IMF lending can deepen economic crises, says report
New research suggests that the International Monetary Fund (IMF) is weakening the economies of countries to which it lends money.
The European Network on Debt and Development, Eurodad, says that the number of conditions the IMF attaches to its loans is increasing, with a continued focus on “harsh austerity measures and [interference] in sensitive policy areas.”
A new report from the organisation, entitled “Conditionally Yours: An analysis of the policy conditions attached to IMF loans”, suggests that such conditions are inimical to a nation’s economic growth – meaning recipients of IMF bailouts often struggle to maintain payments or enjoy recovery.
The conditions attached to IMF loans, such as fixed tax rates, spending cuts, or public-sector pay freezes, have long been regarded as controversial. While the IMF claims to have streamline its lending conditions, Eurodad claims the number attached to loans has increased by an average of almost six since 2005.
Moreover, it states that the largest loans come with the most conditions, with countries like Cyprus, Jamaica and Greece being especially badly affected.
Eurodad also expresses concern over Ukraine’s likely acceptance of help from the IMF, saying proposed conditions to cut energy subsidies and raise gas prices could have a negative effect on the country’s economic stability.
Jesse Griffiths, a director of Eurodad who co-authored the report, said: “It is clear that the IMF needs a major overhaul. It should stop using its power to interfere in highly sensitive and controversial economic reforms, and recognise that its current model often makes debt situations far worse. We recommend that the IMF focuses on its true mandate of providing emergency funding without harmful conditions, and that more permanent and just solutions are found for countries devastated by debt crises.”
About Kevin Sorkin
I am the Founder and CEO of Pendragon International Media Ltd, publishers of Global Government Forum. This portfolio also includes research services and important world leading events for public servants such as the Global Government Summit, the Global Government Finance Summit, the Global Government Forum Innovation conference, Global Government Digital Summit and Putting Citizens First. I am also the founder of the Civil Service Awards and Civil Service Live, established industry leading brands and extremely important events for government. I also launched and published Civil Service World. Over the years I have established relationships with the most senior officials in government and the private sector and have built a very strong and positive reputation across the industry.
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