Fri. Apr 19th, 2019

Venezuela and the commercial tensions agitate restlessness in the IMF and the BM

Venezuela and the commercial tensions agitate restlessness in the IMF and the BM



The commercial tensions and the crisis of Venezuela this week focused the discussions of the spring assembly of the International Monetary Fund (IMF) and the World Bank (WB), in which the limits of multilateralism were once again confirmed.

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In addition, and despite a certain optimism about a probable rebound at the end of the year, the attacks of US President Donald Trump to the Federal Reserve (Fed) have renewed the stupor among the participants.

"I am worried about the independence of central banks in other countries, especially in the most important jurisdiction in the world," Mario Draghi, president of the European Central Bank (ECB), said on Saturday, in a comment as explicit as unusual about United.

That message did not seem to affect Trump, who on Sunday reiterated in a tweet that "if the Fed had done its job well, something that has not happened, the stock market would have risen" more and the US GDP. "It would have surpassed 4% instead of 3%, without almost inflation".

The independence of central banks is one of the bases of economic orthodoxy, so that Trump's recommendations that the Fed cut interest rates have been a new source of concern.

They are not, however, isolated, as other countries such as Turkey and India have expressed discomfort with the monetary policy of their central banks.

The meeting, in which ministers and central bankers from all over the world agree, supposes a thermometer on the health of the global economy and the effectiveness of multilateralism to solve the challenges.

Once again, the importance of free trade was reaffirmed and, once again, Trump turned a deaf ear to announcing new threats of tariffs, this time to the European Union (EU), from the White House, just four blocks from the IMF headquarters. in Washington.

All this in a highly complex global environment, with high levels of global debt and "very volatile financial conditions", which have caused an economic slowdown.

The Fund's new forecasts for this year are 3.3% for the global economy, 2 tenths less than in January, and the lowest rate since 2009.

The managing director of the IMF, Christine Lagarde, repeated during the week the mantra of the "delicate moment" of the world economy, something that other attendees echoed.

"There is a lot of noise in the global economy, investors are postponing their decisions" pending the clarification of prospects, said Carlos Urzúa, Mexico's finance secretary, at a press conference.

To this long list of uncertainties, the "dramatic" situation of Venezuela is added, in the words of Lagarde.

In almost all the meetings, several participating sources commented, the Venezuelan crisis was one of the topics to be discussed and one of the most worrying.

In an interview with Efe last Thursday, Lagarde said that the institution is ready for the day Venezuela says "please come help," but stressed that the support needed will be "huge."

In addition, the Venezuelan crisis has multiple edges beyond the economy, such as migration, with implications throughout the region.

Axel van Trotsenburg, vice president of the WB for Latin America, stressed that the "massive and rapid migration" from Venezuela is a humanitarian challenge "unprecedented" in the region, with more than 3.7 Venezuelans who have left the country in recent years .

Trotsenburg stressed that it is "the second largest crisis" of displaced people in the world, after that caused by the war in Syria.

But the diagnosis and the willingness of a large part of the international community to offer aid to Venezuela, whose tragic economic situation nobody rejects, clashes with geopolitical issues.

The regulations of the Fund prevent it from offering assistance to the opposition leader Juan Guaidó, who proclaimed himself president in January after declaring illegitimate the new term of Nicolás Maduro, while there is no consensus among its members on whether they recognize him.

More than 50 countries, led by the United States and most of Latin America, have recognized Guaidó as interim president of Venezuela, but some nations with significant weight within the IMF, such as Russia and China, continue to support Maduro.

"There are some members examining their position, and as soon as that happens and we can identify the authorities, we are prepared to act, and deploy all our resources if we are asked to help, along with others," Lagarde said Saturday.

Asked by Efe in case she had recently talked with Guaidó or Maduro, the managing director denied any contact, in an implicit acknowledgment of the stalemate.

"No, I have not had conversations with either of them," Lagarde stressed.

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