Latin America’s shift to the right and to pro-market policies is reshaping its relationship with Donald Trump’s Washington, including new flows of resources from multilateral institutions historically demonized in the region for advocating fiscal austerity.
This alignment was evident at the annual meetings of the International Monetary Fund (IMF) and the World Bank, held last week in Bangkok. Officials from the so-called Bretton Woods institutions demonstrated support for many of the policies adopted by the new Trump-aligned governments and reported a rising demand in the region for financing and economic guidance.
“Indeed, we are seeing a shift in the direction of policies,” said Nigel Chalk, director of the IMF’s Western Hemisphere Department, during a Friday press conference. “We view our role as supporting this transition to more socially conscious policies, more fiscally responsible, and more market-oriented in the region.”
The expansion of this presence coincides with a deep reshaping of the Latin American political map, marked by the election of leaders more aligned with Trump.
According to Chalk, the IMF currently has ten active programs in the Americas, out of a total of 35 lending programs in effect. This includes a precautionary line of credit for Chile, new financing for Bolivia, and negotiations underway with Colombia for a new program. All these countries recently elected presidents supported by Trump. The IMF also maintains activity in El Salvador and Argentina, inspired by the MAGA movement, while both the Fund and the World Bank resume their relationship with Venezuela under Washington’s influence.
Still, Chalk and his counterpart at the World Bank, Susana Cordeiro Guerra, stated that policy does not play a role in the institutions’ decisions and avoided mentioning Trump in this week’s discussions.
“The bank is, to the extent possible, agnostic about the politics of reforms,” said Cordeiro Guerra. According to her, the increased engagement with these leaders stems from the fact that “the overlap with the employment and growth agenda is enormous.”
Although the relationship of many world leaders with Trump is more personal and transactional than ideological, the Republican Party has traditionally supported fiscal discipline and the pro-market policies advocated by the IMF, known as the Washington Consensus, as well as having greater alignment with right-wing parties on issues such as immigration and security.
Javier Milei, from Argentina, had already established himself as the region’s main conservative symbol, using a chainsaw as an icon of his austerity program. Last year, the country received a US$20 billion IMF package, despite concerns from some IMF board members about US$12 billion disbursed upfront. This week, IMF Managing Director Kristalina Georgieva shared the stage with Argentine Economy Minister Luis Caputo and pointed to Argentina as an example to be followed.
In Chile, the pro-market reformer José Antonio Kast took office this year and in August was granted a renewal of a flexible credit line with the IMF.
In Colombia, President Abelardo de la Espriella took office in August and is negotiating a new program to address the fiscal deterioration inherited from his predecessor.
Rodrigo Paz, from Bolivia, ended nearly 20 years of socialist governments last year and secured this month a US$1.9 billion program as the country faces its worst economic crisis in four decades. His administration began the gradual dismantling of fuel subsidies and other measures aimed at restoring public finances after years of falling natural gas revenues and dollar shortages.
“Despite the international context, new windows of opportunity are opening for our region and this is the time to act with responsibility to seize them,” said Bolivia’s Finance Minister Christian Andrés Morales this week.
Governments that inherited fiscal imbalances, slow economic growth, or weakened financial reserves are increasingly turning to Washington-based institutions for resources, while implementing policies long advocated by these bodies. In the past, left-wing governments often used the IMF and other multilateral entities as scapegoats for fiscal austerity.
“I get the impression that there is today much more support in the region for the IMF’s role and, more broadly, for the role of multilateralism,” added Chalk.
The IMF’s sister institution, the World Bank, has also expanded its presence.
“We want to reward reformers,” said Cordeiro Guerra in an interview. “This is about doing the hard work and effectively implementing reforms aimed at fiscal consolidation and macroeconomic stability.”
She cited Paraguay, the Dominican Republic, El Salvador, and Panama as examples of governments promoting reforms favorable to the private sector while recording growth above 4% per year.
The bank may lend to Venezuela, which has not received resources from the institution since 2005, up to US$5 billion in the next two years, provided the country settles arrears with other multilateral creditors.
Venezuela resumed formal relations with the Washington-based institution this year, after the United States captured President Nicolás Maduro. This week marked the first participation of Venezuelan officials in IMF and World Bank meetings in more than two decades, including the presence of Economy Vice President Calixto Ortega on a panel beside Chalk.
The World Bank is also preparing a broad financing package for Colombia, another for Barbados, and another for Argentina, which faces more than US$25 billion in debt maturities. All loans depend on approval by the executive board and will mobilize both the Bank’s public and private arms.
Negotiations with Colombia include three separate loans aimed at expenditure efficiency, energy, and health, said Cordeiro Guerra, without disclosing the amounts. The bank intends to use a similar framework in Barbados to support payments regulation and digital government payments.
Part of this financing will follow a model already used in Argentina, where the World Bank supported a commercial loan of up to US$2 billion. The framework uses the institution’s guarantees to reduce private creditors’ risk, helping governments obtain resources on more favorable terms.
