The International Monetary Fund and World Bank Group (IMF-WBG) held its Annual Meeting in Marrakesh, Morocco last October 9 to 15 with the theme “Global Action, Global Impact”. Top central bankers, finance ministers, private executives, and other neoliberal stalwarts gathered together in this event to discuss “world economic outlook, global financial stability, poverty eradication, inclusive economic growth and job creation, climate change, and others” (IIDS, 2023) amid economic contraction, debt crisis, rising poverty, and climate crisis.
However, none of these issues can truly be addressed by the IMF-WBG as it continues to be driven by the interests of the imperialist proponents and continues to operate under the neoliberal framework. The IMF-WBG has a long history of intervening with Southern countries’ domestic affairs and economies through onerous loan conditionalities that result in austerity measures, budget cuts in social services, privatization, and further liberalization of the economy.
Record high debt
Global debt is at a record high of $307 trillion. The global debt-to-GDP ratio has resumed an upward trajectory. Debt distress still ravages low-income countries such as Sri Lanka, Pakistan, Lebanon, Egypt, Ethiopia, Ghana, Tunisia, Ukraine, and Zambia. Global economic growth is projected to slow down to 3 percent this year and 2.9 percent for next year.
719 million people across the world live in extreme poverty, earning only $219 per day, many of whom are women. 1.2 billion people in 111 countries live in multidimensional poverty, which encompasses multiple challenges and barriers such as lack of access to food, healthcare, education, and other basic services (IWDA).
In Eastern and Southern Africa, the government debt accelerated from 60 percent of GDP in 2018 to nearly 70 percent in 2021 due to the COVID-19 pandemic. Even before COVID-19, debt servicing tripled from 5 to 15 percent of government expenditures between 2009 and 2019. Governments spend 3.5 times more per person on debt service than on education, health, and social protection.
In Pakistan, foreign debt reached $125 billion with a whopping $77.5 billion that needs to be repaid by June 2026. Even the World Bank estimated the poverty ratio at about 39.3 percent. Severe flooding due to the unprecedented rainfall last year worsened and exacerbated the already distressed situation of the country. Based on the World Bank’s assessment, the total damage amounts to USD 14.9 billion and the economic loss is about USD 15.2 billion. Estimated amount needed for rehabilitation and reconstruction is at least USD 16.3 billion.
Sri Lanka is still far from recovering after their debt default and the succeeding political unrest since last year. Food remains unaffordable and the cost of other basic commodities such as fuel, electricity, and medicine from 2022 onwards remain exorbitant.
But instead of canceling all odious debt, the IMF and WBG continue their predatory lending practice by granting onerous loans such as policy prescriptions like tax hikes, privatization, and other policies favoring corporate interests over nations’ welfare, especially in the Global South.
Debt and loans: tools of imperialist control
The Sri Lankan government undertook reforms to comply with IMF’s conditions, such as tax increases, anti-corruption legislation, and energy diversification, and attract private sectors to invest in domestic renewable energy infrastructure.
Meanwhile, Pakistan will raise 215 billion Pakistani rupees (USD 750 million) to meet the loan condition set by the IMF by raising taxes and hiking interest rates by 22 percent, even while the people are grappling with poverty.
In the Philippines, the government received a loan from WBG worth USD 370 million for the Support to Parcelization of Lands for Individual Titling (SPLIT) project by splitting the holder of the Collective Certificate of Land Ownership Award (CLOA) into individual holders from agrarian reform beneficiaries. However, this program undermines the ability of farmer-beneficiaries of their collective farming, makes CLOA collateralizable, and paves the way to the reconcentration of land in the hands of the landlords.
Oppose IMF and World Bank’s Schemes
It is clear that the IMF and WBG will neither pursue a solution to the debt crisis nor eradicate poverty through their loan conditionalities such as austerity measures, tax increases, privatization, and economic liberalization.
IMF and WBG must be held accountable for their role in the global economic and debt crisis. We reject IMF-WBG’s deceitful lending solutions to eradicate poverty by continuing to advance the implementation of neoliberal policies under the guise of loan conditionalities. It is a debt trap.
APRN joins the people and their organizations in calling for a people-centered approach to address the debt crisis and poverty by repudiating onerous loan conditions, canceling odious debt, and pursuing democratic ownership of economies and self-determination without IMF-WBG and other similar institutions.
We support the people’s movement and civil society for the abolition of IMF-WBG and for creating an alternative multilateral financial institution anchored on people’s rights and sovereignty, and based on equality, justice, and solidarity. ###