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Bolivia’s Reasons For Returning A Millionaire Loan To The Imf To Face The Pandemic

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The Central Bank of Bolivia announced on Wednesday the repayment of a millionaire loan agreed upon after the untimely departure from the presidency of Evo Morales and his replacement by Anez, the first loan granted to the country in years. And the institution also announced that it will undertake the corresponding administrative, civil and criminal actions against all public servants and former public servants that show signs of responsibility for their participation in the process of negotiation and operation of the aforementioned financing with the.

According to the BCB, the US $ 327.7 million loans to face the covid-19 pandemic were irregularly managed by the de facto government in April 2020.”According to a statement from the financial institution, this loan in addition to being irregular and onerous due to financial conditions generated additional and millionaire economic costs for the Bolivian State. In fact, as of February of this year, the additional costs already amounted to US $ 24.3 million, US $ 19.6 million due to exchange rate variation, and the US $ 4.7 million in fees and interest.

So to make the loan repayment effective, the was forced to disburse the US $ 351.5 million to the IMF. The institution, which said it was acting in defense of Bolivia’s economic sovereignty and respect for the country’s Political Constitution, also stated in the statement that the loan carried unacceptable conditions. The so-called Rapid Financing Instrument (IFR) of the IMF conditioned a series of fiscal, financial, exchange, and monetary impositions with its. And according to the current Central Bank authorities, this would go against the provisions of Articles 158 and 322 of the Bolivian Constitution and other related regulations in force, thereby violating the sovereignty and economic interests of the country.

This assessment, however, is not shared by the former director of Jose Gabriel Espinoza, who assured that the operation never posed any conditionality to the country’s fiscal or monetary policy. Espinoza also told the Bolivian daily El Deber that the early settlement of the operation, which was agreed to for five years, was what had caused the exchange loss indicated by his predecessor while lamenting the lack of a serious economic plan to face the crisis. The economic management adopted by the Government is to send messages of persecution, to cover its lack of a real economic policy in the face of the crisis he said.

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According to an IMF press release from April last year, the objective of the credit was to help Bolivia meet the balance of payments needs derived from the outbreak of the covid -19 pandemic, and support medical expenses and health care measures. urgently needed relief to protect the well-being of the population. And, in it, the Deputy Managing Director of the IMF Mitsuhiro Furusawa, also highlighted the determination of the authorities on duty to ensure macroeconomic stability and debt sustainability once the crisis is over.

To this end, they are committed to achieving a sustainable fiscal deficit in the medium term, while maintaining strong support for social spending, and adopting other macro and financial measures as necessary Furusawa declared at the time. Bolivia did not want the loan granted by the IMF to face the covid-19 pandemic. Bolivia does not want the money from the International Monetary Fund. At least not the one facilitated by the IMF during the interim government of Jeanine and. The Central Bank of Bolivia announced on Wednesday the return of a millionaire loan agreed upon after the untimely departure of the presidency of Evo Morales and his replacement by Anez, the first loan granted to the country in years.

And the institution also announced that it will undertake administrative, civil, and criminal actions that correspond against all the public servants and former public servants who show signs of responsibility for their participation in the process of negotiation, subscription, and operation of the aforementioned financing with the IMF. According to the BCB, the US $ 327.7 million loans to face the covid-19 pandemic were regularly managed by the de facto government in April 2020.

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According to a statement from the financial institution, this loan, in addition to being irregular and burdensome due to financial conditions, generated additional and millionaire economic costs for the Bolivian State. In fact, as of February this year, the additional costs already amounted to the US $ 24.3 militia US $ 19.6 million due to exchange rate variate the and the US $ 4.7 million in fees and interest. So to make the loan repayment effective, the BCB was forced to disburse US$351,5 millones al FMI. Among other things, the loan sought to support medical expenses derived from the covid-19 epidemic.

The institution, which said it was acting in defense of Bolivia’s economic sovereignty and respect for the country’s Political Constitution, also stated in the statement that the loan carried unacceptable conditions. The so-called Rapid Financing Instrument (RFI) of the IMF conditioned a series of tax, financial, exchange, and monetary impositions with the IMF, it reads. And according to the current Central Bank authorities, this would go against the provisions of Articles 158 and 322 of the Bolivian Constitution and other related regulations in force, thereby violating the sovereignty and economic interests of the country.

Political Measure

This assessment, however, is not shared by the former director of Jose Gabriel Espinoza, who assured that the operation never raised any conditioning factor for the fiscal policy or monetary of the country. Espinoza also told the Bolivian newspaper El Deber that the early settlement of the operation, which was agreed for five years, was what had caused the exchange loss indicated by his predecessor while regretting the lack of a serious economic plan to face the crisis. Image source, Getty ImagesCaption, The loan was managed during the transitory government of Jeanine. The economic management adopted by the Government is to send messages of persecution, to cover its lack of a real economic policy in the face of the crisis he said.

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According to an IMF press release from April last year, the purpose of the credit was to help Bolivia “meet the balance of payments needs derived from the outbreak of the pandemic of covid-19, and support urgently needed medical expenses and relief measures to protect the well-being of the population. And, in it, the Deputy Managing Director of the IMF, Mitsuhiro Furusawa, also highlighted the determination of the authorities on duty to ensure macroeconomic stability and debt sustainability once the crisis is over.

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For it, commit to achieving a sustainable fiscal deficit in the medium term, while maintaining strong support for social spending, and adopting other macro and financial measures as necessary said Furusawa at the time. Image source Getty ImagesCaption, The Arce government does not want debts with the IMF.however was replaced in November of last year by a new administration of MAS the party of Evo Morales with Luis Arce as president. And, for the moment, the Bolivian authorities do not seem interested in owning the IMF

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