IMF’s work in Africa found wanting
13 March 2007
New report shows that IMF's lending in Africa is "confused, vague, lacks transparency and suffers from a large gap between rhetoric and practice."
An article by the Inter Press Service (IPS) news agency describes a critical new report on the International Monetary Fund’s (IMF) lending to sub-Saharan Africa. According to IPS, the report, which was conducted by the Independent Evaluation Office (IEO), the Fund’s own monitoring unit, found that the IMF’s work in Africa is “confused, vague, lacks transparency and suffers from a large gap between rhetoric and practice.”
The report’s conclusions were based on the experiences of five countries in Africa between 1999 and 2005 under the IMF’s Poverty Reduction and Growth Facility (PRGF) concessional lending program. The report noted that while the countries under study registered positive economic growth and improved macroeconomic indicators, the proportion of people living in poverty did not decrease. These findings highlight the gap between the Fund’s stated commitments to reducing poverty and the impacts of the policies it promotes.
Civil society advocates have long argued that the Fund’s operations have exacerbated rather than decreased poverty, through the strict economic policy conditions that it often attaches to its loans. As explained in the IPS article, such conditions typically include “tight fiscal management, tax reforms, financial sector reform, governance reforms, economic liberalisation and privatisation of state-owned enterprises.”
Some civil society organizations such as AFRODAD argue that PRGFs have failed to improve overall poverty reduction outcomes. There is growing concern about the IMF’s continued insistence on capping public expenditure, which may constrain a country’s ability to hire more of the doctors and teachers needed to fight HIV/AIDS, increase school enrollment, or otherwise improve social service delivery.
The IEO’s report comes amid increasing debate about the continued relevance of the IMF. The Fund is in crisis, with growing numbers of middle income borrowers repaying their debts to get out of programs with the IMF, and with some poorer borrowing countries such as Ghana expressing reluctance to cast their lot with the Fund; in November, Ghana announced its withdrawal from the PRGF, citing the “highly prescriptive conditions” attached to the loans.
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