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|Doing a Decent Job? IMF Policies in Times of Crisis|
The IMF claims to have become more flexible in its lending requirements to cash-strapped countries. Yet as this joint report indicates, the Fund is still imposing inappropriate conditions on borrowers that will erode social protection for the poor.
5th October 2009
New Report on the IMF Shows a Leopard Cannot Change its Spots
October 2009 - SOLIDAR and Eurodad
Despite changes in rhetoric, IMF policy advice and conditions are still having the same detrimental effects on social protection, decent work and poverty in countries forced to take out loans due to the financial crisis, a new report released today shows.
Published on the eve of the International Monetary Fund (IMF) and World Bank Annual Meetings, held in Istanbul on 6-7 October, Doing a decent job? IMF policies and decent work in times of crisis, critically examines the situation faced by those most vulnerable in the wake of government cuts imposed by the IMF’s tight fiscal policies in El Salvador, Ethiopia and Latvia.
The report by SOLIDAR, Eurodad, and the Global Network comes hot on the heels of the Pittsburgh G20 meeting where leaders decided to make some changes to the IMF governance structure, but failed to change the modus operandi of the two institutions.
Despite talk of a recovery, the International Labour Organisation (ILO) estimates that unemployment will rise by 59 million by the end of the year and over 200 million workers could be pushed into extreme poverty, mostly in developing and emerging countries where there are few or no social safety nets.
“This clearly shows that talk of recovery is misguided to say the least, and that once again instead of helping people survive the crisis by expanding and supporting social protection just when it’s needed most, the IMF is back to business as usual, with workers and the poor suffering bearing the brunt of their obsession with fiscal conservatism,” commented Conny Reuter, Secretary General of SOLIDAR.
The IMF has undergone a remarkable recovery over the past year, having agreed loans and credits for 2009 worth $4 billion, four times more than they did in 2008. It has stated that it has become “more flexible” in its traditionally tight fiscal and monetary policy advice and lending conditions, but the report clearly shows that the effects on the ground are still the same with cuts to vital services and wages.
“In all three IMF programmes examined in the report, there has been some easing of fiscal targets which allows for slightly higher budget deficits on a temporary basis, but as always, the sting is in the tail, and in the final years of their loans countries will again be subjected to severe fiscal tightening,” commented Nuria Molina, the Director of Eurodad.
“Despite making commitments at the G20 to follow the principles of the Global Jobs Pact concluded at the 2009 ILO Conference by implementing expansionary fiscal policies and the safeguarding and re-enforcement of social protection and decent work, rich countries who control the IMF are still allowing it to impose conditions leaving developing and transition country governments unable to follow these principles of recovery. This is blindingly hypocritical given that rich countries, who don’t have to rely on the IMF, have just engaged in implementing the greatest fiscal stimuli of all time” she added.
“IMF representatives have said that they hope that in 2011 the world will resume its “health growth of the last decade”, but this crisis has just shown that world economic growth is based on rotten foundations. The recovery must be built on more solid foundations, with the IMF using its huge increase in financial resources in a way which allows countries to support decent work, reduce inequality and eradicate poverty, and depart radically from the economic orthodoxy that has informed its past policy advice and conditionality”, Conny Reuter concluded.
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