A new consensus.

Known as the father of the Washington Consensus, a 10-point plan designed to spur economic growth in emerging countries, economist John Williamson since has seen his recommendations intensely criticized. Crises of the late 1990s thrashed the region's pro-market economies. After the spectacular crash of the Argentine economy, many complained that the Washington Consensus hurt more Latin Americans than it ever helped. Williamson talks with LATIN TRADE Correspondent Thierry Ogier about his newly revised look at the idea in a book, edited with Peruvian Finance Minister Pedro-Pablo Kuczynski, After the Washington Consensus: Restarting Growth and Reform in Latin America.

Was there some flaw in the original Washington Consensus?

People who tried to go down that road did tend to take it too much as a sort of ready-made recipe. They thought that if they simply followed those 10 rules, then everything else would follow. Of course, it was incomplete. We've tried to make this very clear in this new work. In the original version we did not talk about certain policies that would be necessary to avoid crises while stabilizing the economy. Chile did those things in the 1990s, and I think that is one reason why Chile's performance was so much better than the rest of Latin America.

Does Brazil today represent a good example of how the idea could be fixed?

I don't think these were mistaken policies, I just think that they were incomplete. I hope it's the way things are going to go [in Brazil]; it's a bit early to be sure as yet. At the moment, things look quite hopeful, yes.

Could Brazil serve as a good example of a post-Washington Consensus country, as Chile did in the previous decade?

It may turn out that way. I still worry a little bit about whether they will go for something that would look too much like industrial policy for my taste. Brazil is a case where it could try to rationalize public expenditure instead of raising taxes ... in order to get debt down.

Does Brazil need International Monetary Fund (IMF) backing?

Not really.... Pedro-Pablo Kuczynski had a lovely phrase when he was [previously] in office: "It's like the number of the fire department, you stick it on the front door in case of need, in case there's a crisis, but you don't go calling it up everyday." It seems to me that the crisis has now been resolved in Brazil, so there's no need to maintain or create a new accord with the IMF.

So, Brazil can live without the IMF?

It's my view, yes.

What is your assessment of the transition from the previous Brazilian government, especially at the finance ministry, between ministers Pedro Malan and Antonio Palocci?

It was a model transition. Brazil came out looking very good from that transition ... Some obstacles have already been lifted. There's a good chance that interest rates in Brazil will be lower in the next few years ... At the moment it looks like things are going in the right direction.

Is Brazil still vulnerable to external shocks?

Suppose there was a big increase in the price of petroleum. That for some reason, Saudi Arabian production suddenly fell off due to some sort of political crisis, and the price of oil goes to US$60 a barrel ... [then] there will be an impact on Brazil's balance of payments. Would Brazil be in a position to offset that either by having a more expansionist fiscal policy or by drawing on reserves? No, I don't think it would. For the next several years, if something like that happened, there would be little alternative but to let it feed through into slower growth.