March 09, 2006

Reuters Report about Bolivia and the IMF

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Here is an article by Reuters about Bolivia and the probable end of its dependency relationship with the IMF .

Bolivia seen likely to end IMF financing ties

The article quotes Mark Weisbrot, Co-Director at the Center for Economic Policy Research in Washington as saying:

"The need for new economic policies can be seen from the severe economic failure over the last quarter of a century," Weisbrot said in a report this week, adding Bolivia's per capita income is lower now than it was in 1978.

"It would not be surprising if the new government of Bolivia were to allow the current agreement with the IMF to expire at the end of March and not seek any renewal," he said.

The big question, Weisbrot said, is whether an agreement with the IMF will be a condition for other sources of funding -- especially the World Bank, Inter-American Development Bank and high-income governments.

"In the past, this would almost certainly have been true. This may not be true today," he said. "The power of the fund has declined drastically since the late 1990s."

3 comments:

Anonymous said...

Miguel, might be interested to see Weisbrot's full report downloadable at http://www.cepr.net/publications/bolivia_challenges_2006_03.pdf
Nick

Miguel said...

Thanks for the link, Nick.

Boli-Nica said...

Weisbrots paper is very misleading.

He has a very hard-left agenda,was a huge Sandinista supporter when he was an econ grad student Michigan in the 80's. Now he is a big Chavista apologist.

In terms of economic thinking, he was a member of the Union of Radical Political Economists, which was largely Marxist economists. Most serious economists think he has really silly ideas.

This is no doubt a major position paper intended to influence thinking in Bolivia on economic development, and will no doubt be repeated by the left NGO and MAS types.

Outside of that, some of his arguments are based on questionable assumptions:

he assumes that revenues from gas will increase significantly due to the higher royalties/taxes.

Repeats the myth that Brazil will invest 5 billion dollars the next five in gas as evidence that new law is not affecting investment.

Underestimates the impact of US-Bolivia trade.

Astonishingly for someone who is supposedly an economist he says that independent central banks, corporate law restructuring, and getting rid of some state banks is somehow a bad policy, without citing any evidence. 9 out of 10 economists of all stripes will tell you that is hogwash.