Ravi Philemon
OVER ninety countries comprising more than half the world’s population have lived directly under International Monetary Fund (IMF) imposed conditions. In other words, the IMF has had a tremendous impact on billions of people around the world. But how well has the IMF performed in improving the lives of the people in these countries?
Founded at the end of World War II to promote global economic stability, the IMF keeps watch on the currency, trade and economic policies of its 184-member nations and makes nonbinding recommendations for improvement. The fund also provides low-cost loans to countries in financial need on the condition that borrowers undertake economic policy changes like adjusting their balance of payments or reducing inflation.
(Photo courtesy of Rachel Welles / Creative Commons)
One might think that after the IMF is done with these countries, they would be less in debt than before the IMF got to them in the first place. It is disconcerting to learn, that in the seven years after the IMF sanctioned ‘stabilisation’ programme, Sudan’s debt increased from 2 billion US dollars to 13 billion US dollars. (See: The New Scientist: Third World Debt)
In other words Heavily Indebted Poor Countries (HIPC) countries like Sudan, after cutting all of their basic programs, were more in debt than when the IMF got to them in the first place. Does that sound like a successful loan program? It certainly does sounds like a successful loan-sharking program. (See: IMF and World Bank: Global Loan Sharks and the Media)
In 2008 the IMF was suddenly called back into action after years of declining relevance when financial crises began to swamp struggling countries. The fund brokered rescue packages for Pakistan, Iceland, Hungary and Ukraine; moves that thrust it into the thick of a global crisis after a frustrating period in which it was a bystander.
However, in keeping with its tradition, IMF continues to make crisis loans with heavy conditionality that may adversely affect HIPC. For example, its loan to Pakistan came with a condition to raise interest rates and electricity tariffs before the end of 2008. These conditions will have enormous financial and social consequences for the poor in Pakistan, and frighteningly exacerbate income disparity.
Of course the new IMF loan agreements have clauses about strengthening social safety nets and maintaining or increasing spending on social protection, which is an improvement from the way the IMF, approached social protection in the Asian financial crisis in the late 1990s. But as recessions in the borrowing countries deepen, meeting strict spending limits in IMF programmes may be difficult without cuts to public services and social protection.
Another controversy IMF courts are with its loans to Sri Lanka. IMF officials justify the loans by saying that Sri Lanka is facing a financial collapse because its reserves are totally drying up. That $3.5b which it had in reserves has depleted to nearly $1b; enough to cover a dangerously low 4-week period. But Tom Malinowski of Human Rights Watch, in urging Britain and the United States of America not to approve the loan says, “Sri Lanka is in a fiscal mess in good part because it massively overspent on this war”.
Despite opposition from several countries, including the United States of America, Britain, Germany, France and Argentina, IMF approved a massive US$2.6 billion loan to Sri Lanka in July 2009, saying that it has noted the human rights violations and to impose conditions on the improvement of human rights to the loan, is but a concern of the western nations.
In fact, IMF vehemently states that human rights advocates “should not expect the IMF to impose human rights conditions on its assistance to member countries”. What IMF has failed to realise is that human rights is not a just a concern of western nations, it a fundamental human norm, which cannot and should not be ignored by international financial institutions such as the IMF.
Singapore which has been a contributor to IMF’s loan programmes since 1998, quadrupling its lending to IMF recently to US$1.5. This credit by Singapore to IMF will go into a New Arrangement to Borrow Scheme (NAB) which deals with “situations that may threaten the stability of the global financial system”.
Hopefully countries like Pakistan will not become more indebted in a decade by participating in such programmes of IMF. Hopefully Singapore has not unwittingly become a ‘syndicate’ of global loan sharks like the IMF.
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IMF is like GOD because it doesn’t help those who do not help themselves. So thanks to the so many hard working Singaporean and their leaders, more good years for the little RED dot so long as we do not have Chee and sibling to spoil our good years.
Can Chee and sibling spoil our good years ? Are we in a golden period as claimed by one old fart ?
What a dumbass comment.
///IMF is like GOD because it doesn’t help those who do not help themselves. ///
That implies that god does not exist. Thank you.
IMF is an oppressive imperialist setup dedicated to the eternal exploitation of the have-nots, that they remain forever financial dependent and in debt. It’s only when many nations remain poor that some remain rich. That’s the present economic system.
