Civil society organisations (CSOs) are increasingly concerned that the IMF continues to include strict fiscal consolidation targets in its loan programmes, despite the deepening global health and economic crisis triggered by the Covid-19 pandemic.
In an October letter, more than 500 CSOs and academics, including the Brazilian Campaign for the Right to Education and prominent feminist economist Stephanie Seguino, questioned the Fund’s continued adherence to such targets, as the economic fallout of the pandemic continues to worsen. According to the letter, “Time and time again, rigid and rapid fiscal consolidation conditioned in IMF programs has meant devastating cuts in health and education investments, losses of hard-earned pensions and social protections, public wage freezes, layoffs, and exacerbated unpaid care work burdens. In all cases, it is the most vulnerable people in societies who bear the brunt of these reforms, while the elite, large corporations and creditors enjoy the benefits.”
Despite IMF Managing Director Kristalina Georgieva publicly calling for a “greener, smarter and fairer” recovery to the Covid-19 pandemic, a number of recent IMF loan programmes, as well as IMF language in emergency financing agreements and analysis, continue to call for a “swift” return to fiscal consolidation as soon as the peak of the crisis has passed. The governments of Egypt, Ukraine (see Observer Summer 2020), South Africa (see At Issue Summer 2020) and Ecuador have now agreed new programmes with the Fund that involve severe austerity measures. CSOs are also concerned that a forthcoming IMF programme for Lebanon is likely to include significant austerity measures (see Observer Autumn 2020). Bosnia and Herzegovina (BiH) and Costa Rica have both made new requests for non-emergency IMF programmes over the last two months, and news reports already indicate the latter will be committing to severe fiscal consolidation measures.
How do we ensure that we do not return to business as usual? Because for 25 years that has gotten us nowhere. We need to start investing in what this country urgently needs: healthcare, education, and a clean environment.Nela Porobić Isaković, Women’s International League for Peace and Freedom
Commenting on the request by BiH, Nela Porobić Isaković with the Women’s International League for Peace and Freedom said, “IMF loans have for a long time come with austerity measures targeting the public sector, and now new negotiations lack any transparency. It is a true source of worry for the Bosnia and Herzegovinian citizens – where does the money go, how will the money be repaid, and how do we ensure that we do not return to business as usual? Because for 25 years that has gotten us nowhere. We need to start investing in what this country urgently needs: healthcare, education, and a clean environment.”
After a year of anti-austerity ‘IMF riots’ sweeping across the world, the Fund’s continued dedication to fiscal consolidation amid growing economic and debt crises across the Global South has put the potential negative social consequences of IMF loan conditions – long a cardinal sin of the Fund in the eyes of its social justice activists – back in the spotlight (see Observer Winter 2019). With the IMF slated to continue to play a central role in the Covid-19 response in many crisis-stricken countries, the CSO letter called on it to finally close the dark chapter on IMF-conditioned austerity for good. It went on to say that this means “systematically assessing the impacts of fiscal policy reforms on gender and economic inequality and rejecting those that have negative social impacts”, and recommended a number of other policy measures.