Venezuela to quit IMF, World Bank

4 May 2007 by Saul Hudson

CARACAS (Reuters) - Venezuela will withdraw from the Washington-based lending organizations, the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
and World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

, in a symbolic move that distances leftist President Hugo Chavez from much of the international economic community.

Chavez, who plans to create an alternative lending bank run by South American nations and funded in part with his OPEC OPEC
Organization of Petroleum-Exporting Countries
OPEP is a group of 11 DC which produce petroleum: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezuela. These 11 countries represent 41% of oil-production in the world and own more than 75% of known reserves. Founded in September 1960and based in Vienna (Austria), OPEC is in charge of co-ordinating and unifying the petroleum-related policies of its members, with the aim of guaranteeing them all stable revenues. To this end, production is organized on a quota system. Each country, represented by its Minister of Energy and Petroleum, takes a turn in running the organization. Since 1st July 2002, the Venezuelan Alvaro Silva-Calderon is the Secretary General of OPEC.

nation’s high oil revenue, said on Monday Venezuela no longer needed the institutions dominated by U.S. “imperialism.”

Leaving the International Monetary Fund and the World Bank would severs ties between the fifth largest oil supplier to the United States and the world’s leading lenders to emerging nations.

“We don’t need to be going up to Washington ... We are going to get out,” Chavez, who calls Cuban leader Fidel Castro his mentor, said at an event to celebrate May Day workers’ rights.

“I want to formalize our exit from the World Bank and the International Monetary Fund,” he said.

Chavez blames the organizations’ decades-old economic recipes of tight budget control, privatizations and open markets for continued poverty across Latin America.

He wants to build a socialist state based on policies rejected by the institutions in Washington, such as those he announced on Monday — a 20 percent minimum wage hike and a gradual reduction in the working day to six hours.

The move to quit the multilaterals is politically symbolic but should have little immediate financial impact.

Since Chavez first took office in 1999, Venezuela has gradually reduced its cooperation with the organizations and, after years of strong oil prices, said it paid off its last debts to the World Bank this month.

Venezuela is one of several countries, particularly in Latin America, that have in the last few years reduced their dependence on the multilateral agencies and so tempered the lenders’ global clout.

Some leftist Latin leaders hosted by Chavez at the weekend proposed quitting a World Bank body that arbitrates between foreign investors and states as they seek greater freedom to dictate the terms of foreign investment in their nations.

Chavez is nationalizing huge swathes of the economy this year and on Tuesday will lead a massive rally to take over the operations of multi-billion dollar oil projects run by some of the world’s largest companies.

He said it marked the end of an era of Washington-dictated policies and returned Venezuelan resources under the state’s control.

“The wheel has turned full circle,” he said.



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