Source:
allAfrica
The cut in government expenditure in education, health, and housing amongst others, ends up harming the welfare of the people. March, 2007
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Long-term development programmes were originally the domain of the World Bank (WB) alone. However, when short-term lending became more and more unnecessary, the International Monetary Fund (IMF) sought for a new mission. In co-operation with the WB, the IMF established programmes aimed at providing medium- and long-term support for developing countries. By providing structural adjustment, the IMF began operating in a terrain which is supposedly the domain of the WB.
Initially, the IMF was created to provide short-term macroeconomic management, while the Bank was responsible for long-term administration of microeconomic projects. However, the Bank also departed from its original project-oriented lending to a broader programme approach. The distinction between the institutions thus became increasingly blurred. The traditional distinction between macro- and microeconomics in facilitating growth was challenged. It was acknowledged that growth-oriented stabilization can only take place over a long period of time. Therefore, Bank and Fund now co-operate in long-term development.
The so-called Structural Adjustment Programmes (SAPs) are targeted at low-income developing countries, mainly in Africa, South Asia, and the Caribbean. Support is made available to eligible countries undertaking comprehensive macroeconomic and structural adjustment programmes. Central to the arrangements are policy papers, which are drafted by national authorities in collaboration with the IMF and WB staff. These identify the country's macroeconomic and structural policy objectives, the strategies and priorities of the authorities to achieve those objectives, and the associated external financing requirements, thereby serving as a framework for other donors planning additional technical and financial assistance. According to many NGOs, SAPs are the main instrument used by the Bretton Woods Institutions to impose neo-liberal policies on developing countries, thereby increasing poverty and environmental destruction instead of generating the promised economic growth. In the 1990s worldwide concerns about SAPs grew to unprecedented levels. In response, the IMF and WB renamed and redesigned the programmes several times. They incorporated elements of poverty reduction and environmental sustainability into the programmes. However, the main focus remained on facilitating economic growth by applying a framework of neo-liberal economic policy prescriptions agreed upon in the “Washington Consensus”. This section provides an overview of the IMF's and WB's current long-term development programmes. For more information on NGO views on IMF performance see also IMF reform.
The World Bank's main self-proclaimed objective is to eradicate poverty. Yet, evidence suggests that its programmes often harm the poor and the environment.
International Monetary Fund - IMF
The IMF is one of the most powerful international organizations. Its policies change the lives of millions of people in developing countries.
This review looks at the quality and results of Poverty Reduction Strategy Papers (PRSPs)
in 19 countries with a focus on the effectiveness of the IMF and World Bank ’s roles in the PRSP process.
The PRSP homepage of the World Bank serves as a gateway to the PRSPs, including links to relevant documents such as the countries’ PRSPs. It is possible to subscribe to the PRSP Newsletter.
This paper outlines the PRSP strategy. It states that rapid, sustainable growth in which the poor fully participate is a necessary condition for poverty reduction. This will e.g. require prudent macroeconomic management, robust private sector activity and investment, and sound structural policies.
According to this IMF factsheet PRSPs describe the macroeconomic, structural and social policies that a country will follow to promote growth and reduce poverty. Among the core principles of the PRSPs are participation of national governments, civil society, and external donors as well as the recognition of the multi-dimensional character of poverty and a long-term approach.
Summary of and comment on the new poverty reduction strategy of IMF and World Bank written shortly after the launch of the new program. While the new approach is welcomed for its broader perspective on fighting poverty and involving civil society, it still uses many of the old macroeconomic policy prescriptions which failed to work before (doc-file).
This FAQ-style introduction to PRSP answers some important questions related to the PRSP approach. It focuses on important issues for NGOs and reveals the shortfalls of the PRSPs.
This document is intended as a resource for organizations concerned with influencing and monitoring national policy making in developing countries to the benefit of the poor. The document focuses on low-income countries as the current donor conditionality under the PRSP strategy demands civil society participation in planning and implementation of programs.
According to the author the Poverty Reduction Strategy Papers (PRSP) are unlikely to reduce poverty as they are proving to be little more than hurriedly worked-over versions of standard World Bank/IMF policy papers. Instead, governments and civil society need to evolve their own development approaches and plans that are locally and nationally relevant and sustainable, and which ensure that national policies serve human, social, and environmental goals rather the market and macroeconomic targets.
Abstract of external views on the PRSP approach, including comments from international organizations, regional development banks, bilateral donors, research institutes, civil society organizations, and others.
According to this declaration by a coalition of African NGOs the PRSPs have to be placed within the context of corporate globalization. In this process the world is restructured by institutions such as World Bank and IMF to serve neoliberal interests. When they came under pressure, the IFIs invented the PRSPs mainly as a public relation tool. As the PRSPs continue to impose structural adjustment on poor countries they have to be abandoned.
This study of five African countries shows that civil society participation under the PRSP process remains very limited. While the African governments just did enough to qualify for support, IMF and World Bank accepted PRSPs where the impact of civil society clearly was very limited. In the case of Uganda, the time restraints of the PRSP made the consultation even less participatory than it would have been otherwise.
