However, it is equally clear that many Latin American countries have reduced their traditional sources of vulnerability (i.e., a heavy reliance on external sources of finance, weak fiscal regimes and a volatile macroeconomic environment) through impressive improvements in economic policies and supporting institutional arrangements.
Despite significant differences between countries, some general trends are clearly distinguishable: •  The quality of fiscal policies has improved considerably as many countries have used the favourable conditions for fiscal consolidation and have made fiscal policies more transparent. •  Monetary and exchange rate policy frameworks have become more sophisticated and the credibility of the policies has improved as inflation rates have declined.