Financial Watch

The International Monetary Fund supports the adoption of a tax on capital inflows to stem the excessive appreciation of currencies in some Latin American economies, said Nicolas Eyzaguirre, the director of the fund’s Western Hemisphere department.

Latin American economies should consider “carefully designed” taxes to avoid volatility in their currency markets, he said. The taxes would be appropriate where fiscal policy “discipline” is in place, he said.

“In the cyclically more advanced economies in the region, the immediate task is to begin to withdraw stimulus policies,” Eyzaguirre said.