By IPS Correspondents
ORANJESTAD, Aruba, May 17 1998 (IPS)

Regional economists are urging Latin American and Caribbean governments to avoid any false sense of security while the region banishes painful memories of the economic crash of the 1980s.

And technocrats are advocating formulation of a “fiscal covenant” which would re-define the role of the state in the context of revolutionary social and economic change while securing the interests of the people of Latin America and the Caribbean.

Over the past five years, economies have grown, foreign capital has flowed freely into the region, inflation has slowed and production and exports are rising, acxcording to official statistics.

The rate of growth in Gross Domestic Product (GDP) is now in the vicinity of 4.5 percent, capital inflows are more than compensating for balance-of-payment deficits; a regional inflation average that once reached triple digits in the 1980s is now about 12 percent and, in 1997, regional exports grew by 5.9 percent. This contrasts greatly with the period of crisis that plagued vulnerable small economies and brought regional economic giants such as Mexico and Argentina to their knees.

Now, with to facilitate sustained increases in regional exports and has accelerated private capital inflows – the experts are making measured pronouncements about the good fortunes of the region as a whole.

Through it all, though, some disturbing trends have continued to take root. The urban unemployment rate which averaged 6.2 percent in 1991-1994 reached 7.7 percent in 1996, adjustment programmes have not always achieved conditions of sustained fiscal stability and banking crises in some countries have had devastating effects.

“The experience of Latin America and the Caribbean shows clearly that economic growth is an extremely useful tool for improving social development,” says Executive Secretary of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).

“But it is not enough. We must make special efforts to improve the living conditions of the population,” he says. “This mixed picture of strengths and weaknesses shows that more effort is needed to create a fiscal regime capable of harmonising macroeconomic stability with government responsibilities in the areas of growth and equity,” Ocampo says.

It is a view shared by Prime Minister of Aruba, Henny Eman, who says he believes there should be “a tremendous internal effect based on high-quality development capable of meeting the challenges posed by the search for equity.”

“To that end,” he argues, “each of our countries, through all the uncertainties, risks, successes and failures the effort entails, must develop its own internal vision in order to address with decision the fascinating task of achieving economic, social and political development.”

Eman concedes that “there is no one single formula for defining

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