While the conference generally welcomes the new PRSP strategy of the IFIs it rejects the emphasize of the programs on the debtor countries’ internal factors and refers to the negative impact of globalization instead. It also asks for a greater participation of parliament and civil society in the design of the programs (pdf-file).
This article from the Forum des alternatives africaines in Senegal partly blames Northern NGOs by falling for the IMF and World Bank propaganda, which claims that PRSPs are reducing poverty. As the approach uses the same macroeconomic framework as earlier strategies, it cannot lead to poverty reduction. Instead, it is driving a wedge between Southern and Northern NGOs, where some Northern NGOs have literally forced their Southern partners to participate in the PRSP process.
The PRSP process has been a step forwards in poverty reduction as it opened up some space for debate and civil society involvement. However, local civil society and parliamentarians were, if at all, only consulted, but did not actively participate in the design of the papers. So far, the promise of PRSPs involvement in poverty reduction remains largely unfulfilled.
2002 Statement of the Fund’s Executive Board, which concludes that the design of the programs under the new PRGF has become more pro-poor and pro-growth.
This report by the Bolivian NGO CEDLA reveals the lack of civil society involvement in the PRGF approach. In the case of Bolivia many NGOs were excluded from the discussion about and draft of the final paper. Neither the IMF nor the national government analyzed the impact of structural adjustment on the poor (pdf-file).
Link to three papers assessing the PRGF. The papers argue for a greater cooperation between the IMF and other development agencies as well as a further reducing the conditionality of the programs.
According to this Nicaraguan paper, debt is the mechanism that the North is using to exploit and oppress peoples in the South. As poverty is a result of this exploitation it cannot be eradicated by new loans as provided by the PRGF. Rather, sustained poverty eradication has to be linked with a new model of development more equal and just, which is not possible under the framework of the current economic system.
The Heavily Indebted Poor Country (HIPC) Initiative
Just over half of the 68 billion dollars of debt that should have been written off by the end of 2002 was cancelled. Moreover, the debt burden of most participating countries is still unsustainable as economic growth predictions of the IMF were overly optimistic. The first country that graduated from the programme, Uganda, faces an unsustainable burden again. Still, HIPCs paying off debts with funds that should go to food aid, health and education.
The HIPC Initiative homepage of the World Bank gives detailed overview including a detailed description of its focus, reviews, and country-specific information.
Critical introduction to the HIPC Initiative. The HIPC Initiative is not providing long-term debt sustainability and still imposes neoliberal conditionality on the borrowing countries. Instead a fair and transparent process is needed to provide true debt sustainability.
According to this paper the HIPC Initiative has not secured long-term debt sustainability. The HIPC Initiative has to provide sufficient debt relief to attract private investors and achieve economic growth.
The enhanced HIPC Initiative is not working effectively according to three development NGOs. As a consequence, some countries will soon be left with unsustainable debt again. Instead of the current approach, the IFIs should mobilize the financial resources to offer a 100% debt cancellation, if necessary for the HIPCs in order to achieve the MDGs. A broad set of economic and human development objectives need to be applied when deciding what level of repayment a country can afford.
The director from the Ugandan International South Group Network (ISGN) states in this speech that the IMF/World Bank staff are corrupted by the interests of the G7 donors. As a result, developing countries should reject the HIPC Initiative because the institutions still impose the old conditionality on the debtor countries. Moreover, the promised participation of civil society is a farce as long as IMF and World Bank maintain their gatekeeper role.
The report lists the progress made in the HIPC Initiative. Most countries entitled to take part in the initiative reached or are close to the decision point for debt relief. However, the initiative cannot guarantee sustainable debt burden in the future, though the IFIs address debt sustainability in various workshops in the HIPCs (pdf-file).
Civil society groups have long attacked the HIPC Initiative for keeping poor countries within the perimeters of the creditor-controlled global economic system. Now, as the scandalous facts of international debt begin to come to light, the Bank itself has acknowledged the serious shortcomings of the initiative, even when measured by its own standards.
As an answer to the IMF/World Bank status of implementation report this New Economics Foundation analysis finds that the HIPC Initiative is severely behind schedule. IMF and World Bank fail to take their full share of debt relief and irrelevant conditions delay the relief. Consequently, Jubilee Research, together with CAFOD, Christian Aid, Oxfam International and Eurodad asks for sufficient resources to provide real debt relief to HIPCs in order for them to meet the MDGs (pdf-file).
The Structural Adjustment Programme Review Initiative (SAPRI)
Published in January 2004, this book represents the most comprehensive, real-life assesment of the actual impacts of the liberalisation, deregulation, privatisation and austerity policies that constitute structural adjustment programmes.
According to this review of the SAPRI civil society groups can make an important contribution to reform the programs by fostering the dialogue between governments and their citizens. While structural adjustment reduced government spending and inflation it contributed to higher unemployment rates and consumer prices in some SAPRI countries. Therefore, the programs have to be “owned” by the country and the society in order to be successful. Social expenditures should be safeguarded, e.g. to maintain access to health care and education (pdf file).
