IMF: A 'useful veil' for austerity

Issue 

BY SEAN HEALY

The International Monetary Fund's efforts to repackage itself as an institution motivated by concern for the poor have been dealt a blow by a new report which reveals that the IMF's "Poverty Reduction Strategy Papers" are no different from the structural adjustment programs they were supposed to replace.

The report, "Still SAPping the Poor: A Critique of IMF Poverty Reduction Strategies", written by Ghanaian economist Charles Abugre for the World Development Movement, claims that the PRSPs, like their predecessors, "are acting as barriers to policies benefitting the world's poorest peoples". The WDM's debt campaigner, Bethan Brookes, said the report, released on June 26, "blows out of the water the IMF's claims to have poverty reduction-centred programmes".

Stung by criticisms that its economic prescriptions had worsened the 1997 Asian economic crisis and by angry demonstrations around the world, managing director Michel Camdessus announced at the IMF's 1999 annual meeting that the PRSPs would be developed to replace the Policy Framework Papers, which outlined the structural adjustment measures governments had to carry out to qualify for IMF and World Bank loans.

The PRSPs would supposedly rectify the two major criticisms of the IMF's structural adjustment programs: they would enshrine poverty reduction as the central goal of countries' economic policy and they would be "country-owned" documents, worked out in consultation between the IMF, national governments and their populations.

Abugre's findings indicate that neither of these two aims have been met. "PRSPs are a classic case of empty rhetoric. It could provide a useful veil for the World Bank and IMF to continue their neo-liberal agenda", he said.

Even worse, the PRSPs "may well result in the worst of both worlds ... by legitimising and institutionalising yet additional conditionalities without significant benefits either by way of debt reduction or reach change in the content and 'ownership' of policies".

Abugre's study of those PRSPs released so far finds that they contain many of the same conditionalities as their predecessors: rapid privatisation of state assets, deregulation of controls on capital, public sector budget cuts and monetary and budgetary orthodoxy. In Kenya, for example, while non-government organisations were working on proposals for poverty reduction schemes, a separate government working group was meeting in private to draft budget policies "so stringent that [NGOs'] spending expectations were largely thrown overboard".

Claims that the PRSPs embody wide public consultation are hollow, the report shows. It also points out that claims of "country ownership" are undermined by stipulations which give the IMF final veto over the paper.

According to Brookes, "What most concerns WDM is that PRSPs are the gateway to debt relief. The whole debt relief programme is conditional on poor countries producing these programmes for IMF approval."

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