Page Seven / La Paz
The 327 million dollars that the International Monetary Fund (IMF) authorized in favor of the country in April was a SWAP operation that did not require authorization from the Legislative Assembly because it was not a loan, but an agreement to purchase Special Drawing Rights (SDR). ) in exchange for national currency, says former Minister of Economy Ronald MacLean.
The IMF’s executive board approved Bolivia’s request for emergency financial assistance in April for approximately $ 327 million (SDR 240.1 million, 100% of the quota) under the Rapid Financing Instrument (IFR). In this case it is a swap or an exchange. As shareholders in the IMF we have the right to these resources that are guaranteed in SDR and they give us in the form of foreign exchange, he said.
Unlike loan operations in which the flow of resources is unilateral (between the creditor and the debtor), this implies an exchange of reserve assets (SDR) for national currency at the beginning of the operation with a rescue agreement at the end. of the term. Financial assistance under the IFR is available to member countries in the form of a direct purchase subject to a repurchase obligation within the agreed period.
On April 10, 2020, in accordance with the Articles of Agreement of the IMF, the Government of Bolivia exercised its right as a member country to access financial assistance for 240.1 million SDR, which represents 100% of the country’s quota in the IFR framework.
It is our money, because all the countries of the world except Cuba and North Korea are part of the World Bank and the IMF and as a partner we have access to these funds in case of emergency such as the pandemic, MacLean stressed.
He also pointed out that these resources did not have any conditionality, the interest rate was minimal. It is not a credit, it has no conditionality, it is not expensive, expensive, nor is it illegal, he remarked.
The IFR’s financial cost with the IMF is 1.066% per annum, with a one-time financing fee of 0.50%, a five-year term, and a 3-year grace period.
The former authority also argued that by returning the resources, the Government caused economic damage to the country, because it had to pay an additional 24.3 million dollars.
It is an economic damage to the country and the money is returned by demagogy. Those 24 million dollars that were returned with the resources we need for vaccines, equipping hospitals, hiring doctors, nurses, and needless to say the 327 million dollars that could be used in other investments, he remarked.
MacLean considers that in the face of the economic damage caused by the return of the money with penalty, the Legislative Assembly should summon the President of the State, Luis Arce, and his Minister of Economy, Marcelo Montenegro, to an interpellation.
Former BCB president Juan Antonio Morales explained that the operation was structured as a swap (currency exchange) whereby the country sells its quota in the IMF in exchange for dollars, but with the obligation to buy it back at maturity.
The approval of the credit by the Legislative Assembly (ALP) for the conditions it had and given the hardships caused by the pandemic seemed to be a matter of mere processing. Unfortunately for the country it was not. It interfered with political motivations. The ALP, dominated by the MAS, blocked approval on the grounds that the IMF imposed harsh conditions, which was not true, he said.
For the former monetary authority, it would have been more advantageous for the country to use these resources than to print money, figuratively and also literally.
This is what has been done with the credits of the BCB to the Non-Financial Public Sector (SPNF), he said in an opinion article.
The mechanism of access to resources
Bolivia’s request for financial assistance and approval by the IMF’s executive board were strictly in accordance with the Articles of Agreement of the IMF of which Bolivia has been a member since 1945, an International Agreement in force that is part of the national legal system.
The resolution of the IMF executive board that approves the operation of direct purchase of SDR by the requesting country, in exchange for the delivery of the local currency, with the commitment to repurchase and proceed with the return of the SDR at the end of the agreed period “It did not impose any conditions on the country,” said former Finance Minister Ronald MacLean.
The BCB, when proceeding with the return of the resources to the IMF, argued that they were recorded as liabilities and the Legislative Assembly did not approve. He pointed out that former authorities are responsible for the damage for this credit.
–
