Source:
Argenpress
Fri May 04 2007
According to most analysts it is praiseworthy for Ortega to set the goal of 'breaking free' from IMF recipes during his administration, if the aim, in this case, is to enhance the country’s possibilities in terms of wealth creation, which would imply, in turn, to reach huge internal consensus regarding the course to be taken by Nicaragua. President Daniel Ortega has not yet described the road that would be taken in order to make the dream of becoming independent of IMF ties come true. Adolfo Acevedo believes that the analysis should take into account the deep identity crisis being faced by the IMF.
No sooner had Antenor Rosales – a former Sandinista guerrilla who reached the rank of General in the Army – taken office as president of the Central Bank of Nicaragua than he made the following surprising and rare statement: ‘A goal of the government is to break free from the International Monetary Fund’.
To make such a statement was like stirring up a hornet’s nest. Some people regarded it as a harsh remark by a new official who is more used to dealing with soldiers and equipment than with monetary and financial balances.
Others believed it was just the anticipation of a strategic view on the future of a battered economy that is considered as one of the poorest in the Americas: Nicaragua.
On the evening of April 21, the president of Nicaragua, Daniel Ortega, undertook to confirm that the maybe hasty statement by the retired general was not simply the indiscreet remark of a government official seeking the spotlight.
‘For Nicaragua it would be a blessing to be free from the Fund’, said Ortega, who in order to dispel any doubts about his words, promised Nicaraguan people to break free from the IMF before the end of his presidential term, that is to say, within less than five years.
Ortega’s assertion implies a bold and huge challenge taking into account that over 70 per cent of Nicaraguan people live on one US dollar a day, and that the country’s annual economic growth rate remains below its population growth rate.
Once again the debate has been opened in the country; the hornet’s nest has been stirred up again.
In January, some economists and diplomatic staff had stated that it would be good news if the country no longer depended on the IMF, but others like Swedish ambassador, Eva Zetterberg, considered that ‘at present, that is a dream’.
Her colleague, Bert Van Geel, ambassador of the Netherlands to Nicaragua, agreed with Zetterberg, although stating in a more subtle way that it could be ‘an option for the future’.
From the point of view of economist Róger Cerda, the freedom from IMF control is something that necessarily implies a certain level of sustainability, in all senses, of the Nicaraguan economy.
He said that, in any case, it is about flying on one’s own wings, which means to have enough resources to spend on growth, while also fighting poverty and inequalities, creating jobs, investing on education and many other things.
That is to say, the task is not easy at all and nobody has actually said so, but nor is it impossible and many people think it is desirable as a goal since it points to the existence of national efforts aimed at breaking free from the label of ‘HIPC-country’.
The abbreviation ‘HIPC’ identifies the Initiative for ‘Highly Indebted Poor Countries’ which implies identifying a country as valetudinarian in financial terms, that is to say, that is unable to stand on its own feet.
According to most analysts it is praiseworthy for Ortega to set the goal of ‘breaking free’ from IMF recipes during his administration, if the aim, in this case, is to enhance the country’s possibilities in terms of wealth creation, which would imply, in turn, to reach huge internal consensus regarding the course to be taken by Nicaragua.
That which is not desirable, according to some analysts, among them the Nicaraguan economist, José Luis Medal, is to replace one dependence with another one. Medal suspects that Nicaragua could be thinking of letting Venezuela adopt the Nicaraguan debt to the IMF, which stands at about 63 million dollars, as a way to break free from IMF-imposed controls as soon as possible.
President Daniel Ortega has not yet described the road that would be taken in order to make the dream of becoming independent of IMF ties come true.
The Fund has forced the country to give its most precious assets away in order to sell them at illusory prices to foreign capitals, which now have control over telecommunications, energy distribution and generation, major tourist centres and other assets that were privatised as a result of IMF recipes..
Undoubtedly, Ortega is clear about such road, although he does not talk about it since, after all, tactics should be applied rather than talked about.
In that context, it is worth mentioning the point of view of Nicaraguan economist Adolfo Acevedo, who believes that those colleagues who state that Nicaragua would never be capable of freeing from the IMF, should take into account the deep identity crisis being faced by the institution.
Acevedo underscores that the IMF internal crisis results from the fact that, at this point, practically all middle-income countries in Latin America, Asia and the former Socialist countries have decided – out of their own will – to stop receiving IMF conditional financing.
This, Acevedo says, has posed two really serious problems to the IMF. The first one is a deep financial crisis since it can no longer rely on interest payments previously made by the middle-income countries that have abandoned its guardianship, that is, it has remained without income sources to maintain its huge list of financial bureaucrat staff.
In the second place, it has prompted an existencial crisis resulting from the fact that day after day the IMF loses the bases (countries) that justified its role as inspector or supervisor of the economic health and good course of the economies of low-income countries.
According to Acevedo, the IMF will collapse under its own weight. It is only a matter of time, and besides, it is something to be taken into account in any analysis on the subject.
Ortega’s comments logically pose several questions
* What road will be taken to ‘free’ us from the IMF?
* Is the Bolivarian Alternative for the Americas (ALBA in Spanish) considered as a mechanism of horizontal cooperation and complementarity that may strengthen South-South cooperation?
* How would Nicaragua pay-off its debt to the IMF? How will Nicaragua manage to give trust to the donor community as an economically sustainable country no longer under the tutelage of the IMF?
* No matter what the answers are, the truth is that only time – five or more years – will tell whether the right thing is being done or not.
Related Information:
How would the "maths" of Venezuelan cooperation work within IMF "maths"?, by Adolfo Acevedo (Coordinadora Civil - Nicaragua)
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