UNITED NATIONS – The austerity policies adopted by some Western governments are hurting both the people of those countries and residents of the developing world, Latin American leaders said at the opening of the UN General Assembly.
“History has revealed that austerity, when it is exaggerated and detached from growth, is counterproductive,” Brazilian President Dilma Rousseff said.
Rousseff, who leads the economic giant of Latin America, said the focus on budget-cutting is making the slowdown worse in developed countries while also putting pressure on emerging nations.
Brazil has shown it is possible to maintain “high rates of employment” and boost incomes without abandoning sound fiscal policies, she said, calling for a global pact to revive growth.
Rousseff’s Argentine counterpart, Cristina Fernandez, lashed out at austerity and offered pointed criticism of international financial institutions.
“We don’t come to lecture, just to recount the experience of a country that lived through a situation similar to that which some other countries in the developed world are now living through,” she said in a speech interrupted several times by applause.
Fernandez singled out the International Monetary Fund for its “absolutely absurd” practice of imposing austerity and so-called structural adjustment on nations in need of help.
She noted that years of following IMF policy prescriptions led in 2001 to the near collapse of Argentina’s financial system under a debt burden equivalent to 160 percent of gross domestic product.
Her country saw its economy shrink by 20 percent in four years as a result of the kind of “ferocious austerity” now being applied in places such as Spain, Greece and Portugal, Fernandez said.
Argentina began to grow again in 2002 and shifted into high gear the following year, when Fernandez’s late husband, Nestor Kirchner, was elected president. His administration successfully renegotiated the country’s sovereign debt – in default since December 2001 – and later paid off all of the loans Buenos Aires received from the IMF.
Joining the anti-austerity chorus at the General Assembly was the new president of the Dominican Republic, Danilo Media, who said “counter-cyclical policies of social investment” are the way to spur economic recovery.
“The economy should be at the service of people, not the reverse,” he said.
Salvadoran President Mauricio Funes used his time at the podium to criticize the absence of any control over financial flows, which he blamed for “recurrent crises” whose cost is borne “always by the peoples and never by those responsible.” EFE