Chavez Sidelining the IMF in Latin America

Mar 2

It’s interesting in general how greatly IMF influence has waned over the last few years. I don’t really understand it, although there are a few pointers. The news seems to have generally gotten around after the Asian meltdown and events like the Argentina troubles that IMF funding is a cure worse than the disease—not only for the countries involved, but often for the politicians leading those countries. And I’ve gotten the impression that there’s an awful lot of investment money splashing around these days, so countries haven’t had to go to the “lender of last resort” because there are plenty of other lenders.

But it seems that nowhere has the IMF’s influence disappeared so entirely as in Latin America, in good part because Hugo Chavez has been using oil money to buy bonds and otherwise lend (at much lower interest rates than the IMF from what I’ve heard) to countries in the region, allowing them to pay off IMF debt, substituting lower-interest debt to Venezuela. The effect has been dramatic, according to this article: