The International Monetary Fund started a public debate with the National Commission in Defense of Water and Life (CNDAV).  The CNDAV is promoting a Constitutional reform against the privatization of water. One of the reasons given by the CNDAV for advocating this direct democracy mechanism is the existence of a Letter of Intent that the Uruguayan government signed with the IMF in 2002.

In its latest media appearance, the IMF assured that it did not impose any demands on the Uruguayan government concerning the opening of the water market to the private sector, a fact which is denied -and documented- by the CNDAV.

By means of a letter sent to a Uruguayan newspaper, the IMF affirms that "financial aid provided to Uruguay is not subject to any kind of guarantee to ensure payment", trying to render invalid one of the arguments posed by the promoters of the Constitutional Reform in defense of water. The letter is a response to an article published in the same newspaper (La República, August 29th, "Keys to the Constitutional reform in defense of water") and yet it sets aside the conditions established in the Letter of Intent signed in 2002 between the Uruguayan government and the IMF.

The article published in La República newspaper stated that the knowledge of the agreements made between the Uruguayan government and the IMF -expressed in the Letter of Intent - was one of the reasons why the National Commission in Defense of Water and Life felt the need to take action, and which resulted in the proposal of a Constitutional Reform to be voted together with the national elections in October 2004.

The IMF claims that the assertions by the CNDAV are "untrue" since "financial aid that IMF provided to Uruguay is not subject to any guarantee to ensure payment". However, going over the contents of the Letter of Intent signed in June 2002, it seems that it contradicts the words of IMF resident representative in Uruguay.

What does the Letter of Intent say?

In the text of the Letter of Intent signed 18th June 2002 between the IMF and the Uruguayan government, the latter committed to "introduce new regulatory frameworks in several areas including electricity, telecommunications, water, sanitation, trains, transport, etc."
As if this did not suffice, the document also provides the "Actions and terms", that is, the way in which said changes would take place and the terms during which they would take place.
In paragraph VII) II.4 (concerning the modifications to the regulations on water and sanitation) there are some important points as to how the modifications shall take place, the exact dates in which the modifications will take place as well as the dates in which proposals for Parliamentary discussion are set.

For instance, paragraph a) provides the “introduction of a new regulatory framework for the (water and sanitation) sector" adding that said initiative “shall be put to Parliamentary consideration in September 2002."

Paraph b) further on provides that the Uruguayan government commits with the IMF to “introduce new quality and control rules in order to enable private sector investment" and it also provides that a “decree" that will enable said “introduction" should be passed in December 2002.
Therefore, in the case of the IMF Letter of Intent there is not only a change in regulating the water sector but also the provision of a legal-administrative mechanism through which this new regulating framework will become effective, a decree of the Executive Branch.

Paragraph c states that “call for bids in order to improve water services in Montevideo" should come into effect in December 2002, while paragraph d promised a “call for bids for the private sector to administer sanitation plants in March 2003."

All the aforementioned provisions can be found in the Letter of Intent, a public document signed between the IMF and the Uruguayan government in June 2002. These conditions are more than a guarantee they are actual demands. Regarding the changes committed for the water and sanitation sector -analyzed above- it is irrelevant whether they were "imposed" by the IMF or "accepted" by the Uruguayan government.

The main feature of the Constitutional Reform to be voted next 31st of October is its conceptual opposition to the IMF, but also to the World Bank and the Inter-American Development Bank. These multilateral organisms consider water as a merchandise, whereas the constitutional reform proposes considering water as a human right. And as such, access to drinkable water and sanitation should be guaranteed to the whole population as a result of a sustainable and participative public administration.

More information:
REDES-Friends of the Earth Uruguay
prensa@redes.org.uy
(0598) 2 9082730
María Selva Ortiz
(0598) 99 259822
agua@redes.org.uy