The financial crisis and poor countries

World Bank comes up short, IMF pushes austerity

The spring meetings of the IMF and World Bank broke no new ground relative to commitments made by G20 heads of state at their 2 April summit in London. The IFI meetings were perhaps more notable for the predictions of huge finance sector losses and negative global economic growth issued earlier in the week by the IMF.

G20 leaders agreed to a huge expansion of the IMF’s resources “to support growth in emerging and developing countries by helping to finance counter-cyclical spending.”  Most of the recent IMF emergency loans have in fact obliged developing-country governments to adopt various type of austerity measures in the interests of “fiscal discipline”, at the same time that the Fund has encouraged massive stimulus spending by industrialized-country governments.

Neither organization picked up the message in the G20 statement that it is important not only to restore growth in the short term, “but to lay the foundation for a fair and sustainable world economy”, including through employment and fair labour market policies. The World Bank, perceived by many analysts as the big loser at the London G20 summit, received no promises of new financial resources. The final communiqué of the ministerial Development Committee does not even mention one the Bank president’s pet ideas, the creation of a global “vulnerability fund” to which rich-country governments would allocate 0.7 per cent of their stimulus budgets. The communiqué does no more than invite donor countries “to consider further support” to some of the Bank’s new initiatives.

Source :  Upstream Journal



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