Standing in the way of development?

Linked with European Network on Debt and Development EURODAD.

Published on EURODAD, by a report by Eurodad & Third World Network,  20 April 2010.

In an effort to respond to the global financial crisis, the G20 dramatically strengthened the role of the International Monetary Fund (IMF) in developing countries, including in low income countries (LICs). To address the urgent financing needs of LICs, the G-20 boosted the Fund’s concessional lending capacity, which in 2014 will be ten times higher than before the crisis. 

The increased availability of IMF resources for LICs in response to the global crisis has been accompanied by an attempted redesign by the Fund of its ‘lending toolkit’. This redesign claims to make Fund lending more flexible and better tailored to the differentiated needs of LICs. Civil Society Organisations (CSOs) remain, however, greatly concerned about the persistently excessive rigidity of the policy framework imposed on LICs by IMF lending programmes, both in general terms and within the context of the recent twin crises—namely, the food and fuel crisis on the one hand and the financial crisis on the other. Such rigidity is very likely to prevent LICs from undertaking the necessary counter-cyclical policies during the current global crisis as well as the public investment needed to stimulate long-term growth and development.

In this context, Eurodad and Third World Network commissioned a report to a group of independent researchers at the University of London in order to subject the Fund’s programs in low-income countries to examination and inform the debate between the IMF and its critics based on empirical evidence.

The report, “Standing in the way of development? A critical survey of the IMF’s crisis response in low income countries”, assesses the claims by the Fund in the context of its engagement in 13 LICs that had continuous programme engagement with the Fund between January 2007 and June 2009 with the objective to respond to the following questions:

.Has there been a significant change in IMF programmes in LICs?
.Have the IMF programmes provided sufficient policy space for LICs to address the immediate concerns raised by the global crises? and
.How does the Fund relate the short-term objective of stabilisation to the long-term objective of growth and poverty reduction?

The report starts with an outline of the IMF’s reinvigoration in the aftermath of the global economic and financial crisis (section 1), followed by a summary of the impact of the crisis in the world’s poorest countries (section 2) … (full text).

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