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Chavez fierce critic of IMF

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Venezuela spurns IMF, says its recipes not needed
Reuters, 04.25.04, 2:40 PM ET

By Silene Ramirez

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.

Copyright 2004, Reuters News Service

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