Japan’s prosperity is not dependent on politcians. So is South Korea, USA and the whole of the developed world. Why should the island of Temasek Island be so uniquely different, mate? The reason : the legacy of a subservient mentality, trapped like a frog in the well.
Btw, is not Chee a Singaporean? Or perhaps some think they are more “Singaporean” than others?
This is an age old discussion that has been going on for at least 50 years, so far as I am aware.
The article falls into the trap of selective bias. Without proper figures on the full range of IMF programmes over the years, it is not possible to arrive at a conclusion as to the efficacy of its programmes on the basis of a few quoted examples.
We must remember that the IMF is the lender of last resort to indebted countries. Countries turn to the IMF when they have exhausted all other avenues to keep their heads above waters. These borrowers are effectively bankrupt, to use an everyday analogy.
When a person is drowning, you don’t argue with somebody who is throwing you a lifeline. Or if you are dying, you don’t argue with the doctor as to the medicines prescribed. In the final analysis, all borrowers have the option to refuse the loan.
You also don’t shoot the banker because you are in dire economic straits.
IMF emergency loans have helped to resuscitate large countries when they got themselves into trouble such as the one Mexico got into in 1994-95. The US government and the IMF rallied with a loan of nearly US$50 billion which helped Mexico to avoid defaulting on its debts. See http://www.uiowa.edu/ifdebook/ebook2/contents/part3-III.shtml for details.
Finally, on human rights. Although there is a Universal Declaration of Human Rights which spells out objective criteria for individual rights, in practice this is a vast grey area. Probably no country in the world, not even the United States, will pass if put to a strict test of the Universal Declaration. Again, to use the doctor analogy, when a patient is dying, you don’t ask whether he has lived a moral life before administering medicine.
The IMF is banker of last resort to the world’s indebted countries. Lets keep that in perspective.
borderless low IQ.
Of course GOD exist so as IMF.
If you do not agree than you just sit at home doing nothing and wait to the “Durian to drop”.
Journalists have been criticising IMF programmes for years because they impose strict economic orthodoxy.
Without knowing the exact circumstances of each country, it is facile to pass comments. For example, Zimbabwe is an IMF borrower but it has been labouring under the yoke of a despotic, ageing and sick dictator for years. To attribute the failure of its economy to the IMF rather than to a crippled, non-performing government is disingenuous, to say the least. Likewise with Sudan.
4) Peter Sellers
//////// The article falls into the trap of selective bias. Without proper figures ….., Lets keep that in perspective. ////////
These 3 phrases in you posts says a lot.
And I am in total agreement.
Too many articles here tend to go that way.
I disagree with this article. Sudan is fighting a civil war in the south as well as in darfur with the janjaweed. To blame the IMF for a country’s own inadequacies and the countries own preoccupation with winning a civil war and presecuting its own civilians such as sudan, sri lanka and zimbabwe is definitely a narrow minded view.
@Peter
I might criticise the IMF from an ideological standpoint. That it is complicit in sustaining an exploitative global economic order – one that in many instances impoverishes Third World countries further, and create situations where these countries have little choice but to, in a cruel trap of fate, turn to the IMF. Criticism of this nature can complement the praise the IMF might deserve in instances where good work has been done, as well as accompany the condemnations levelled against crackpot dictators.
Abstract, debatable, ideological arguments aside, I might liken Ravi’s article to how the Workers’ Party and the SDP oppose the PAP. One criticises within the framework (set by u-know-who), and hopes for cumulative change. The other embarks on civil disobedience and aims for radical change.
: )
The government should look into providing low or interest free loans to help people who have fallen into credit card or loan sharks debts. This will help to prevent them from further financial and other difficulties to clear their debts.
They should also allow for more flexible policies in the CPF and HDB housing rules where most of our money is tied up. It can also look into bailing out companies who have hit hard times and forced to retrench workers.
10) andrew leung
/////////// The government should look into providing low or interest free loans to help people who have fallen into credit card or loan sharks debts. This will help to prevent them from further financial and other difficulties to clear their debts. //////
people who have fallen into credit card or loan sharks debts have to take ownership of their problem if they were self inflicted as a result of poor financial prudence, otherwise providing more loans is not going to help them change their errant ways.
I agree….u can’t stop a spendthrift person who is using a credit card without restraint…but those with legitamate housing loans problems have to have some avenue to ask for help
11) KopitiamApek
“people who have fallen into credit card or loan sharks debts have to take ownership of their problem if they were self inflicted as a result of poor financial prudence, otherwise providing more loans is not going to help them change their errant ways. ”
I agree, but I believe that the circumstances where they have incurred their debts can be varied. I believe this measure can be potentially helpful to some people from being further harrassed by the bank or loan shark and sinking into further debts and family problems.
