There is life after the International Monetary Fund (IMF), and Bolivia, South America's poorest country is proving that financial independence from the financial institution is possible. FYI

The International Monetary Fund, together with the World Bank, was founded in Bretton Woods in 1944. It was created by the Allies, led by the United States and Great Britain, to create an international financial institution to guide the global economy that has been devastated by the Great Depression in the 1930s and the Second World War.

The IMF has a membership of 184 countries, up from the original 29 countries that joined the Fund in 1945. Wealthy countries, particularly the G7, dominate the Fund's decision-making structure. The US alone has a share of 17.3% t of the votes, and holds de facto veto power. North America and the EU account for more than 50% of the votes, inciting criticism that the IMF serves Western financial and economic interests.

In contrast, borrower countries are seriously under-represented at all levels.

Civil societies around the world say IMFs objectives could not be accomplished satisfactorily, as it has tied its financial programmes to extensive conditions that focus on reduction of balance-of-payment deficits over a set period of time, usually by reducing public expenditure and/or raising taxes. These conditions have hurt poor countries the most.

Source: Choike. (2006). International Monetary Fund  IMF. Retrieved March 20, 2006 from  <www.choike.org/nuevo_eng/informes/1729.html> 
Bolivia has informed the IMF that it will not negotiate for another agreement after its three-year USD248.9 million loan expires on  March 31 this year. The loan was obtained in April 2003, and was later reduced to USD211.6 million  at the request of Bolivian authorities. Economic analysts say Bolivia has no urgent need for IMF aid because it has no major balance-of-payments problems at the moment and has a sizeable international reserve.

Bolivia was among the beneficiaries of the plan by the G8 to cancel USD40 billion in debt of 18 poorest nations classified as Heavily Indebted Poor Countries (HIPC). This year, the debts of 14 African nations and 4 Latin American nations to the World Bank, IMF, and African Development Fund (AfDF) will be cancelled under the plan called Multilateral Debt Relief Initiative (MDRI).

Bolivian Economy Minister Luis Alberto Arce says that his country is evaluating whether it needs further assistance from the Fund.

"On evaluating how much we need, we will see if we canvia the IMFopen any financing channels," Arce said, adding, "But if the amount of financing we require is low, it will not justify an agreement with the fund.

Evo Morales, the first indigenous Bolivian president since the country became a democracy, wants to put his own development plans in order first, minus IMF funding and conditions, economists say. Bolivias new government took office in January 2006 with promises of reform geared at increasing economic growth and reducing poverty.

Sixty-three percent of the country lives below the poverty line, and Bolivias real GDP per capita is lower today than it was 27 years ago. This, despite Bolivia having followed and completed numerous structural reforms recommended by multilateral lending institutions. It has operated under IMF agreements almost continuously for the last 20 years.

Bolivias long experience with the IMF has not always been a happy and successful one, said Mark Weisbrot of the Center for Economic and Policy Research (CEPR).

In 2003, indigenous peoples in the capital city of Cochabamba rallied and rioted against the privatisation of its waterworks. This led to more strikes, including those of policemen, to protest the increase in taxes, which were conditions set by IMF to reduce Bolivias budget.

The violent protests forced the foreign company out of Cochabamba, and later resulted in the resignation of then President Sanchez De Lozada. The massive protests also blocked plans to export Bolivia's newly discovered natural gas reserves.

Presently, Bolivia will still have to find out if an agreement with the IMF will be a condition for other sources of funding -- especially with the World Bank, Inter-American Development Bank, and high-income governments, Weisbrot said.

Economists said if Bolivia does not enter into another agreement with the IMF, it will further put in question the institutions relevance in Latin America. Many countries in the region have either discarded or questioned IMFs conditions of privatising utilities, reducing money for social spending, and promoting unrestricted global trade.

Brasil and Argentina cleared their IMF debts in December 2005, ahead of schedule. Argentina bounced back from an economic collapse in December 2001 by ignoring some provisions of the IMF, and it said it cleared its debt to be free from IMF interference.

Ecuador experienced an uprising that kicked out President Lucio Gutirrez for his adherence to austerity measures. It has now increased social spending by using its special oil stabilisation fund, in opposition to IMF set practices.

Venezuela has pushed for further socialism by seizing idle mines, factories and land, financed by its huge oil revenue. It has allocated bigger budget for social spending, a move that has become popular with the countrys poor population.

Sources:

Bolivia without the IMF. (n.d.) Retrieved March 20, 2006 from <www.choike.org/informes/279.html>.

Dolan, M. (2006). Bolivia seen likely to end IMF financing ties. Retrieved March 20, 2006 from <http://feeds.theeuropenews.net/?rid=a526613fab545c4b&cat=88176adfdf246af5&f=1>.

Forero, J. (2005). Bolivia regrets IMF experiment. The International Herald Tribune. Retrieved March 20, 2006 from <http://www.iht.com/articles/2005/12/14/business/water.php>.

Kovach, H. (2006). Unable to vote with ones feet? Developing countries and the IMF. Pambazuka News. Retrieved March 21, 2006 from <www.pambazuka.org/en/category/comment/32423>.

Toussaint, E. & Comanne, D. (2000). Debt relief: Much ado about nothing. Committee for the Abolition of the Third World Debt.  Retrieved March 20, 2006 from  <http://www.cadtm.org/article.php3?id_article=474>.