Countries that have financial problems due to lack of foreign
currency to meet their needs and with difficulties in accessing the
international private financial system are forced to resort to the International
Monetary Fund to obtain resources.
The Fund imposes a set of conditions known as Structural
Adjustment Programs, whose main objective is saving or limiting spending to
supposedly clean up the economies of the countries. It is considered that the
deficit of public finances due to unproductive or oversized expenditures is
mainly responsible for inflation and the recession or stagnation of production
and consumption in the economies and is, therefore, the great enemy to
overcome. The implicit objective of this spending limitation is to achieve a
balance or surplus between income and expenditure and, in the worst case
scenario, to achieve a moderate rate of fiscal deficit not exceeding 2% of GDP.
To defeat the fiscal deficit, a series of medicines are prescribed,
including reducing public spending on everything that is direct transfers to
the population such as pensions, scholarships, social assistance and also
reducing high-cost public services such as health and education. for which part
of them is passed on to the private sector, that is, part of the health and
education services are privatized. The same is done with respect to other
public services and public companies that do not generate profits. The
Adjustment Programs also contemplates the supposed balance of the financial
sector of the countries for which they impose positive interest rates, that is,
higher than the level of inflation, the liberalization of trade, that is, of
any restriction on imports and exports, the elimination of subsidies and all
kinds of price controls in the economy.
The Economic Adjustment Programs supposedly seek the welfare
of the countries but in reality they generate totally opposite results:
devaluation of the currencies, less production, less consumption, more
unemployment, inflation, more poverty in the weakest sectors of the population
that receive less pensions, less health, less education and the decrease in
credit due to the augment in interest rates, among other serious problems.
Spain, Italy, Portugal and Greece are the countries in Europe
where Adjustment Programs have been applied in recent years. In the 90s of the
20th century, these programs were developed in Latin America and, as a
consequence, extreme left governments emerged in 10 nations of the Continent: Argentina
with Kirchner, Brazil with Lula, Bolivia with Morales, Ecuador with Correa,
Paraguay, Uruguay, Honduras, El Salvador and Venezuela with Chavez and the left
was strengthened in Mexico by winning Lopez Obrador in Mexico this year 2018.
The great challenge for the International Monetary Fund is to
build a new Adjustment Program that is truly useful to the countries and allows
global financial equilibrium.
IMF-Supported Programs
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