There can be a financial help centre for advice and counselling or debt management strategy to be given, with a loan assistance that can be made available.
aiyoyo
saw news
“Commuters unhappy with 25-cent levy for GIRO top-up of new ez-link card”
is it another type of shark family?
aiyoyo
11) KopitiamApek
It takes 2 hands to clap…true, people needs to control, but don’t you feel that these companies are making it too easy for people to obtained a credit card? of course they are commercial entity and earning a profit is their objective
my ex-colleagues who gross pay is around 2K after allowances and OT can get a credit card too…however, some people who are forced by circumstances into such debt deserve our sympathy, but there are those who can’t afford to live the high lives and yet wants to do it, now those, sadly, doesn’t deserve any
4) Peter Sellers & 7) KopitiamApek ,
Hey, if you want to criticise selective bias of TOC article, how about ST?
12) hello
13) andrew leung
agree with both your views.
those with less than good financial prudence need to be helped out of the hole they dug themselves in, by giving them advice and counselling to change their ways. By giving them a loan without doing this first is like telling them to dig themselves out of that hole.
Many lottery winners become broke? Can you imagine? They have no money left!
Many lottery winners, especially those who take a lump sum are now poor. How could that possibly be? Many people think that if they could just win the lottery, their whole life would change for the best. They think that once they win all that cash, then all their problems will disappear. Therefore, week after week they buy lottery tickets, hoping to win.
A woman who won lottery twice! She won millions. The money has been gone for a long, long time now. She said, “There are a lot of people out there like me who don’t know how to deal with money. Hey, some people went broke in six months. At least I held on for a few years.”
There was a man who won 16 million dollars. All of that money is gone and he now lives on social security. These are not isolated incidents. Circumstances just like these continue to happen repeatedly. What is the reason?
So many lottery winners are broke because winning the lottery did not change their mental attitude about finances. Receiving a big chunk of money did not change their poverty mentality. Their poor, poverty thoughts simply continued to bring to them what those thoughts have always brought to them – poverty.
Some people tend to talk a lot about their lack. Therein lies the problem. Those who have great lack always talk about their great lack. They will tell you all day long how lousy things are, how they never get a break and how their boss is greedy. And, worst of all, they think that none of this plight is their fault. They see themselves as victims in this cruel life. They don’t see anything changing. They see themselves destined and shackled to a life of misery, unless of course, they win the lottery.
So, what happens if they do defy the almost impossible odds? Winning the lottery may give them a windfall, but it doesn’t change their mind set. Deep down inside, they still carry the same mentality. They end up throwing it away, spending it away, or giving it away.
It is our habitual mental attitudes that do shape our lives.
Instead of thinking, focusing on and complaining about the way things are right now.
Global Loanshark?
That is a totally bias statement, with very little weight in it.
Ravi supports his statement with the fact that countries are “more in debt than when the IMF got to them in the first place”
Now if we look at IMF as a bank giving out loans to countries, obviously they will walk out with more debts! Duh!
To draw a parallel, we go to the banks to get loans when we need money to buy house. We don’t call them loansharks. In fact, banks play an important role because they lend us money to pay for something we can’t currently afford.
The difference between banks and loanshark is the interest rate they charged. As far as i know, IMF interest rates are considered low- and that is why countries go to IMF.
The probable reason why debt of those countries actually increase is because they borrow more principal over the years (which is a gd thing for countries because they get more money to work with) and NOT because of high interest compounding.
One should look at the reason for debt growth and not assume debt growth -> high interest compunding -> loanshark.
One perpetual criticism of IMF is its loan conditionality.
I noticed that the author seems to disagree with economic conditionality- such as high interest rates etc. but seem in favor of political conditionality e.g. human rights.
Personally, I am very critical of their conditions esp those imposed in Indonesia that crippled their economy for a long time. But if die die have to have conditions, shouldn’t the conditions be more economic rather than political condition? After all, it is an economic problem.
Hi City of constantly changing weather:
A pleasure to hear from you.
The US and the OECD, of course, have a disproportionately large vote at the top table of the IMF, so it’s inevitable they shape the world in their image. To that extent, Ravi’s criticism is valid. The solution, no doubt, is to re-draw the entire global financial architecture which is something, I believe, UNCTAD is now doing. Throw out the US Dollar et al…..
