Fury as IMF admits ‘cannot recall’ meeting indigenous Ecuador groups ahead of $4.2bn loan
Indigenous groups in Ecuador have condemned the IMF’s mission for failing speak to them before they agreed a $4.2bn rescue plan that included a cut to fuel subsidies that triggered an angry response. A senior IMF official has admitted he cannot recall whether meetings took place.
The International Monetary Fund was caught in the middle of a furious row on Saturday after indigenous groups in Ecuador accused the multilateral of “going behind their backs” when it agreed a $4.2bn rescue package for the Latin American economy.
The IMF’s deputy director for the Western Hemisphere told GlobalMarkets he “cannot recall” if the mission to Ecuador met indigenous groups before implementing a programme that is now in danger.
Conaie, Ecuador’s indigenous group confederation, led 11 days of protests that forced President Lenin Moreno to back down earlier this week on the IMF-backed plan to cut fuel subsidies as part of the programme package. The cuts had been expected to save around 1.5%-2% of GDP.
Moreno has invited Conaie to negotiations over a new decree, but the confederation slammed the IMF yesterday, saying the policies that it recommended “make no sense, because they impose an idea of development that does not respond to our specific needs”.
In a letter, signed by Conaie president Jaime Vargas, the group said: “All change and policy must be agreed upon with the people, not be done behind their backs.”
Asked why the IMF had not consulted with indigenous groups as it had done with business leaders and other NGOs, Krishna Srinivasan said the Fund had “met a lot of people from civil society”. “It is not clear who is from an indigenous group,” said Srinivasan. “I cannot recall [if we met indigenous leaders]. We met a lot of people, we meet the civil society, we meet NGOs, we meet trade unions.”
“[Conaie president] Jaime Vargas is a high profile figure and it is quite clear when you meet an indigenous leader,” said one source close to the situation, who did not want to be identified. “They visit everyone else so why not the indigenous leaders?”
Ecuador’s IMF programme is now in the middle of its second review, with the Fund now waiting for the new decree regarding government fuel prices, Alejandro Werner, director of the IMF Western Hemisphere department, said yesterday.
For the fuel subsidy cuts to be reversed is a big blow, but could have been avoided, said a market source.
The IMF is doing some “excellent things” for Ecuador, said the source, that should be able to win the backing of indigenous groups. This includes obliging the country to sign up to the Extractive Industries Transparency Initiative. Moreover, an IADB paper in June showed that the fuel subsidies — which it says account for 7% of public spending — were not benefiting the poorer segments of society.
“The IMF has done a poor job of explaining itself and much of the indigenous community see it as a force for evil to be beaten,” said the source.