By Red Uno:

Dunn: “The IMF Is Not Coming to Solve the Crisis; It Is Coming to Give Us Time to Solve It”

The economic analyst said that the loan from the International Monetary Fund represents a temporary source of liquidity and warned that the resources must be accompanied by economic reforms and a reduction in state spending.

Photo: Jaime Dunn, economic analyst

Economic analyst Jaime Dunn stated that approval of the loan with the International Monetary Fund (IMF) represents a necessity given the country’s economic situation, but emphasized that the resources alone will not solve the crisis.

“Regardless of whether it is good or bad, it is a necessity; it is something that has to be done,” Dunn said when referring to the progress of the loan, which, following its approval in the Chamber of Deputies, must continue its consideration in the Senate.

The economist explained that the agreement with the international organization does not involve merely a loan, but also a stabilization program and economic reforms that would make it possible to access additional external resources.

“We are not simply talking about a loan; we are talking about an agreement to catalyze an external package of another $5 billion as well as a stabilization and reform program,” he said.

IMF Would Provide Liquidity but Would Not Solve the Crisis

Dunn said that IMF financing should be understood as a temporary tool to strengthen the economy, but that structural solutions depend on decisions made within the country.

“The IMF is not coming to solve the Bolivian crisis. It is only coming to lend us time so that we can solve it ourselves,” he said.

In that regard, he maintained that, with or without an agreement with the international organization, Bolivia will have to implement measures to correct its fiscal and economic problems.

“If the crisis is fiscal in origin and that has generated a balance-of-payments crisis, then with or without the Fund, fiscal adjustment has to be carried out,” he explained.

Proposes Fiscal Reforms and Structural Changes

Among the measures mentioned by the analyst are reducing the fiscal deficit, limiting Central Bank financing of the Treasury, reviewing subsidies, eliminating price controls, and examining the situation of state-owned companies.

“There has to be fiscal adjustment, zero financing from the Central Bank, elimination of subsidies, termination of price controls, opening of markets, ending export quotas, and a review of state-owned companies,” he said.

Dunn argued that the loan would provide financial backing to implement these measures, although he insisted that the resources should be used as a bridge toward reforms.

“It is better to do it with the Fund and with money,” he said, explaining that the financing would provide greater room to implement the necessary changes.

Warns About How the Resources Are Used

The analyst expressed concern about where the loan proceeds will go and said that the resources should not be used merely to sustain the current functioning of the state.

“Hopefully these resources, because they also come under the heading of unrestricted use, will not be used, as a deputy minister said, to pay salaries and year-end bonuses,” he stated.

According to Dunn, the financing should be used to strengthen international reserves, support the Central Bank, and accompany a program of economic transformation.

“These resources have to help and provide support for a fiscal adjustment program,” he said.

“The Adjustment Must Begin with the State”

Dunn said that the population has already assumed part of the costs of the crisis and argued that the state must now implement measures to reduce spending.

“The state has to do its part now,” he said, pointing out that government payrolls, administrative spending, and deficit-ridden state-owned companies should be reviewed.

He also argued that the cost of the crisis should not fall exclusively on citizens.

“The great risk is that the citizen continues to bear the adjustment, the state is not reformed, and the citizen continues to be the one who has to pay for the crisis,” he said.

Calls for Immediate Implementation of Measures

Finally, Dunn said that economic decisions should not be postponed and called for measures to begin immediately.

“We are far too late in taking the measures that need to be taken. Nothing about next year or this coming quarter; we have to start taking the measures tomorrow,” he said.

The analyst said that delays in implementing reforms have deepened the country’s economic problems and increased the costs facing the country.