Añez Official Detained Over Illegal IMF Loan
Former coup regime official, Carlos Schlink, was detained today at Viru Viru airport in Santa Cruz while trying to leave the country. Courts had banned him from leaving Bolivia as he has been called to testify as a witness as part of the investigations into an illegal IMF loan taken out by the Añez regime.
Schlink was Vice Minister of Treasury and Public Credit under the former coup administration led by Jeanine Añez. The former official was detained at the airport and taken to a police cell in the town of Warnes, he has been given preventive detention and must now face prosecutors to answer for the economic damage wrought by the IMF loan of 2020.
A loan of $US 324 million was accepted from the International Monetary Fund during the Añez coup period. However, Bolivia’s constitution stipulates that any international credits sought by the government must be first approved by the legislature. The legislature voted to reject the loan, but Añez went forward and requested it, thereby committing an unconstitutional act.
With the return of Bolivian democracy, following the election victory of Luis Arce and the Movement Towards Socialism, the loan was returned in full, with interest. The loan was considered to be detrimental to the economy due to the conditions placed by the IMF, which included the imposition of austerity measures.
In an article for Kawsachun News, Teresa Morales, former Minister of Productive Development in Evo Morales’ government, explained the illegal nature of the loan, as well as the economic harm it inflicted on the country:
“They decided, at the height of the difficulties presented by the pandemic, to accept a loan offered by the IMF to the most desperate countries that needed a quick injection of resources to meet the challenges of Covid. The problem here is that it came with all kinds of strings attached, it offered Special Drawing Rights (SDRs, a reserve asset) that carries an incredibly high Maintenance Value, this means that the original cost of the loan goes up each day because the price of SDR rises. They don’t lend directly in dollars, a value that can be easily calculated and monitored, they lend in this separate reserve asset (SDR), the value of which is constantly rising.
The other problem was the high-interest rates. No country should accept interest rates of nearly 8%, the CAF (Latin American Development Bank) was offering much cheaper loans, at about 2%. The coup regime took out a loan that had an interest rate of over 7% and which was valued in SDR.
Something important in Bolivia is that the people approved the current constitution by referendum and the constitution has two articles protecting the economy by putting checks and balances on the ability of governments to freely take out these sorts of loans. Any loan, by law, must be voted on and approved by the legislature. So at first, when Añez secured the loan, she put it to congress and it was rejected for not having good terms and conditions. So what she should’ve done is not accept the release of those funds from the IMF. However, she went ahead and accepted the money, as did the Central Bank, an amount of $US 324 Million.
This became more absurd because the government couldn’t actually spend the money because of the vote in congress, so the lump sum had to just sit in the accounts of the Central Bank, but while it did it the value of the SDR was going up and interest was being charged.
When Luis Arce takes power, he looks at this situation and can see that it’s illegal and immoral, he returns the loan to the IMF, including the high cost incurred by the rising value of the SDR and interest rate charges, so as to not have to apply the other conditions of the IMF. The conditions of the loan included the requirement to lift the exchange rate controls that Bolivia has, that would have caused instant devaluation of the currency and of people’s incomes. The other condition was austerity, they wanted the state to restrict spending so as to reduce the fiscal deficit.”