The ﬁnancial crisis has given the world’s currency cop a boost in terms of relevance and power, but given its failure to see the current crisis coming, the IMF’s ability to monitor the world’s economies is questionable. The IMF assessment of the US economy in 2007 considered the mortgage crisis at an end and predicted a “soft landing” for the economy.
“Financial innovation and stability have underpinned U.S. economic success and funding of the current account deﬁcit,” the IMF report said. “The system has been highly resilient, including to recent diﬃculties in the subprime mortgage market.”
The assessment did mention that any crisis in the US economy would have a strong damaging eﬀect on other countries, but considered the risk too low to be of concern. Its record elsewhere is worse. Impoverished countries like Senegal have been on non-stop IMF programs for decades with nothing to show for it. Forced to integrate into global trade rather than build strong local production, they rely on exports of raw material with no say in the selling price.
The number of people without enough to eat increased by 150 million in 2008. 200 million people are expected to fall into absolute poverty because of the economic crisis.
The poorest people in the world are hostage to a market system in crisis, and will pay a dear price for a crisis they did not create. $50 billion of the $1,100 billion in extra money the G20 countries promised the IMF is supposed to go to support poor countries. Maybe it will help, but we need to make sure of it. How? Actually, what is needed is pretty straight-forward. Te IMF has to stop trying to manage the economies of poor countries. Policies forced on them rarely work.
Source : The Upstream Journal