The Third World Network has reported that despite pledges to address the crisis in flexible and innovative ways, the IMF’s key objective in crisis loans remains “macroeconomic stability” through the “tightening of monetary and fiscal policies.”
Since the onset of the financial crisis in 2008, IMF crisis loans have required policies such as:
â€šÃ„¢ lowering fiscal deficits and inflation levels;
â€šÃ„¢ buffering international reserves (as they fell to dismal levels from the impact of the trade shock in this financial crisis);
â€šÃ„¢ reducing or restraining public spending (through public sector wage freezes and pension freezes, cutting minimum wages, eliminating subsidies to fuel, gas and power, and hiking utility tariffs and tax reforms);
â€šÃ„¢ increasing official interest rates or restraining the growth of the money supply;
â€šÃ„¢ preventing currency depreciation; and,
â€šÃ„¢ providing financial sector liquidity where needed.
Instead of increasing government expenditure and boosting domestic demand, local employment and economic activity to overcome the recession, the IMF is cutting spending and increasing tariffs and taxes in already contracting economies for the purpose of maintaining low inflation and fiscal deficit rates, flexible exchange rates, and trade and financial liberalization. The burdens of these questionable policies, intended to maintain investor confidence, access to external capital and sustainable debt situations, fall squarely on the shoulders of local taxpayers and consumers.
As I have argued time and again, and as Krugman, Wolf, Galbraith at al do likewise, time and again, these policies not openly make no sense, they are utterly counter productive.
The neo-liberal agenda of oppressing the poor for the relative benefit of the well off continues unabated.
And in the end we all pay for that — even the better off. See The Spirit Level if in doubt (can’t get link right now).
And that’s why the IMF is either seriously misguided or so deliberately blind to the consequences of its actions in pursuit of the interests of a tiny minority.
I fear the latter, because that appears to be the whole neo-liberal agenda in a nutshell: screw the 99% in the interests of the 1% is the best summary of it there is.