The Miami Herald
Oct. 15, 2002

IMF comes under attack amid Latin money crises

Dade meeting contemplates region's range of troubles


  Opening a major two-day economic conference on Latin America, Ecuadorean President Gustavo Noboa criticized the International Monetary Fund on Monday for linking loans to conditions that can disrupt the social fabric of countries struggling to overcome economic woes.

  ''The ingredient I see missing from the [International Monetary Fund] is social sensibility,'' said Noboa, whose administration has been working for months to secure a multimillion-dollar loan. ``We can't do things that would set off our population.''

  Noboa, the first speaker at The Herald's sixth annual Americas Conference at the Biltmore Hotel, said that IMF-mandated conditions threatened to ''liquidate democracy'' in Latin America. He cited as an example a domestic gas tariff that led to massive protests among indigenous citizens, resulting in four deaths.

  Noboa's reversal on the gas tariff, and on plans to increase electricity and telephone fees, was viewed by observers as an easy, populist move for an outgoing president.

  ''I preferred to maintain peace,'' Noboa said. ``Apparently the International Monetary Fund did not like that.''

  ''They need to understand our cultures and principles and respect them,'' he said. ``It's all right to impose conditions, but don't choke us.''

  Noboa's admonition complemented appeals by other Latin American leaders at the summit who called for unity in the battle against poverty, as well as economic and political stability in Latin America.

  Peruvian President Alejandro Toledo, meanwhile, announced a new initiative calling on foreign ministers from the Andean region to develop a ''democratic solution'' to the explosive political impasse in Venezuela.

  ''The suffering of Argentina, Venezuela and elsewhere [in Latin America] is also the suffering of Peru,'' Toledo said. ``I dream of the day when Latin America is
  completely free and democratic.''

  Toledo did not offer details of the proposed initiative and it was not clear if Venezuelan President Hugo Chávez would welcome the offer.

  The theme of the conference, ''Economic Stability in The Americas,'' which attracted 700 participants, provided leaders with a platform to describe a region suffering from an economic recession and desperately in need of support from developed nations.


  Argentina, which has undergone political and economic upheaval over the past 12 months because of its inability to meet its foreign debt commitments and abide by
  economic restrictions imposed by the IMF, was repeatedly described as a nation in which the economic situation is ``extremely grave.''

  Ricardo López Murphy, a presidential candidate in next year's election, said it is the first time Argentina's population is suffering from hunger.

  ''I feel very sad about the idea that my country has been erased [from the global market economy],'' López said, adding that liberty, private enterprise and law-abiding governments are potential solutions. ``I'm going to do whatever is possible for Argentina to make a comeback.''

  In Brazil, the left-leaning presidential contender has stirred fears of a breakdown in the capitalist economic system. Brazil is a leader in international trade and a
  weakening economy there would have a rippling effect in the region.

  However, Brazil's ambassador to the United States, Rubens Antonio Barbosa, assured the audience that a default on Brazil's international debt ``is not an issue, not on the table.''

  He said mainstream politics in Brazil remains centrist.

  Peru, meanwhile, is struggling from a decade of corruption and mismanagement. Toledo called for the establishment of a ''New Deal'' -- including long-term private
  investment by industrialized nations -- to help Peru and other countries in the region overcome the economic crisis.

  Ecuador also is still recovering from its worst-ever economic crisis, which saw half the bank sector collapse, the government default on its foreign debt, and the currency become almost worthless.

  The departure in mid-August of the former finance minister amid accusations of leading a bribery and corruption ring left his successor, Francisco Arosemena, with the daunting task of rectifying the dollarized economy.


  The biggest challenge has been convincing international lenders that the economy should be saved and trusted.

  To secure the loan, Arosemena has been working to satisfy the IMF by ensuring that tax collections and high oil prices will help the country close the year with a 6.9 percent primary budget surplus.

  However, the IMF remains reluctant, despite two years of impressive growth and a significant drop in inflation.

  Herald writer Larissa Ruiz Campo contributed to this report.