Venezuela's Chavez snipes at IMF, defiant on policy

<a href=reuters.com>Reuters Thu April 24, 2003 06:35 PM ET By Pascal Fletcher

CARACAS, Venezuela, April 24 (Reuters) - Venezuelan President Hugo Chavez thumbed his nose at international lenders on Thursday, saying his government would rather go without loans than accept the kind of conditions imposed by institutions like the International Monetary Fund.

Underlining his fiercely nationalistic rule of the world's No. 5 oil exporter, the populist former paratrooper said his government would not accept any foreign meddling or imposed policy recommendations as it pressed ahead with his self-styled "Bolivarian Revolution."

"Nobody has come here to impose the measures that we have adopted, are adopting or will adopt. We don't accept that," Chavez told businessmen in Maracay, west of Caracas.

In a jibe at the reluctance of some multilateral financial institutions and foreign banks to lend to his government, he said: "Well, if they don't want to lend money to us, then don't. This is a sovereign and independent country".

He said Venezuela would not accept the kind of economic reforms demanded by the IMF in its loan or debt restructuring deals. "The kind of packages the IMF wants to apply to a country as a condition for lending money ... no, no, no".

Venezuela, which earns most of its export revenues from oil sales, is currently in a deep recession. The country has not asked the IMF for aid, but has reportedly sought loans from other multilateral lenders.

Chavez's defiant comments followed his decision this week to bring back as his planning minister Jorge Giordani, a 62-year-old, leftist academic.

Giordani replaced economist Felipe Perez who was fired after disagreements over policies.

In an earlier stint as planning minister, Giordani led the government's economic team until May of last year. He is closely associated with Chavez's interventionist economic policies that are bitterly contested by business and labor opponents.

These include tightening state control over the oil sector and agrarian reforms that call for the expropriation of idle rural estates for redistribution to landless peasants.

After surviving a crippling opposition strike in December and January and a short-lived coup last year, populist Chavez has stepped up his revolutionary rhetoric, railing against what he calls "neo-liberal capitalism", the IMF and U.S. efforts to create a hemisphere-wide free trade zone in the Americas.

RADICAL RHETORIC, BUT DEBTS HONORED

Venezuela's political and economic turmoil has pushed the oil-reliant country into one of the deepest recessions in its recent history. Chavez's latest comments were unlikely to help ongoing efforts by his government to raise fresh funds abroad or negotiate a voluntary external debt swap.

However, analysts said the negative impact of Chavez's radical image and rhetoric was tempered by the apparently swift recovery of Venezuela's strategic oil sector following the opposition strike, which fizzled out in early February.

Chavez said oil output was currently 3.2 million barrels per day, slightly higher than output levels before the strike.

Analysts noted that despite the president's frequent anti-capitalist outbursts, his government had so far continued to honor its external debt payment obligations.

"I think people can see him getting more radical, but they have largely bought into the idea of him paying the external debt," Michael Gavin, head of emerging markets research at UBS Warburg, told Reuters.

Gavin said there was some concern that Giordani, who dominated the government's economic policy between 1999 and 2002, might clash with Finance Minister Tobias Nobrega, who over the past year has tried to woo international markets and is working on the proposed voluntary external debt swap.

"If you have tensions between Giordani and Nobrega, it will be difficult to do," Gavin said.

U.S. investment bank J.P. Morgan said Thursday it had cut Venezuela's bonds to neutral in its model emerging bond portfolio, citing the likelihood of a lower oil price, and the appointment of Giordani.

"The reappointment of Jorge Giordani as Planning Minister and the possible departure of Finance Minister Nobrega could delay the external debt swap," said JPM.

Chavez, who is accused by foes of ruling like a dictator and trying to install Cuban-style communism, said his survival of last year's coup and the recent strike had strengthened his government.

"We're stronger, who can doubt it?" he said.

But even he acknowledged that the recent strike, which slashed vital oil production and exports for several months, had inflicted serious damage on the economy.