The IMF And
The Bolivian Crisis
By Tom Kruse
Znet
October 15, 2003
The
current crisis in Bolivia is social, economic and political. Socially,
despite improvement in service coverage, poverty and vulnerability have
been increasing. The vulnerability of families to shocks and displacement,
especially among the rural poor, has worsened dramatically. Economically,
growth has been poor, and accompanied by growing structural unemployment
and underemployment. Over 7 of 10 new jobs created in the past 15 years
have been in the "informal" sector. And politically, Bolivia
faces a dramatic crisis: as never before, governments and the "political
class" - as it is referred to here - face a deep crisis of legitimacy.
These three areas
of crisis are clearly linked to policies imposed by the international
financial institutions, in particular the International Monetary Fund.
Research shows clearly that the policies prescribed by the IMF have,
among other things, not produced strong or sustainable growth; opened
countries, communities and families to new vulnerabilities; exacerbated
inequalities, which puts a brake on growth, stresses political systems
to the breaking point, and engenders new and powerful forms of criminality
and social tension.
Bolivia has been
a model student of such "reforms", and is now also a showcase
for the contradictions and crisis these policies engender. After almost
2 decades or "reform" and structural adjustment, Bolivia is
growing slowly if at all; Bolivians are increasingly vulnerable and
poor; while society n general is increasingly inequitable and patently
unjust. Mention should be made of the political aspect. IMF policy prescriptions
have systematically removed essential economic policy decisions from
political process. This "emptying out" of substantive political
has much to do with the crisis of legitimacy of the "political
class". Successive governments are limited to administering policy
prescriptions. The IMF has recognized the call by Civil society organization
to include "macroeconomic issues" in PRSP dialogs, but disingenuously
(cynically?) suggest that such issues must be taken up by national governments
- the same governments whose hands are tied by IMF conditionalties.
The current crisis
in Bolivia bears the imprint of IMF policies, both in terms of background
conditions and immediate causes. Anemic growth due to factors both internal
and external to Bolivia have resulted in a dramatic fiscal crisis; the
deficit is now estimated at over 8%. IMF prescriptions have been for
more austerity and belt tightening: on the expenditure side the IMF
calls for "flexibilizing" government spending, which means
adjusting public sector salaries to national economic performance; and
permitting the devaluations to erode the value of pension payouts. The
anti-poor nature of these measures should be clear.
On the income side
more and more effective taxation, which in essence means getting more
people, largely poor and middle class, to pay more taxes; and the effective
start of natural gas exports. Bolivia has enormous reserves of natural
gas. However, how the gas is to be exploited, and who the benefits will
accrue to, are heated political issues in Bolivia. There is good reason
fro the heated debate: Bolivia has passed through 3 major cycles of
non-renewable commodity exports: silver through the 19th century, guano
and rubber later that century, tin in the 20th century. These cycles
for exports never laid the basis for a prosperous, productive and just
society. On the contrary, Bolivia is one of the least prosperous and
most unjust societies in Latin America. The question Bolivians are rightly
asking is, "how will this next round of non-renewable commodity
exports be turned into real development?"
Two things are clear
to Bolivians: politicians, under the stewardship and dictates the IMF,
have proven they are absolutely untrustworthy in managing the economic
affairs of the country. In this context, the IMF has been consistently
applauding and/or promoting the political class' rush to export gas
under conditions and agreements that are destined to turn this next
cycle of exports into another sad chapter of squandered wealth and underdevelopment.
This can be seen in the last Stand By Agreement with Bolivia signed
in mid 2003, and subsequent reviews of the same in August and September
of 2003.
The "gas issue"
is perhaps the single most important political and development issue
in Bolivia today. Some sectors in Bolivia say first value added activities
should be created in Bolivian and no to exports; others call for going
slow to ensure exports will in fact benefit the country, contributing
to the productive capacity, productivity and reducing poverty. In all
cases, there call is for transparency and voice in a process that will
have enormous impacts on Bolivia's future. But the IMF's position works
in the opposite direction, supporting the rapid conclusion of obscure
deals made by un-transparent multinationals and unaccountable politicians,
impossible for people to know about, much less evaluate or have voice
over. It is clear that the IMF's position on this issue - and antidemocratic
practices generally over the last decades - has only exacerbated the
lack or transparency and structural absence of voice, in turn adding
fuel to the fire that today consumes Bolivia.