Kohler, managing Director of the International Monetary Fund, says that Central America is facing a "critical time," but one that holds much promise. "The 1990s has been a decade of significant achievements in Central America, including the strengthening of democracy after years of conflict in many countries, progress with economic reforms, and better growth than during the decade of the 1980s" he said. "Recent years, however, have seen a deterioration of economic performance in many countries, partly because of adverse external developments."

Speaking at the Second Annual Roundtable on Central America in El Salvador, Kohler observed that regional standards are essential. He also met privately with ministers and governors from El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua, Panama, and the Dominican Republic.

"In my discussions with the leaders, there was agreement that the continued integration of Central America into the global economy offers clear potential for raising growth, improving living standards, and creating new jobs," he said. "We also agreed that the integration process needs to be anchored in strengthened domestic policies and institutions, and that it will benefit from greater regional cooperation among Central American countries. With increasing financial integration, strengthening cross border cooperation in prudential supervision deserves particular attention."

In discussing how the international community can help Central America achieve these goals, he noted that the successful conclusion of the Doha Trade Round would be particularly important. Furthermore, the "envisaged" regional free trade agreement with the United States (CAFTA) would also offer other potential benefits.

"The IMF stands ready to assist Central America in implementing its agenda of macroeconomic and institutional reforms aimed at enhancing its growth potential. We are continuing our close policy dialogue with the Central American countries, with increased emphasis on the sharing of cross-country experiences and regional surveillance. We are also actively engaged with financial programs in several countries, and intend to increase our technical assistance to Central American countries in the coming years."