Latest fibs from world financiers

Published on Pambazuka News, by Patrick Bond, May 11, 2011.

Patrick Bond makes a stinging critique of the recent report of the African Development Bank that claims that ‘one in three Africans is middle class’ and as a result, Africa is ready for ‘take off’ … //

… Obviously not: Ncube defines middle class as those who spend between $2 to 20 a day, a group that includes a vast number of people considered extremely poor by any reasonable definition, given the higher prices of most consumer durables in African cities. Those spending between just $2 and $4 a day constitute a fifth of all sub-Saharan Africans, even Ncube admits, while the range from $4 to $20 a day amounts to 13 per cent, with 5 per cent spending more than $20 a day.

Below the $2 a day level, 61 per cent of Africans are mired in deep poverty, a stunning reflection of ongoing underdevelopment due to imperialism, the resource curse and nefarious African elites … //

… MACRO-ECONOMIC MUMBO-JUMBO 

Given this reality across the board, there are practically no micro-economic successes to speak of. Thus the current Afro-optimist wave is a tsunami of macro-economic propaganda, led not by African politicians and their northern helpers, but by resurgent multilateral development banks.

In February, the World Bank issued a strategy document, ‘Africa’s future and the World Bank’s support to it’, followed in April by the International Monetary Fund (IMF) ‘Regional Economic Outlook’ for Africa.

The latter report notes ‘a structural upbreak in growth encompassing 21 of the region’s 44 countries. Many of the strongest performers have sustained their superior performances for a decade or more through good times and bad and increasingly they exhibit characteristics associated not only with faster growth, but more sustained growth. For now, at least, the lions continue to roar.’

But once we correct the economists’ definitions of GDP (gross domestic product) growth by factoring in environmental destruction and non-renewable resource depletion, even a 2006 World Bank report (‘Where is the wealth of nations?’) concedes a net ongoing reduction of African wealth.

One motivation behind this hype is a return to austerity and intensified globalisation, following a brief period of much higher African deficit spending required to counteract the world crisis. The IMF Regional Economic Outlook’s ‘Main findings’ argued that African countries’ budgets ‘should be moving away from the supportive stance of the last few years.’

And African central banks should raise interest rates, says the IMF: ‘Monetary policy remains looser than desirable in many countries in the region, even before the recent surge in fuel and food prices.’ Normally with higher prices on imported oil and grains, a lower interest rate would compensate to boost weaker domestic economies. But no, the IMF’s main fear is always inflation, since the institution represents bankers, who fear the erosion of the value of their main asset, money.

Out of 22 recent IMF Africa programmes, according to a 2010 Center for Economic and Policy Research study, 17 were contractionary orders and just five expansionary. Even South Africa was advised in September 2008 to intensify its neoliberal bias.

By that time, African fiscal deficits were blooming: a slight spending increase conjoined with a huge revenue drop, generated a switch from a positive fiscal balance (6 per cent of GDP) to a huge deficit (-6 per cent) between 2008 and 2009. That’s how Africa survived the world crisis without more damage.

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Link: ANTI-RHYTHM, an African Blog with short statements.

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