Hernán Sáenz Jiménez
Encyclopedia
Hernán Sáenz Jiménez is a Costa Rica
n economist
and lawyer
, who was the Minister of Finance for the administration of President Rodrigo Carazo Odio
in Costa Rica from 1979 to 1981. He currently serves as the Executive Secretary of the Administrative Tribunal of the Inter-American Development Bank
and lives in Washington, DC.
While Sáenz was Minister of Finance, Costa Rica was plagued by economic instability and social unrest. Throughout the Carazo presidency, there was a world economic recession
. Oil prices were at historic highs and the value of Costa Rica's main crop, coffee
, was falling. Carazo instructed the Central Bank of Costa Rica to borrow heavily in order to maintain the value of the Costa Rican colón
, hoping that an economic recovery was close at hand. This policy eventually became unsustainable, leading to a catastrophic sudden devaluation in September 1980. Skyrocketing rates of inflation prompted capital flight
, crippling internal business operations. In all, the national debt rose from $800 million to over $3 billion due to the government's mismanagement of the economy. As a result, in 1981 Sáenz was forced to suspend servicing Costa Rica's external debt.
Sáenz asked the International Monetary Fund
(IMF) to provide Costa Rica with an emergency loan package to ameliorate the debt crisis. As a precondition for the IMF loan package, Sáenz agreed to sweeping austerity measures demanded by the IMF, including a devaluation of the colón, reduction of public subsidies and spending, removal of price controls, and reform of the tax structure.
Carazo's government ended up not complying with the draconian and one-sided concessions that Sáenz had made to the IMF. Sáenz resigned in protest, hoping other government officials would follow suit, but to no avail. The Costa Rican government simply could not continue under the austerity measures, and the IMF suspended its financial assistance. At the time of Sáenz' resignation, the country was left on the verge of bankruptcy and with a rate of inflation at nearly 100 percent. The heavy load of debt that the central bank acquired during that period has contributed to the high rates of inflation that Costa Rica has endured ever since.
Sáenz subsequently resettled in the United States and took a position as the Executive Secretary of the Administrative Tribunal of the Inter-American Development Bank in Washington, DC, which he continues to hold today.
Costa Rica
Costa Rica , officially the Republic of Costa Rica is a multilingual, multiethnic and multicultural country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west and the Caribbean Sea to the east....
n economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
and lawyer
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
, who was the Minister of Finance for the administration of President Rodrigo Carazo Odio
Rodrigo Carazo Odio
Rodrigo José Ramón Francisco de Jesús Carazo Odio served as President of Costa Rica from 8 May 1978 to 8 May 1982.Carazo was born in 1926 in Cartago...
in Costa Rica from 1979 to 1981. He currently serves as the Executive Secretary of the Administrative Tribunal of the Inter-American Development Bank
Inter-American Development Bank
The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean...
and lives in Washington, DC.
While Sáenz was Minister of Finance, Costa Rica was plagued by economic instability and social unrest. Throughout the Carazo presidency, there was a world economic recession
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
. Oil prices were at historic highs and the value of Costa Rica's main crop, coffee
Coffee
Coffee is a brewed beverage with a dark,init brooo acidic flavor prepared from the roasted seeds of the coffee plant, colloquially called coffee beans. The beans are found in coffee cherries, which grow on trees cultivated in over 70 countries, primarily in equatorial Latin America, Southeast Asia,...
, was falling. Carazo instructed the Central Bank of Costa Rica to borrow heavily in order to maintain the value of the Costa Rican colón
Costa Rican colón
The colón is the currency of Costa Rica. The plural is colones in Spanish, but English speakers often say colons instead. The ISO 4217 code is CRC....
, hoping that an economic recovery was close at hand. This policy eventually became unsustainable, leading to a catastrophic sudden devaluation in September 1980. Skyrocketing rates of inflation prompted capital flight
Capital flight
Capital flight, in economics, occurs when assets and/or money rapidly flow out of a country, due to an economic event and that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic...
, crippling internal business operations. In all, the national debt rose from $800 million to over $3 billion due to the government's mismanagement of the economy. As a result, in 1981 Sáenz was forced to suspend servicing Costa Rica's external debt.
Sáenz asked the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF) to provide Costa Rica with an emergency loan package to ameliorate the debt crisis. As a precondition for the IMF loan package, Sáenz agreed to sweeping austerity measures demanded by the IMF, including a devaluation of the colón, reduction of public subsidies and spending, removal of price controls, and reform of the tax structure.
Carazo's government ended up not complying with the draconian and one-sided concessions that Sáenz had made to the IMF. Sáenz resigned in protest, hoping other government officials would follow suit, but to no avail. The Costa Rican government simply could not continue under the austerity measures, and the IMF suspended its financial assistance. At the time of Sáenz' resignation, the country was left on the verge of bankruptcy and with a rate of inflation at nearly 100 percent. The heavy load of debt that the central bank acquired during that period has contributed to the high rates of inflation that Costa Rica has endured ever since.
Sáenz subsequently resettled in the United States and took a position as the Executive Secretary of the Administrative Tribunal of the Inter-American Development Bank in Washington, DC, which he continues to hold today.
Sources
- Nelson, Joan M. Economic Crisis and Policy Choice: The Politics of Adjustment in the Third World. Princeton Univ. Press 1990 at 182-187
- Watkins, Thayer. Political and Economic History of Costa Rica. http://www.sjsu.edu/faculty/watkins/costarica.htm