Chile: the balanced view : a recopilation of articles about the Allende years and after

"extremely hard" to get out an unspecified loan during the summer of 1973, but that the proposal simply kept falling through "as though someone were consciously trying to sabotage it" by precipitating catastrophic shifts in Chilean and international economic conditions. There is much that is val id in the World Bank argument that Chile was not creditworthy during the 1971-1973 period, given the ultimately disastrous economic conditions in tha! country by the end of that timespan. Nevertheless, it must be noted that Chile was able to borrow money and obtain credit from many sources throughout this period.(63) In Novem– ber 1972, the Chilean government announced receipt of $250 million in short-term credits from Canada, Argentina, Mexico, Australia, and Western Europe and $103 mili ion from the USSR, plus $446 million in long-term credits from communist countries and $70 million from other Latin American states. (64) Ouring the period in which the World Bank contended that Chile simply was not creditworthy, an international institution admitted that the Chilean foreign debt grew by $400 million, and Chilean sources claimed that ít expanded by $800 mi 11 ion.(65) Furthermore, even when in default to her other creditors, Chile continued after November 1971 to repay debts owed the multilateral banks (excepting the $8.1. million unpaid the IBRO due to an interest policy disagreement between the Bank and Chile). An IMF report on the Chilean economy prepared in early 1972 was reportedly quite optimistic concerning Chile's future economic prospect and her future ability to repay the internatio– nal obligations upon which she was then in default,(6!;l) Particularly in 1971, before Chile declared a moratorium on foreign debts, before the final expropriation ofthe foreign-owned copper mines, and before inflationary pressures became unmanageable, there is some evidence that Chilean credít-worthiness was less weak than the World Bank suggests. Sigmund contends that there is "a certain disingenuousness in the constant references to credit-worthiness at a time when Chile was still paying her debts."(67) While the aboye caveats are necessary in order to provide perspective, it is nonethe– less clearfrom ourexamination of World Bank lending to Chile during the 1961-1974 period that the Bank remained relatively consistent in its treatment of that country throughout this entire timespan. As Chile experienced serious domestic economic dislocatíons during both the Frei and Allende administrations, the World Bank became quite reluctant to finance Chilean projects and quite critical of Chílean inflation and internal ecor)omic instability. The Bank's su~pension of lending to Chile during the Allende period thus does not seem to be out of character with previous World Bank practice towards tha! country. INTER-AMERICAN DEVELOPMENT BANK: From this examination of IOB lending and economic conditions in Chile during the past thirteen years, it seems proper to conclude that the Inter-American Oevelopment Bank was less consistent than was the World Bank in its approach to Chilean lending. Perhaps due to its view tha! development problems emanate from weakness in national economic structu– res rather than simply from poor macroeconomic policy decisions by governments, the IOB lent to Chile during periods of substantial inflation (1966-1970) and during periods of large balance-of-payments deficits (1961-1963). If that Bank were consistent in its treatment of Chile, one might have expected it to contínue making new loans to Chile through out'the Allende period or at least un!il it became eviden! in late 1971 and early 1972 that the future economic conditions in Chile would be significantly worse than those experienced under (63)Whíle some credltors may not have had as rigorous tests 01 credit-worthiness as Ihose employed by!he World Bank, others may have had their iudgement on Chile's prospects encouraged by the IMF 1972 repprt noted below. (64)Sigmund. The FalJ 01 Allende, p. 336. (65)lnt. doc. and Ibid., p. 337. (66)Sigmund, The Fall 01 Allende. p. 338. (67)lbid.. p. 338. 137