IMF, World Bank and Africa
An avid viewer of television has seen the commercials portraying shortages of food and mass starvation in Africa. Yet in these times of relative prosperity, little is heard of Africa's debt problem. Although the total debt of all African countries combined is small in comparison to that of the United States, millions of people suffer as a result. However, it is not until these countries have difficulty repaying their loans that the international community begins to take notice. Many African countries are currently in such debt that all new loans are used to repay old loans in a attempt to salvage any credit rating a country might have (George, 13). Because many banks, particularly in the United states, have invested as much as 100 percent of their shareholder's equity in these less developed countries (LDCs), the chances of a country defaulting on a loan sends tremors through the economic world (George, 39). Eventually the countries are recognized as a poor credit risk and can no longer get loans. This is where the International Monetary Fund (IMF) and the World Bank come into the picture. The structural adjustment programs of the International Monetary Fund (IMF) and the World Bank have had greater negative effects than p
Since 1980, African "income, employment, nutrition, and health and education levels have all declined with a fall in average living standards adjustment programs are not working. Experts agree that there is economic sense in the policies that the IMF and World Bank impose on borrowing countries - yet the standard of living still drops. Recently people have begun to understand that the answer to the debt problems is not purely economic. No policy can correct a corrupt regime to compensate for geography or environment. However, knowing these problems exist in particular cases will enable the respective organizations to allow for some degree of compensation in policy formulation. Although it is probable that there is some bias in the policy decisions made by the IMF and World Bank, as in most decisions, this is unavoidable of the organizations movements. In the past the IMF and World Bank have neglected to consider the social impact of their policies. One can only hope that with the end of the "ME decade" a social awareness, that seems to be growing, will work its way in to the Western thought that has dominated economics for the last twenty years. In the early 1980's, the IMF made some of its largest loans ever to the government of South Africa, without the usual conditions attached (Mittleman, 64). Although the "loans are reserved for balance of payments attributable beyond a countries control, it was obviously the apartheid system that limited South Africa's economic growth" (Mittleman, 65). It is difficult to determine the extent to which certain governments influence the Fund and the World Bank. However, these governments risk huge sums of money so some involvement is inevitable since domestic interests are at stake. In the case of the United States, hundreds of small banks, inexperienced at foreign lending, rely on the U.S government to represent their interests in the World Bank and the IMF. Theoretically, "the IMF is politically and ideologically neutral, its mission being the broadly stated maintenance of international financial stability" (Carvounis, 70). However, critics of the IMF claim that it institutes the current economic thought of western Industrial Nations in regards to the political and economic positions of the country in question (Kronsten, 149). To a certain extent this is reflected in the IMF's attempts to promote international trade and the policies aimed at a free market system that ignores any social consequences (Carvounis, 70). Since the International Monetary Fund and the World Bank are basically run through the use of funds from the major industrial nations, their interests tend to become obvious not only in policies but, also in the borrowing countries that the institutions deal with. The World Bank admits the facts that the industrial nations, the United states in particular, heavily influence the policies of the bank for several reasons. The industrial nations have invested the most capital in the Bank. Most of the experts have been educated in Western thought and the location of its headquarters in Washington D.C, all have some affect on the decisions and policies it produces (World Bank, 4). Mittleman, James H. and Donald Will. "The International Monetary Fund, State Autonomy and Human Rights". Africa Today. 1987 http://flag.blackened.net/revolt/africa/wsfws/3_1imf.html Lawrence, Peter .ed. World Recession & The Food Crises In Africa. London, 1986 The early 1970's saw "over ambitious development projects and an unproductive state apparatus" as the main reasons behind the disaster that would occur when the copper price would drop drastically in 1974/75. Following the drop in world
Some common words found in the essay are:
World Bank, South Africa, Bank IMF, , Third World, Bank Harsch, IMF Recently, Drawing Rights, Fund Prendergast, Will54 IMF, world bank, imf world, imf world bank, adjustment programs, structural adjustment, structural adjustment programs, monetary fund, international monetary, international monetary fund, industrial nations, african countries, bank imf, world bank imf, washington dc, structural adjustment program,
Approximate Word count = 2483
Approximate Pages = 10 (250 words per page double spaced)
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