This report represents findings of the SAPRI and the CASA initiatives. It documents how trade and financial liberalization, privatization and labor market reforms have systematically destroyed local businesses, damaged the environment, reduced employment and real wages and undermined the access of the poor to affordable health care and education (pdf file).
This articles summarizes the SAPRI process and describes how Bank staff tried to undermine the initiative once it became clear that SAPRI would reveal the failure of structural adjustment. Still the Bank seems to engage in dialogue with civil society only as long as it serves their public relation interests.
For the last several years the World Bank and IMF have squared off against governments, NGOs, UN agencies and even each other over the concept of 'fiscal space'. The IFIs and the UN Development Programme (UNDP) have contrasting views on how to increase fiscal space, meaning how to enable governments to spend and invest more. The core of the disagreement is how fiscal space should be viewed. The UNDP views increasing fiscal space as a means to combat poverty and achieve the Millennium Development Goals (MDGs), while the IFIs generally start by analysing the resources already available and then calculate fiscal space. April, 2007
The International Monetary Fund (IMF) and the World Bank are the major cause of poverty in African countries today. Despite claims that they will reduce poverty, it is widely accepted that most of the debts, as a cause of poverty in Africa, are due to the policies of these institutions. The World Bank and IMF adjustment programmes differ according to the orignal role of each institution.
When historians look back over the past 25 years, one of the great crimes they will identify is the Third World debt crisis. Now, finally, the rich countries have agreed to cancel the debts of the poorest countries to the International Monetary Fund (IMF) and World Bank. But they continue to differ over how to do it. Sell the IMF gold is a possibility. June, 2005
Debt, and the impact it has had on generations of Africans, is one of the central issues facing Africa and its future development. In this year the Commission for Africa prepares to release its final report on the development challenges and the future of the continent is being discussed at a number of international meetings.
This special report of Pambazuka News focuses attention on the issue of debt and the impact it has had on generations of Africans. March 10, 2005.
These institutions (World Bank and IMF)claim to be acting in the interests of the global good, with mission statements such as the World Bank, which says that its "mission is to fight poverty and improve the living standards of people in the developing world". But critics slam both institutions for their lack of democracy and for creating a system of modern day colonialism that does nothing to advance the interests of the poor. October 2004.
Beginning with an article by Patrick Bond that examines how the Bretton Woods Institutions have responded to criticism over their democratic credentials, their particular approach to development policy, their ongoing support for mega-projects and their failure to cancel debt, Pambazuka News will be carrying a series of articles in the context of Africa, leading up to the annual meetings of the World Bank and IMF in October. August 2004.
Indigenous peoples took a strong interest in the Extractive Industries Review (EIR) and made a number of submissions and inputs throughout the process. This interest is based on the well documented fact that, without full recognition of and respect for our rights, extractive industries exacerbate poverty among indigenous peoples, undermine our socio-cultural integrity and well being and, in some cases, threaten our survival as distinct peoples. August 2004.
After a longer-than-expected meeting, the executive board of the World Bank Group gave general approval to a management plan to continue investing in oil, gas, and mining projects despite the recommendations of an independent review. August 2004.
The Extractive Industries Review (EIR), commissioned by World Bank President James Wolfensohn, recently concluded that financial support for projects in the oil, mining and gas sectors have not led to direct poverty alleviation. The EIR made specific recommendations to improve the World Bank's policies and practices. However the World Bank has ignored the EIR recommendations and endorsed business as usual. August 4, 2004.
In the past two years criticism has grown regarding the effectiveness of neoliberal strategies for poor countries. Although many of the arguments coming from the left are now new, there exists a growing body of critical economic investigation, from the very academic and institutional circles that historically have contributed to the design of policies for the international financial institutions. July 2004.
Economic growth leads to rising income for the poor in developing countries as much as in developed ones states this study. Openness to foreign trade, good rule of law and fiscal discipline benefit the poor to the same extent as the whole economy. Avoidance of high inflation is "super-pro-poor" as high inflation is more harmful to the income of the poor than to GDP overall (pdf-file).
In a response to above paper the author refers to the fact that World Bank and IMF policies in the past two decades rather reduced than increased economic growth. While the World Bank study shows little relationship between any of the variables examined it mirrors the IfIs policy approach: It assumes universal economic laws for development regardless of the local political or cultural circumstances.
The study by an Ugandan NGO claims that the new PRSC approach by the World Bank and the Fund’s PRGF represent merely a repackaging of the old structural adjustment programs. Instead, it is recommended, Uganda should develop its own set of economic policies with state support similar to the ones used successfully by industrialized countries (pdf-file).
While IMF and World Bank claim to fight poverty with new programs such as the PRGF and the HIPC initiative, there is according to the author no evidence for a real change of the formula for structural adjustment which failed to help the poor so far.
This article states that the IMF has neither the legitimacy nor the capability to engage in poverty reduction. However, as the Fund has a gatekeeper function for other lenders including development agencies its policies can have far-reaching effects. Consequently, the author demands that the IMF stays out of any long-term development programs and focuses instead on short-term lending facilities (pdf-file).
