The Second Term: The Struggle with the IMF

Abstract

In the period from the failure of the December 1977 IMF test to the failure of the December 1979 test economics was clearly in command, that is, political dynamics were fundamentally shaped by the constraints of the economy. The government lost virtually all room for maneuver by early 1978. A combination of three factors put the government entirely on the defensive. First, the harsh austerity measures imposed by the IMF caused a dramatic decline of living standards without producing any signs of arresting the economic decline and laying a basis for recovery. They also deprived the government of the means to carry on with its reform policies by way of their budgetary as well as political implications. Second, the severe internal tensions in the PNP and the demoralization of the activists and parts of the leadership made the government appear even weaker. Third, the opposition very skillfully exploited the political vulnerability of the government, waged a relentless delegitimization campaign and attempted to take advantage of the slipping political base of the government to promote popular countermobilization.