15) Yamamoto
/////It takes 2 hands to clap…true, people needs to control, but don’t you feel that these companies are making it too easy for people to obtained a credit card? of course they are commercial entity and earning a profit is their objective////////
Ultimately one has to take ownership for one’s decision. Playing victim and blaming it on the finance companies making it easy to get a loan/card is self defeating. A smoker can blame the tobacco companies for his smoking habit , a alcoholic can blame the beer companies, etc, if you need to find someone to blame it on, you will find one.
////my ex-colleagues who gross pay is around 2K after allowances and OT can get a credit card too…however, some people who are forced by circumstances into such debt deserve our sympathy, but there are those who can’t afford to live the high lives and yet wants to do it, now those, sadly, doesn’t deserve any ////
yes help those who deserves help,
as for those who can’t afford high life, but have it anyway, their low ability to earn money is just not compatible with their high ability to spend money
16) Yamamoto
//////Hey, if you want to criticise selective bias of TOC article, how about ST? ////////
As I have posted many many time in respond to such questions – 2 wrongs don’t make 1 right.
21) Peter Sellers
//////The US and the OECD, of course, have a disproportionately large vote at the top table of the IMF, so it’s inevitable they shape the world in their image. //////
For decades, it is the favourite pasttime of US and the OECD to force down the throat of the weaker nations their brand of human rights, democracy, etc, all in the name of world domination.
Two of the best commentators of what the IMF does are Joseph Stiglitz and Simon Johnson. They come from different angles.
Stiglitz is a former World Bank chief economist, author of books like Globalization and its Discontents, and a Nobel Economics Prize winner. He has heavily criticized the IMF for the conditionality of its loans being geared towards “Washington Consensus” prescriptions that are too draconian.
Johnson is a former IMF chief economist. He has defended conditionality as a way of making governments break free from economic elites that have captured the political system for their own personal gains. He has harshly criticized the recent US government’s bailouts of Wall Street firms as precisely the way economic elites get governments to do what they want.
No disrespect intended, but I think it is more insightful to read stuff by these two guys than to read this particular piece. They are well-respected researchers who have also been on the front lines.
22) KopitiamApek
2 wrong doesn’t make it right, but 3 left does.
Of course a person has to take ownership for what he does. Like i said Apek, if the standard for getting credit is like a decade ago, do you think these people will be in trouble right now? but of course, it is their fault for not managing their finance properly and we can’t blame commercial entity for wanting to generate more profit…but commercial entity does have the need to be socially responsible…
but personally, I think that the youths need to be taught to live within their means, and on the danger of becoming a card slaves. Imagine students wanting to sign 0% installment plan for laptop using debit card or clear card…geez….I have always wondered why people think like that…
26) Yamamoto
Yes. I agree with you. commercial entity does have the need to be socially responsibe, but sadly they are all too engrossed in their zest of profit maximisation that they forget to check their moral compass once in a while.
And yes, the youths need to be taught to live within their means, sometimes they learn the painful way
Parents oftentimes are accessories to the crime, albeit unintentionally
They keep give them allowance all thru NS, and some even continue to do so when they start work.
Some buy them cars, some pay for their extravagant cell phone + bills, etc
Little wonder they grow up clueless in managing their money.
It’s interesting to observe and note, how we have moved from mankind’s past to present…
Towards this ever increasing trend….
Stage One: The Richs Vs The Poors
Stage Two: The Haves Vs the The Have-nots
Stage Three: The Exploiters Vs The Exploiteds
Stage Four: ………. ??? what’s next?
Someone correct me if i am wrong… :)
28) TheWatcher
If you look at it anotherway, all 3 stages involved exploiters vs exploited.
I would say stage 4 is still the same
to Apek @24) and Peter Sellers,
For decades we also have one Big Chimp force down the throat of weaker citizens his brand of human rights, democracy, etc all in the name of famiLee domination.
Perhaps the IMF with the help of more powerful countries can get the Spore govt to cough out more Billions belonging to despots such as Burmese Junta, Mugabe. The above article quoted Spore’s contribution to IMF as $1.5 B. I am sure the amount deposited in Spore can be more than $100 B if it includes those dubious Indonesians using Spore as a safe haven.
About time ill gotten wealth be returned in some form to the affected countries.
