IMF reassures support for COVID-19 after hundreds of groups opposed belt-tightening measures
Tasked with helping the global economy recover from the impact of COVID-19, the International Monetary Fund (IMF) was designed to stabilize world markets at a time like this. During the worst economic crisis since the Great Depression, the IMF took unprecedented action by lending around $ 100 billion of its $ 1,000 billion in funds for countries in need.
“The IMF has been very loud and clear in this crisis. ..With regard to our members, we say “spend, but keep the receipts”. “
“The IMF has been very clear in this crisis,” said IMF Managing Director Kristalina Georgieva said recently. “With respect to our members, we say ‘spend, but keep the receipts’. ”
These initial loans had few conditions and served as a lifeline for countries in free fall. But as the pandemic lingered, many needed more money. Costa Rica, for example, had to apply for another loan. And this time, the IMF demanded that in exchange, Costa Rica raise taxes and sell some state assets. The country’s unions hesitated. Earlier this month, protesters took to the streets for weeks.
“The protests were so huge that the government had to cancel this proposal,” said Patricia miranda, Director of Advocacy at LATINDADD, the Latin American network for social and economic rights. “[The IMF is] just postpone and postpone the problem for a few years or two or three years. But they don’t solve the problem.
There were also protests against the IMF’s austerity measures in Ecuador. Miranda says Latin America has little to say about its plight and is already retreating into a deep economic hole that took decades to get out of. This is why its organization and 500 others around the world signed a joint letter which urges the IMF to abandon the belt-tightening policies it has historically imposed on countries after an economic crisis.
“It is very important that governments still have the capacity, space and time to deal with this economic crisis in a way that will help people – and not further increase inequality. “
“People are not going to find jobs immediately,” said Nadia daar, who heads the Washington DC office of OxFam International, one of the signatories. “So it is very important that governments still have the capacity, the space and the time to deal with this economic crisis in a way that will help people – and not further increase inequality.”
She says there is a simple way for the IMF’s board to approve trillions of dollars of special asset that the IMF controls for all of its member countries. This money would not have to be refunded. The IMF did so in response to the Great Recession of 2008. But the United States has a veto on the IMF board, and the Trump administration used it to close this option for the moment. Thus, the IMF supports countries through loans.
“They promote austerity to ensure that creditors are repaid, but also that debt levels remain ‘sustainable’, which means that debt levels remain low so that creditors, bankers are not panicked. And so, what matters is keeping debt levels low, even at the expense of meeting health and recovery needs in these countries. “
“They promote austerity to ensure that creditors are paid off, but also that debt levels remain ‘sustainable’,” said Bhumika Muchhala, senior policy researcher at Third World Network, “Which means that the debt levels remain low so that the creditors, the bankers are not panicked. And so, what matters is keeping debt levels low, even at the expense of meeting health and recovery needs in these countries. “
She said market stability should not take priority over human rights. The best solution, Muchala said, would be for lenders to write off countries’ debt. And IMF staff agree with it. IMF communications director Gerry Rice says they are pleading for this to happen. Meanwhile, he said, the IMF knows it needs to be careful about when to call for a tightening of the belt for countries receiving loans.
“At some point – and I think all countries recognize that it is not just the IMF – it will be necessary to restore public finances. … But the focus will be, at least as far as the IMF is concerned, on protecting vulnerable people.
“At some point – and I think all countries recognize that it is not just about the IMF – it will be necessary to restore public finances,” he said. “But the focus, at least as far as the IMF is concerned, will be on protecting the vulnerable.”
Rice has repeated over and over: This is not the old IMF.
“Everyone is anxious right now because we are facing the biggest crisis of our life,” he said. “I can tell you that the big message from our annual meetings which just ended was’ don’t withdraw your support too soon. Do not withdraw your support prematurely. ‘ This is what we see as the biggest risk right now. “
And in struggling countries, activists want to be clear that they are not asking for handouts. Shereen Talaat, co-director of Arab Watch Regional Coalition, is based in Morocco, where she said the pandemic has people struggling to meet their basic needs and the austerity measures would be devastating.
“We are not asking for free money. … You make a lot of investments. You will earn a lot of money with this investment.
“We are not asking for free money,” Talaat said. “You make a lot of investments. You will earn a lot of money with this investment.
She says if people in her area don’t lead decent lives as workers or consumers, they won’t be able to contribute to a global economy that makes people rich in places like the United States.