NEW YORK, Nov. 11 (UPI) -- Latin American markets were mixed this week, as easing oil prices helped some countries while local issues weighed on others.
A Standard and Poor's report said Wednesday that despite the return to power of leftists in many Latin American nations, the traditional fear that investors have of left-leaning policies is waning.
The reason: sensible economic policies on the part of most leaders.
"Although it is probably too early to definitively judge if this is a permanent trend, greater convergence of economic policy across the political spectrum could have a positive impact on credit ratings over the medium term," the report noted.
Leading the pack of leftist-leaders-turned-economic-pragmatists is Brazil's President Luiz Inacio Lula da Silva.
While coming from a decidedly unorthodox political background, his economic policies have proved anything but, and he is acting as a balm for investors burned in the past by the region's left-leaning populist leaders.
Through much of the last four decades, Latin American politics have swung from the rightist dictatorship to the leftist demagogue. By and large, economics have suffered less under the former, while the latter was associated with financial chaos.
But with the ascension of Lula and other leaders, this cycle is being broken.
"Recent experience seems to suggest that the alternation of power between parties of different political bias does not necessarily lead to a substantial change in the direction of economic policy," the S&P report stated.
A good example of this is the election of the leftist President Tabare Vazquez in Uruguay earlier this month. Although a populist politically, Vazquez has indicated he will take a centrist economic path.
That was good enough for Moody's Investor Service to upgrade Uruguay's ratings outlook on Wednesday to stable from negative, as Vazquez has sworn to maintain a solid primary budget surplus.
All of which is good news for the economies of Latin American countries and foreign investors alike, as leaders of all political stripes in the region have taken the track of economic responsibility.
"The assessment of political risk does not hinge on ideology, but on the willingness and ability of a government to pursue policies that strengthen credit-worthiness and avoid default," S&P wrote.
Brazil's Financial Minister Antonio Palocci said Wednesday that the country's economy was "on track" for long-term growth, but that leaders must remain vigilant on inflation and fiscal responsibility.
"For the first time in 30 years, we have the elements in place to sustain development," Palocci said Wednesday to a group of business leaders in Brasilia, the capital.
Palocci highlighted the trade balance, which this year could leave Brazil with a record $34 billion surplus. He also noted that inflation is under control, with a forecast of between 6 and 7 percent this year.
But Palocci was quick to underscore the importance of an inflation-fighting regime at the Central Bank, which has come under fire for its recent hike of the key interest rate to 16.75 percent.
The market forecast for Brazil's growth this year is between 3 percent and 3.5 percent, a modest figure made so because of a lack in government investment, analysts say.
Brazil's Bovespa stock index closed at 23,455 Wednesday, down 205 points for the week.
Argentina's Central Bank President Martin Redrado said Wednesday that Argentina is looking to ease credit access for companies that failed after the government defaulted in 2001.
Redrado said that banks will be permitted to give a "normal" category rating to companies that have restructured their debts in the last three years, which previously wasn't allowed. This will make it easier for those companies to get their hands on credit.
Since the government's default and the subsequent currency devaluation, credit has been nearly non-existent for Argentine companies, especially small and medium-sized businesses.
That has hampered efforts at kick starting the economy, as many business executives say they want to grow but just don't have to cash to accomplish it.
Lending to private companies is bouncing back this year, up 20 percent after falling 12 percent last year.
The relaxation of how to categorize defaulted companies -- along with an increase in maximum bank loans to three times a company's net worth -- should improve the bank-lending scene dramatically.
For the week, Argentina's Merval stock index gained 11 points to end at 1,297.
The head of the International Monetary Fund said this week that Mexico must keep working hard toward economic reforms.
Rodrigo Rato said that the country has to tackle tax problems, most importantly to lessen Mexico's reliance on oil revenues.
Rato met with President Vicente Fox and other leaders while visiting the country this week.
"I am optimistic Mexico will seize the opportunity now given by a benign external environment and high oil prices to build a consensus for structural reforms that are needed to sustain a higher growth path, create employment and reduce poverty and inequality," Rato said.
Despite some signs of growing cooperation, however, Mexico's Congress continues to block many of the reforms that Fox has moved to enact since he took power in 2000.
Rato also said that reforms are needed in Mexico's judicial system, its energy and labor markets, and the telecom industry.
Mexico's IPC stock index added 28 points this week to close at 11,794.
Chile's economy beat market forecasts and jumped 7.7 percent in September. Analysts say a surprising increase in domestic spending, coupled with the continuing strength of exports, led to the increase.
All of which prompted Finance Minister Nicolas Eyzaguirre to hike the growth forecast for this year to 5.5 percent, up from 5.1 percent.
The country's Central Bank said this week that the "Imacec" economic activity index grew by its swiftest margin in six years for September, as industrial output and brisk mining business buoyed that indicator.
"When businesses invest in such a manner it means that future expectations are fantastic," Eyzaguirre said. "They are anticipating that demand is going to remain high, which means that even if the world economy is a little weaker in 2005, we'll grow."
For the week, Chile's IPSA stock index lost 26 points to end at 1,745.
The local press is reporting that Venezuela is trying to secure a $1 billion loan from the Inter-American Development Bank. The money would be used to fund investment projects in the country.
El Universal newspaper reported that the loan would be used to complete the Tocoma hydroelectric dam.
The newspaper also reported that the loan would be used to fund social projects President Hugo Chavez is pushing for, particularly in the realm of education.
That contradicts earlier statements from the Chavez government that any loans taken from multilateral organizations would be used solely to fund infrastructure projects.
The government -- which has seen a windfall in revenues on the back of high oil prices -- is still running a budget deficit. The government has also tapped the Central Bank's foreign exchange reserves to fund social projects.
For the week, the country's IBC stock index lost 644 points to close at 29,413.
The Colombian government this week sold $375 million worth of peso-denominated debt, as foreign investors' appetite to take on local risk in the country has grown of late.
The government sold the debt -- which matures in 2010 -- for a yield that is lower than market expectations.
Government officials said about 65 percent of the offering was bought by U.S. investors, while Europeans bought about 30 percent.
The debt offering was a big win for Colombia, only the second Latin American nation to successfully make such an offering in its own currency this year.
Aiding the sell is the weakened U.S. dollar, which has driven investors out of the U.S. debt market in search of higher returns abroad.
Colombia's IGBC stock index added 215 points this week to close at 4,093.