I sincerely urge everyone to read the following two books:
1. Confessions of an Economic Hit man
2. The secret history of the American empire.
Both written by John Perkins. Mr. Perkins worked for an American organization as a global economist and arranged for developing countries to get loans from IMF and the world bank. He gives an inside account of the objectives of doing so and the parties whose self-interests are thus served. For those asking for concrete evidence on the wrong doings of the IMF these books are a must read. You will get an insider view of the truth. The very reason for the establishment of the IMF and the world bank, the authorities they answer to, and their motives are clearly elucidated in these books, esp the first one.
Since Mr. Perkins published is expose on IMF, world bank, the US govt , corporations etc etc many other prominent figures, including people who have worked for these as well as other powerful organizations have come forward with the truth.
So please, take some time to read these. They will open your eyes, not just to the IMF but the entire world as we have come to believe it. It certainly opened mine.
Btw, do not dismiss these figures as conspiracy driven lunatics. These are real people who have worked for these organizations for decades and are now risking their lives so that we may know the truth. You can Google their profiles if you want to.
30) KopitiamApek
I wouldn’t say its the SAME.
There are varying differences, from then till now.
No doubt, in essence or in general, the elements of exploitation already existed in the past.
BUT to what DEGREE is it HAPPENING NOW !?? You can take a look at the RISE of those “handful” of cases, whereby foreign worker agencies mistreating/ill-treating their workers for a start, before we launch into counting the “eggs” or cases.
Let me ask u straight, from your point of statement. ARE YOU for one, a person who will swear-by and promote this increasing forms of Exploitation?? No? Yes?
If a person is FOR the practice (of exploiting others), then there is little to talk about.
Rich in the past GET rich probably because of their own hard work. Mainly.
Poor in the past GET poor, probably end up that way due to their own choice or doing.
NOWadays, you might agree rich get rich by exploitative means. Highly likely.
And poors, are “tweaked” to become poor by this system, even if it means they are working their lives off to earn a living.
Is this not so?
33) TheWatcher on September 13th, 2009 7.57 pm 30) KopitiamApek
/////I wouldn’t say its the SAME.
There are varying differences, from then till now.
No doubt, in essence or in general, the elements of exploitation already existed in the past.
BUT to what DEGREE is it HAPPENING NOW !?? You can take a look at the RISE of those “handful” of cases, whereby foreign worker agencies mistreating/ill-treating their workers for a start, before we launch into counting the “eggs” or cases.//////
Yes, agree, we do not know for sure until we have the stats
////Let me ask u straight, from your point of statement. ARE YOU for one, a person who will swear-by and promote this increasing forms of Exploitation?? No? Yes?
If a person is FOR the practice (of exploiting others), then there is little to talk about.///////
Straight answer = NO
//////Rich in the past GET rich probably because of their own hard work. Mainly.
Poor in the past GET poor, probably end up that way due to their own choice or doing.
NOWadays, you might agree rich get rich by exploitative means. Highly likely.
And poors, are “tweaked” to become poor by this system, even if it means they are working their lives off to earn a living.
Is this not so? ///////
I do not know the answer to that
33) TheWatcher
There were, and still are, and probably will always be people who morally good and morally corrupt.
There were, and still are, and probably will always be morally good poor people, and morally corrupt poor, morally good rich people, and morally corrupt rich.
To 34) KopitiamApek:
There were, and still are, and probably will always be people who morally good and morally corrupt. There were, and still are, and probably will always be morally good poor people, and morally corrupt poor, morally good rich people, and morally corrupt rich.
>> That’s why the judiciary system is there to protect the morally good people from the morally corrupt people; not the other way round. Your view?
Do you see that happening in Singapore today, socially and politically?
35) Dumb and dumber
That’s why the judiciary system is oftentimes so damn expensive to do any good to the morally good people
Try to have a car accident, you know what I mean.
The stamp fees for you house is one huge stamp soemtimes back, just plain robbery, of late (last 5-10yrs) it get a lot cheaper
But still too many legal cost are out of proportion to the value itt gives
Now they are opening up the market to competition, good for us, good luck t the legal eagles, may they become chickens (apologies to anyone in the legal profession here, but the truth hurts)
To 36) KopitiamApek,
Totally agree with your view point. The NKF case is a good example whereby TT Durai won his NKF defamation suit when he sued small-timers who blew the whistle on him.
I view that as a problem in our judiciary system – affordability becomes a key in winning law suit – sigh… Singapore advancing? First world for the poort? Yeah right…
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