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AMLO vs. the IMF: rethinking neoliberalism?

As López Obrador said, organisations such as the IMF should apologise to Mexicans for driving an economic policy that promoted privatisation and the free market, and resulted in a crisis of unprecedented social inequality.

 

Reunión con Andrés Manuel López Obrador. Photo: Wikipedia. Autor Presidencia El Salvador/bit.ly/2KhNt9G. Creative Commons Dedicación de Dominio Público CC0 1.0 Universal. bit.ly/2xeT6k6

Luis Manuel Arce

 

The Fourth Transformation enacted by the government of President Andrés Manuel López Obrador directly challenges the essence of the International Monetary Fund

because it goes against neoliberalism, theoretical and practical support of this multilateral organisation controlled by the United States.

The IMF recently lowered its growth projections by 0.9% in its outlook for Mexico this year. However, it is not the first one to do so, as the three main risk-assessment companies; Standard & Poor’s, Moody’s, and Fitch Ratings, have also reduced theirs.

It is as if they had collaborated so that investors would lose confidence when Mexico’s national development plan needs more capital than ever to be able to carry out its great projects, of which the provision of the nine social programmes that are the pillars of the Fourth Transformation depend.

The IMF as well as the risk-assessors bet that AMLO’s government, as it is popularly known, will not manage to stabilise a financial growth near to 4.0% in 2024, the final year of his presidency. They state that this is impossible.

The President believes the complete opposite. He believes that by overcoming this first year in which he admits low growth, the conditions have been created for a sustained recovery of the economy that will drive this level of increase.

His strongest argument is that, once corruption and impunity have been eliminated, as they are without a neoliberal government that generates and covers these things up, the yield from investments will not be weakened and the value of the investment will not be changed. There will not be any arguments, at least from a financial perspective, to justify delays or overcharging.

Photo: Pixabay

Objectives and tasks that are the backbone of the national development plan, such as the Pemex rehabilitation, Maya and Transístmico trains, free border zones, the energy plan for generating electricity, among others, could finish or have a notable advance from the middle of the six-year term until the end of the term, according to López Obrador.

Becoming free from neoliberalism, up to now by decree, for López Obrador means breaking with old political associations to make big reductions in public spending and taxes, decrease the intervention of the State on society and in an economy in favour of the private sector.

It is, above all, breaking with a psychological model based on ideologies and experiences associated with the right-wing or ultraright within an atrocious conservatism that, often, is reminiscent of feudalism or fascism.

Outside of macroeconomic politics with monetary strategies and fiscal restrictions to increase interest rates or taxes on consumption, while reducing those applied to production and business beneficiaries, AMLO proclaims his rejection of privatisation and deregulation of business and the investments that benefit the rich and prejudice the poor.

Photo: Pixabay

This unequivocal rejection of neoliberal formulas brought López Obrador to proclaim in a large public square that “the IMF will no longer decide Mexico’s agenda, that is over now”, and to question their moral authority to give their opinion on the country’s financial growth expectations. However, after these declarations, Alejandro Werner, Director of the Western Hemisphere Department of the International Monetary Fund, announced that a delegation would travel to Mexico to analyse the impact of the Petroleos Mexicanos Business Plan on the country’s public finances programme.

This comes just as, recently, the IMF made known their Global Growth Prospects, where they warn that Mexico will only grow 0.9% in 2019.

Regarding the demagogicconcerns around financial health and Pemex perspectives, the facts are showing that López Obrador’s government is on the right track, and the structural reforms brought about in the most productive company in the State, demonstrate without a shadow of a doubt the recovery of the production capacity and achievement of this in the established timeframe for self-sufficiency.

As López Obrador said, conservatives are gambling on failure of the national development plan and, with it, all the financial and social scaffolding of the Fourth Transformation, which prioritises the poor and the State above private capital, although it leaves the door open to this.

Photo: Pixabay

This has been demonstrated in two significant facts from recent times. The first of these is an agreement reached by 24 banks to invest around 30 thousand million dollars in a national development plan, which crushes the risk-assessment projections of a marked decrease in the level of confidence of the financial sector towards the government.

Another more recent one: the completely successful conclusion of the bidding process for the new oil refinery in Dos Bocas. The construction of this will cost more than 8 thousand million dollars and will begin in August, thus marking the starting point for the increase in production of petrol, diesel and other fuels and achieve self-sufficiency within four years.

(Translated by Donna Davison – Email: donna_davison@hotmail.com) – Photos: Pixabay.

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