Source:
IFIs Latin American Monitor
Tue Jan 30 2007
Rafael Correa’s rise to the presidency on January 15 2007, marks a significant shift in the perspective from which Ecuador was handling its relationship with International Financial Institutions, and particularly with the IMF. President Correa seems willing to reformulate the relationship between Ecuador and multilateral institutions with the support of the future Constituent Assembly.
From the beginning, he adopted a position that was seen as opposed to IMF policy. As Economy Minister under President Alfredo Palacios, he resisted IMF pressure and local economic interests in conflict over oil revenues until submitting his resignation.
His work during the election campaign and the appointment of his ministerial cabinet are also in agreement with his discourse of marked opposition to the neo-liberal policy that prevailed in the country for over two decades and resulted in the exclusion of a large part of the population from the national income distribution system.
Upon taking office, following a second round of voting which gave him 56 per cent of the votes, Correa has the support of most part of the middle class and the Ecuadorean indigenous community. The latter handed power to him at a ceremony of great symbolic content attended by the Presidents of Venezuela, Hugo Chavez, and Bolivia, Evo Morales.
Correa, the external debt and the relationship with the IMF
One of the campaign promises that had more repercussions was that about examining the issue of external debt, even dealing with the possibility of an Argentine-like debt renegotiation.
With regards to the IMF, whenever he had the chance, Correa criticised the participation of the institution in the country’s economy.
In this sense, one week before taking office, Ricardo Patiño, Minister of Economy and Finance, pointed out – following a meeting with IMF representatives – that Ecuador will pay off the 33 million dollars owed to the multilateral institution and will no longer resort to its lending.
This announcement follows the trend towards de-indebtedness and loss of IMF’s influence prevailing in Latin America (and around the world). In this case, the amount to be repaid to the Fund fails to be significant if compared to the 15 billion dollars repaid by Brazil or 9 billion dollars repaid by Argentina, although the fact of ‘doing away with the IMF’ is indeed of major political and symbolic significance.
The same as in the previous cases, local analysts consider the measure to be adequate provided it implies a subsequent responsible fiscal management. According to economist Ramiro Crespo, this decision does not necessarily have to affect the relationship between Ecuador and other multilateral credit institutions, such as is the case of the World Bank and Inter-American Development Bank.
However, President Correa seems willing to reformulate the relationship between Ecuador and multilateral institutions with the support of the future Constituent Assembly. For this purpose, he needs to make changes to the political system, a strong executive power, popular support and support from the rest of the countries within the region.
Related Information:
* Rafael Correa: it is "change of epoch" rather than "an epoch of changes", by ALAI
* Ecuador chose the path of change and sovereignty, by ALAI
* Ecuador, elections and the IMF, by Hedelberto Lopez Blanch
* The resignation of Rafael Correa, Ecuador’s Economy Minister: an example of IFI’s influence?, by IFIs Latin American Monitor
* Minister Correa of Ecuador stands firm before IMF and World Bank, by IFIs Latin American Monitor
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