News / Africa

Increased Support for Developing Countries Urged from the International Monetary Fund

Development activists are calling on the International Monetary Fund and World Bank to improve support to the poorest countries by reforming economic policies on loans and by increasing transparency on deals made between the two institutions and national governments. The Fund says those improvements are well underway.

Multimedia

Audio
William Eagle

For International Monetary Fund (IMF) officials, the past week’s annual meetings were part of efforts to improve dialogue with the developing world.

Caroline Atkinson, the IMF’s Director of External Relations, says "we’ve funded representatives from civil society organizations to come to the [annual] meetings to tell us of their concerns, to hear from us about what we are doing and why, and promote an exchange. We’ve also funded a number of journalists and other media to come from Africa and Asia."

But non-governmental organizations say the Fund needs to do more.

Demonstrators compared the IMF to a
Demonstrators compared the IMF to a "loan shark" and urged an end to what they called unjust economic policies

The group ActionAid says IMF programs have generally prohibited the type of government-supported stimulus used by the industrialized countries to help weather the international financial crisis. Instead, it says they emphasize austerity measures that often call for cuts in government spending, including social services needed to help poor nations meet UN Millennium Development Goals. The MDG’s call for drastic reductions in poverty as well as vast improvements in education and child and maternal health by 2015.

Melinda St. Louis is the deputy director of Jubilee USA Network, which includes over 70 religious, labor and humanitarian groups supporting lower-income countries.

Critics say austerity measures mean less money for education and other social services
Critics say austerity measures mean less money for education and other social services

For example, in Burundi, she says "even though public sector wages are well below average for the region, the IMF used its influence to ensure the government reduce its spending on public sector wages – having hiring freezes and cutting subsidies for fuel and reinstate a 20 percent fuel tax affecting the poorest.

"Ghana had to raise utility prices, and have a wage freeze. They needed to increase salaries for health care workers to keep them in Ghana, but the IMF said they were not able to increase salaries to the level they needed to, which could affect the brain drain of health care workers forced to leave the country to make a living."

Smaller budgets and reductions in public expenditures may be continuing. She says IMF programs are projecting that countries tighten their fiscal and monetary policies in 2010 and 2011.

Some IMF and World Bank projects aim to boost developing countries' exports to niche markets, including flowers from Africa to Europe
Some IMF and World Bank projects aim to boost developing countries' exports to niche markets, including flowers from Africa to Europe

Development groups are also concerned about the effect of budget tightening on the poor.

Activists say many countries try to attract foreign investment with consumption taxes on lower income groups, instead of closing loop holes on the wealthy. Some governments favor free trade zones with minimal taxes on corporations.

Melinda St. Louis says governments also lower tariffs and import taxes, sources of funding for health and education services. Jubilee USA says an IMF requirement to lower trade barriers in Zambia made the country’s textile industry less competitive, and led to the loss there of 30,000 jobs.

Besides calling for reforms on loans and policies for less developed countries, Jubilee USA is also calling for greater transparency regarding deals signed between national governments and the Washington-based financial institutions.

Last week, Jubilee USA demonstrators urged the IMF to break the chains of debt and end unjust economic policies
Last week, Jubilee USA demonstrators urged the IMF to break the chains of debt and end unjust economic policies

"[Some] governments borrow from the IMF or World Bank," says St Louis, "without the knowledge or understanding of the population. Basically, they are getting money up front from projects that may be good, or even wasteful, but the country and citizens are saddled with that debt for decades to come."

She says in some cases, the Ministry of Finance in a given country signs with the IMF loan agreements whose details are not made public for scrutiny by the parliament, media or voters.

Caroline Atkinson of the IMF disagrees with the criticism. She says the Fund has tripled financing to low income countries with zero interest rate loans. She says money has been made available to the poorest countries on favorable terms so they are not crippled with the burden of repayment.

And, she says conditions on loan agreements have been streamlined.

"One of the reasons for conditionality," she says, "is that we lend when countries are sick, when they have a problem. So like any doctor we advise steps they should take to get better. The medicine is the money that supports them with symptoms and helps them get better, but they also need lifestyle changes. If they have got into crisis because the government is spending too much, or they can’t borrow any more, then they probably need to adjust that over time. That is part of what we do."

The global downturn exacerbates the struggle to improve sanitation and other services by 2015, a part of the UN Millennium Development Goals
The global downturn exacerbates the struggle to improve sanitation and other services by 2015, a part of the UN Millennium Development Goals

Atkinson says the IMF does not prescribe policies that place tax burdens on the poor, or that single out corporate interests for tax breaks.

"One of the things we feel strongly about," she says, "is the tax burden needs to be spread fairly and fall on those best able to pay. We give a lot of technical assistance and advice on how to make sure that people with high incomes or wealth pay the vast bulk of tax.  Also, there is no IMF policy in support of lower corporation taxes or free trade zones. Many countries may have them because they have a view about what will encourage exports and growth."

As for transparency, Atkinson says the IMF publishes a large number of loan agreements. She denies there are any private deals between the Fund and clients.

The IMF official says health and education spending was higher last year in countries with Fund support for initiatives that protect nutrition or provide cash to poor families. Some clients, she says, even have intensive public works programs.

Atkinson says it’s evidence the Fund is listening to its critics, and helping to protect the most vulnerable.

You May Like

Multimedia US Defense Secretary: Iraqi Forces Lack 'Will to Fight'

Ash Carter criticizes Iraq's reaction to Islamic State; National Security Advisor Susan Rice echoed Carter's concerns in an interview on CBS More

Boko Haram Surrounds Havens With Land Mines

Chad and Cameroon say huge numbers of land mines planted by Boko Haram fighters along Cameroon's border with Nigeria are a danger to people, livestock and soldiers More

Women Peace Activists Cross Korean DMZ

Governments of Koreas give international delegation of women peace activists permission to pass through heavily fortified border, but some critics say symbolic crossing only benefits Pyongyang More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs