IMF Provoked CARACAZO (Part 15)
Study by Jorge Vendrell that will be part of his next book entitled: "#TOP SECRET CRIOGENIZACION ECONOMICA" Appointment required by copyrigh.
"The liberal-socialist policy of "IMF structural adjustments" is not aimed at helping companies in economic difficulties, but at liquidating them, embodied in the worst of liberalism: "letting go; and socialism: raising taxes"
As I indicated in my previous report, the IMF acts as a mere lender to states in economic difficulty. Their aim is not to promote employment and sustainable economic growth and to contribute to reducing poverty throughout the world, as they preach and which they actually perpetuate.
The IMF's objective is in this order: to collect its loans and interest, and to reduce the deficit of the rescued countries, for which it will promote banking concentration, increase privatizations, reduce social expenditures and increase taxes.
"The IMF's road map is to always apply the same recipes in all the economies it rescues, applying a socialist liberal policy based on raising taxes, ensuring repayment of the loans granted and their interest, and which shows every time the IMF extends with new loans those already granted , allocating a good part of these not to the relief of the economy of the rescued country, but to the payment of the overdue instalments and in many cases to the early repayment of a part of the interest."
This great pressure exerted by the IMF on the economy of the rescued píses, is the result of the lack of empathy of this organization with the citizens of the affected economies whom it considers as "collateral damage" of the wrong economic policies applied by their governments, and which on more than one occasion has been recommended and sponsored by the IMF itself, making it share in the wrong policies that it will later try to correct with your drastic adjustment plan.
To adjust the public deficit, the IMF will use 4 different ways:
Strengthen banking by promoting mergers and acquisitions of the banking sector, delimiting the number of financial intermediaries in order to restrict competition and exercise more direct control over the sector, quite the opposite of what a neoliberal policy preaches.
Increase revenues through privatizations, applying here a neoliberal policy whose objective is twofold on the one hand to increase the resources of the state and on the other to boost the stock market by attracting foreign capital.
Reduce public spending, mainly on health, education, and pensions; as well as a reduction in the salaries of public employees and a drastic fall in the minimum wage.
Increase taxes until a zero deficit is achieved, which will push the economy straight into recession, increasing corporate bankruptcy and unemployment and pushing part of the population beyond the poverty line.
The IMF is well aware that the consequences of its "drastic structural adjustments" will bring with them so-called "collateral damage": massive corporate bankruptcy, rising unemployment, and rising poverty.
But "collateral damage" does not worry the IMF, since it is a born liquidationist. The IMF's policy is the very opposite of the Keynesian policy of Roosevelt's New Deal and the neoliberal policy of lowering taxes, not raising taxes and increasing competition, not restricting it.
"Collateral damage" does not worry the IMF, since it is a born liquidationist. IMF policy is the opposite of Roosevelt's New Deal Keynesian policy.
The IMF's liberal socialist policy does not cure or supply drugs for economic recovery, only amputate. It embodies the worst of liberal socialism, "dropping and raising taxes."
Although those responsible for the economic crises that lead to economic collapse in the countries that come to the aid of the IMF bailout usually have their origin in the waste of their leaders, the International Monetary Fund, agrees with them a policy of adjustments that they accept in order to remain in power, in which they usually last for a short time since many of them will end up falling when the economy collapses and the algaradas in the streets make themselves felt. Examples of this are everywhere:
The Caracazo of 1989, was the beginning of the end of the government of Alan García and the arrival later to power of Chavismo. In reality it was the IMF that in applying its relentless financial policy of structural adjustment, which did not take into account the situation of marginality that a large part of the population lived, caused the explosion of the people who destroyed everything they will find in their path which precipitated on February 27, 1989 the intervention of the security forces of the Metropolitan Police , Armed Forces of the Army and the National Guard that took to the streets to control the situation, and that resulted in 276 dead according to official sources, and with more than 3000 dead according to unofficial ones.
The following article published on November 3, 1989 in the country in its print edition accurately describes the situation to which the IMF invoked Venezulea, from which 32 years later it still does not recover.
IMF PRESCRIPTIONS PLUNGE VENEZUELA INTO A DEEP ECONOMIC AND SOCIAL RECESSION
Caracas - 04 Nov 1989 - 00:00 cet
President Carlos Andres Perez's economic program, inspired by the guidelines of the International Monetary Fund, has plunged Venezuela into a deep recession, and there is already talk of a virtual failure if at the end of the year the government does not manage to reduce the foreign debt and bring fresh money from abroad.
After 10 months of government management with the application of adjustments recommended by the IMF, the Venezuelan national economy has only regressed and entered a paralysis that could last for three more years, according to the forecasts of specialists. By the end of 1989, gross national product would register a negative rate of between 6 and 9 per cent, inflation would reach 80 per cent, unemployment would reach 20 per cent and international reserves would fall to their lowest rung of paying nearly $3 billion in debt servicing. At the social level, adjustment measures have impoverished small and medium-sized entrepreneurs; the burgeoning middle class has fallen into a subsistence situation; big business is closing its doors and kicking out workers; agricultural production decreased by 40 per cent; malnutrition and disease have increased; critical poverty rises to 40%.
To this string of Venezuelan ills must be added the increase in crime, personal insecurity and marginality. According to official figures, from 1978 to 1989 the marginal population stratum increased to 8,331,000 inhabitants, representing 43 per cent of the population and living in 3,769 ranch or shantytowns.
There is no one in the country who does not suffer the consequences of Perez's economic plan. Its price was the IMF's "certificate of good conduct,"as former President Rafael Caldera called it. The shock plan: 200% devaluation of the currency, liberalization of bank interest rates, price increases and gradual elimination of tariffs, caused a severe blow to the entire population, which was not prepared to receive such an impact. After the first six months of the government, there was some confidence in the behavior of inflation, the dollar exchange rate and bank interest, which pointed to a balance and rebound in the movement of the economy.
Everything indicated that bank interest rates were going to fall below 37% to begin the long-awaited recovery. However, in the last month the Central Bank of Venezuela ordered to raise the interest rate again to 40% to stop the rise of the dollar that is currently trading at 42 bolivars. The move was to curb bank liquidity that has been dedicated to buying and reselling the currency, better known as the centrifuge operation of the dollar. The banks have seen that with the dollar they can do better business than with their normal activities, because with such high interest rates nobody wants to borrow and consequently the industry and construction are paralyzed.
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Jorge Vendrell - World Economy Development Center
"The IMF, in applying its financial policy of structural adjustment, without taking into account the situation of marginality experienced by a large part of the Venezuelan population, caused the outbreak ofcaracazo"