[stop-imf] Venezuela spurns IMF, says its recipes not needed

[Robert Weissman]

Venezuela spurns IMF, says its recipes not needed
By Silene Ramirez
Reuters
Sun Apr 25, 2004 02:40 PM ET
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=4931556&pageNumber=1

CARACAS, Venezuela, April 25 (Reuters) - Venezuela was recovering from an
economic recession without the help of the International Monetary Fund, its
finance minister said Sunday, adding that it shows that Latin American
governments need not follow IMF policy recommendations.

In a statement sent to Reuters, Tobias Nobrega rejected an IMF report
last week
that said oil-reliant Venezuela needed to take urgent measures to restore
fiscal stability and to reduce its vulnerability to a possible fall in oil
prices.

The minister had said Friday that Venezuela's economy was headed for 9 percent
to 10 percent growth this year as it rebounds from a recession caused by two
years of political conflict over the rule of left-wing President Hugo
Chavez, a
fierce critic of the IMF.

"Venezuela is overcoming its financial difficulties independently of the IMF
and
it is doing this by applying the opposite of what is recommended by the
well-known but limited IMF recipes," Nobrega said in the statement.

Venezuela is a member of the 184-nation fund, but does not have a
stand-by loan
program.

The economy of the world's No. 5 oil exporter contracted 9.2 percent
last year
as it suffered the effects of a crippling two-month general strike at
the start
of the year following political turmoil caused by a brief coup against Chavez
in 2002.

Strike-hit oil production was restored after the stoppage fizzled out in
February 2003 and the nation's construction, manufacturing, commerce and
transportation industries began to recover at the end of the year.

Although the IMF sees Venezuela's economy expanding 8.8 percent in 2004, the
acting head of the fund, Anne Krueger, said in Washington Thursday that the
oil-rich nation was not likely to sustain its high economic growth next year.
The fund forecasts Venezuelan growth in 2005 at 1.1 percent.

Apparently piqued by this, Nobrega replied Sunday: "Venezuela is not
obliged to
follow the advice of the IMF or of Mrs. Krueger and unfortunately, that
is not
something which other countries in Latin America can say."

He said that Venezuela's case "shows that the whole framework and
policies of
the IMF can be dispensed with."

His comments reflected harsh past criticism of the IMF by Chavez, who has
pilloried the fund as a tool of "imperialism" and blamed it for Latin America's
economic problems.

Nobrega said urgent corrections were needed in the IMF's own theories and
policies, which he said were limited and fragmentary in their focus and were
one of the main causes of political instability in Latin America.

An IMF mission will visit Venezuela next month for routine talks and Nobrega
said the government was ready to debate policies.

Populist Chavez, facing an opposition bid for a recall referendum on his
five-year rule, has stepped up public expenditure on popular social
programs to
shore up support ahead of a possible vote. Opponents of the Venezuelan leader
accuse him of authoritarian rule.

The political uncertainty has not deterred Wall Street investors, who have
welcomed Venezuela's recent forays into the capital market with around $7
billion in new foreign bond issues -- more than half of which will be directed
to refinancing and repurchasing domestic and foreign debt.

The government last August began refinancing its foreign debt with a $1.5
billion repurchase of Brady bonds as it sought to stave off a fiscal
crunch in
domestic and dollar-denominated debt payments over the next few years.