Over the past year, a rebranded IMF returned to Latin America with promises of loan agreements that would be different than the dreaded “structural adjustment programmes” of the past. Behind statements about inclusive growth and protecting the most vulnerable, are policies similar to the structural adjustments of the Washington consensus era. While the Argentina programme has already imploded, leaving behind soaring poverty and a collapsed economy, the IMF seems determined to push forward its agreement with Ecuador.
Things have not been smooth for the IMF in Ecuador. Massive protests erupted after an attempt to impose fuel price hikes as part of the IMF agreement – forcing the Ecuadorian government to withdraw the measures and temporarily put its agreement with the IMF on hold. The IMF recently announced it plans to resume its programme in Ecuador after the country’s National Assembly passed a tax reform bill.
However, the IMF’s press release fails to mention that the bill contains several provisions that aim to weaken and essentially render Ecuador’s capital controls ineffective. Ecuador introduced a series of measures to discourage capital flight and prevent speculative flows of capital back in 2007 by taxing outflows that did not meet the criteria of productive foreign direct investment (FDI). The measures have been successful in strengthening macroeconomic stability and raising revenues for the government.
