WASHINGTON (AP) The International Monetary Fund, seeking to prevent Argentina's continuing economic troubles from spreading to neighboring countries, moved on Tuesday to bolster the financial resources of both Brazil and Uruguay.
The IMF's executive board cleared the way for Brazil, South America's biggest economy, to borrow an additional $10 billion.
Last week, Brazilian authorities said they would use new IMF loan money to help calm jittery financial markets.
Board approval of Brazil's economic program came in a scheduled review of that country's performance under an IMF loan program started last September.
Also on Tuesday, the IMF staff announced that it was recommending increasing Uruguay's $769 million credit line by $1.5 billion.
Deputy Managing Director Eduardo Aninat said the recommendation would go to the executive board for approval on June 24.
''The crisis affecting the region has had more adverse effects on the Uruguayan economy than previously anticipated,'' Aninat said in a statement.
The government of Uruguay had requested an increase in the two-year IMF credit line originally approved on March 25.
Aninat praised the economic reforms being pursued by Uruguay, including the creation of a special fund to bolster the nation's banking system.
''The Uruguayan authorities have continued to respond decisively to these events and the revised program they have submitted rightly focuses on strengthening the confidence in the banking system,'' Aninat said.
Uruguay has been battered more than any other country by the economic crisis in neighboring Argentina.
An IMF team was dispatched to Argentina last week to begin negotiations on resuming of loans to that country, which was forced in December to default on $141 billion in foreign loans.
Argentina's currency has plummeted to near-record lows this year as investors have become concerned about a possible government default and the outcome of national elections in October.
Argentine officials said last week that in addition to drawing down $10 billion in new IMF loans, they planned to tighten the government's fiscal policy and buy back $3 billion in foreign debt.