ActionAid confronts IMF on impacts of its policies in Africa

30 April 2007

A new report documents the results of IMF macroeconomic policies on governments' ability to hire teachers.

The anti-poverty agency ActionAid released a critical new report during the Spring Meetings of the World Bank and IMF entitled “Confronting the Contradictions: the case against the IMF on education.” The paper analyzes the impacts of the Fund’s restrictive macroeconomic policy prescriptions on the education sector in Africa, through case studies of three countries: Sierra Leone, Malawi and Mozambique.

The central argument of the report concerns the conditions imposed on developing countries by the IMF through wage bill ceilings – limitations on the amount of their national budgets that governments can spend on public sector salaries. ActionAid argues that such restrictions have undermined long-term development goals by requiring “many poor countries to freeze or curtail teacher recruitment.”

Representatives from all three countries brought these compelling arguments to the IMF during its recent Spring Meetings. They called for the IMF to stop hampering their governments’ ability to address severe shortages of teachers, and more generally to “stop attaching specific policy conditions to their lending and surveillance programmes.” Among other core recommendations stemming from the report, ActionAid calls for the Fund to present governments with a much wider range of policy options, and for civil society organizations to increase their own economic literacy so that they may engage governments and the Fund on these issues.

Meanwhile, Reuters reported that the Fund released its own report on sub-Saharan Africa earlier this month, in which it predicts that economic growth in the region will accelerate to 6.7 percent next year, up from 5.4 percent last year. The Fund attributed these recent upward trends in part to “sound economic policies in most countries.” Importantly, however, Reuters reported that the IMF admits it is still “too early to assess whether the higher growth rates were helping poverty.”

This admission reflects the findings of a recent report by the Fund’s own monitoring unit, the Independent Evaluation Office (IEO), which highlighted the gap between the Fund’s stated commitments to supporting poverty reduction and the impacts of the policies it promotes. The report noted that while countries under the IMF’s Poverty Reduction Growth Facility (PRGF) concessional lending programs generally registered positive economic growth and improved macroeconomic indicators, the proportion of their populations living in poverty actually increased.

The Fund’s ongoing “confidence crisis” was a major underlying issue at the Spring Meetings, amid increasing skepticism about the legitimacy and relevance of the institution. With growing numbers of middle income countries repaying their debts to get out of IMF programs, and with poorer borrowing countries increasingly reluctant to cast their lot with the Fund, many observers, such as anti-poverty campaigner Soren Ambrose, suggest that the Fund’s future depends on whether it can convince “its shareholders…that the institution should continue to exist.”

Resources

• Confronting the Contradictions: The case against the IMF on education, ActionAid, April 2007 (ActionAid website) (Acrobat PDF 1 MB)
• IMF sees sub-Saharan Africa '07 GDP growth at 6.7 pct by Sujata Rao, Reuters, April 14, 2007 (Reuters website)
• IMF Confidence Crisis by Soren Ambrose, Foreign Policy in Focus, April 12, 2007 (FPIF website)
• IMF’s work in Africa found wanting, Bank Information Center, March 13, 2007 (BIC website)