POLICY ANALYSIS: Swindling the Sick - the IMF Debt Relief Sham
March 26th, 2006
|By Ben Beachy
As 2005 holiday celebrations were getting underway last December, the International Monetary Fund pledged a gift to Nicaragua: complete cancellation of the $201 million debt that Nicaragua owed the multilateral financial institution. Many have applauded this move, part of the Multilateral Debt Relief Initiative, as a needed step towards unshackling historically debt-ridden countries like Nicaragua. In early January I told a group of US citizens visiting Managua that this event may signify an achievement in Nicaragua’s long struggle for self-determination, giving us something, finally, to celebrate. Considering recent moves by the IMF, it appears I was wrong.
The mood in Managua lately has been anything but celebratory. Yesterday, my neighbor Blanca Obando came to my door, said hello, and burst into tears. Through her sobs, she related how her diabetic sister-in-law, Reina Landeros Poveda, had recently cut her foot and developed a painful skin infection. Soon thereafter, Blanca escorted her sister-in-law to the Lenin Fonseca public hospital. Outside the hospital entrance, they found throngs of infected and suffering people who were lying on the curbs “like dogs,” vomiting in the street, and urinating where they could as they awaited nonexistent medical attention. “It was the worst thing I’ve seen in Nicaragua,” Blanca cried. Such words should not be taken lightly from someone who’s seen her country dominated by a US-backed dictator, crushed by a US-funded contra war, and strangled by a US-imposed economic embargo. Edging through the crowd, Blanca and Reina reached the hospital gates and found them locked shut. Hospital staff turned the women back to the street, informing Reina that she could not enter unless she had been shot, run over, or could otherwise show she was on the brink of death.
Such experiences have become commonplace since over 20,000 public health care workers declared an indefinite nationwide strike in mid-November, vowing only to perform emergency operations until the government granted public doctors significant salary increases. Nicaraguan doctor Elio Artola reports that public doctors earn on average about $300 per month in Nicaragua, only 60% of what their counterparts earn in the rest of Central America. After over two months of a fruitless strike, 3,000 doctors on January 18 of this year made the unpopular decision to stop attending to even emergency cases as a last ditch effort for salary increases. Today public hospitals stand paralyzed and surrounded by the desperate scenes described above.
Who’s to blame for this human rights catastrophe - the striking doctors? Or does the problem have deeper roots? Amidst negotiations with the doctors last November, the Minister of Health Margarita Gurdián reported, “we are seeing how we can comply with a commitment the country has made; to do this, there are restrictions on how much the total [public] salary amount can be…” Nicaragua’s “commitment” was its loan program with the IMF. The IMF’s “restrictions” included warnings against any salary increases that exceeded the projected inflation rate. On November 25, Nicaraguan governmental representatives approved a 2006 budget that adhered to the IMF’s stricture, fearing that non-compliance would jeopardize ongoing aid negotiations. In response, doctors’ unions continued the strike and mobilized protests at the IMF’s Managua headquarters in December.
Such IMF interference is not new to Nicaragua. For about a decade, Nicaragua’s health care budget has been steadily declining under IMF structural adjustment programs that impose a cap on social spending. From 1996 to 2003, amidst such neoliberal encroachments, Nicaragua saw its supply of doctors per 10,000 people decrease from 6 to 3.8. Insufficient health funds have not only thwarted doctor availability, but provision of basic medical supplies, repairs for dilapidated hospitals, subsidies for essential medicines, and other prerequisites for functional health care.
Though Nicaragua’s problems did not begin with IMF impositions, they also will not end so long as those impositions persist. Behind the IMF is a larger neoliberal system that, in addition to colonialism, wars, corruption, natural disasters, and embargoes, has historically impoverished Nicaragua, ensuring its continual dependency on outside loans for survival. By attaching neoliberal mandates to these loans, the IMF perpetuates the very system that makes more loans necessary.
Some may have seen hope for a break in this bleak cycle on December 21 of this last year. On this day, the IMF announced it would grant 100% debt cancellation to Nicaragua and 18 other countries, with no sign of strings attached.
Does this mean that Nicaragua is finally freed from the IMF’s meddling? Can the IMF thus be freed of culpability in the current health care crisis?
Hardly. Just after pledging $201 million of debt relief for Nicaragua, the IMF has also promised to reactivate its stalled economic program with the country, meaning a new IMF loan package of about $100 million, (total international aid made available reaches around $230 million). The IMF has already informed the Nicaraguan government of certain budgetary limits that should be followed to ensure dispersal of the renewed aid, such as “keeping growth of the public sector wage bill in line with expected inflation.” Inflation stands at 9.58%, a far cry from the 70% salary increase that striking doctors say is the minimum needed. Last week the newspaper El Nuevo Diario reported that Mario Arana, the Minister of Finance, considered it impossible to increase doctors’ salaries since “the International Monetary Fund (IMF) made a series of recommendations upon announcing the renewal of the economic program with Nicaragua, among them to not further increase salaries.”
It seems that the IMF does not intend to break with its paternalistic past. Given new loans with old conditions, Nicaragua continues to underpay its doctors. Meanwhile, the debilitating strike continues.
What has the salary crisis and resultant strike meant for the Nicaraguan populace? In the case of Reina Landeros Poveda, it has meant a fundamentally altered life. Turned away from Managua’s public hospitals, Reina faced the exorbitant fees of private clinics as her only option for stopping her spreading foot infection. After spending six days and $412 in a private clinic (more than what Reina earns in six months) while watching Reina’s skin infection worsen, Blanca decided to take her sister-in-law once again to the Lenin Fonseca public hospital. This time, Blanca was able to finagle their entry by having a friend on hospital staff claim that Reina was her aunt. Upon examination, the doctor informed Reina that she had gangrene, that the infection had spread up her leg, and that in order to save her life it was too late to save her leg. Due to diabetes-related complications, Reina would not be able to use a prosthetic leg, but would be confined to a wheelchair for life. Shocked, but facing no alternative, Reina had her left leg amputated just beneath the hip on January 21. Blanca’s resentful conclusion still haunts me: had her sister-in-law received medical attention in her first visit to Lenin Fonseca a week earlier, Reina would still be able to walk.
How many more Nicaraguans must meet fates similar to Reina’s as continuing doctors’ strikes render understaffed hospitals defunct? More strikes are predictable if doctors remain underpaid, and underpaid doctors are predictable so long as the IMF continues to pressure against salary increases. Even without doctors’ strikes, continued IMF attempts to control Nicaragua’s public spending leave little hope for reversing the country’s decade-old trend of diminishing health funds and deteriorating hospitals.
Little about the IMF’s recent actions indicates that it plans to stop enforcing neoliberalism’s hold on Nicaragua. Rather, the evidence thus far suggests the IMF plans to exchange one debt for another while continuing the impositions that have encumbered Nicaragua’s health care system for years. Now is not the time to pat the IMF on the back for an attempt at debt cancellation. Now is the time to push the IMF to leave its immoral history of debt-linked mandates behind. Until it does so, neoliberal meddling will remain yet another chain on Nicaragua’s hospital gates and yet another obstruction on its path to self-determination.
Ben Beachy is an educator with Witness for Peace in Nicaragua. Witness for Peace is a politically independent, grassroots organization that educates U.S. citizens on the impacts of U.S. policies and corporate practices in Latin America and the Caribbean.
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