April 2011 - Centre for Civil Society - University of KwaZulu-Natal

Not to mention the privatizations and anti-labor “reforms” that these
countries are subjected to in order to meet the IMF and EU authorities’
demands.
To be fair to Strauss-Kahn as well as some of the economists in the
research department of the IMF who would like to pursue more
enlightened policies, they do not run the institution. Final say rests with
an Executive Board, which is run primarily by the U.S. Treasury
Department and the European authorities (the latter have final say in
Europe, including Eastern Europe).
And on top of the U.S. Treasury Department sits Goldman Sachs.
The IMF’s just released “World Economic Outlook” (WEO) calls for more
“implementing fiscal consolidation and entitlement reforms” in the highincome
countries, saying that “the need is particularly urgent in the
United States” where “broader measures such as Social Security and tax
reforms” will be essential. The Fund is right about “tax reforms,” since the
Bush tax cuts for high-income taxpayers, continued under the Obama
administration, are a significant contributor to the long-term deficit
problem. But the Social Security system contributes nothing to either the
immediate or long-term deficit problem. It can pay all promised benefits
for the next 26 years, and would require only minor adjustments to
maintain solvency indefinitely. By contrast, it is our broken private health
care system that is responsible for nearly all of the long-term deficit
projections.
The Fund projects about 2.5 percent annual GDP growth for the highincome
countries over the next two years, and 6.5 percent for “emerging
and developing economies.” By calling for fiscal consolidation in the rich
countries, the IMF’s WEO seems to accept that they are doomed to slow
growth and high unemployment for the foreseeable future; they want the
faster-growing developing countries to appreciate their currencies and give
the high-income countries a boost by importing more. At the same time
they are worried that the developing countries are “overheating,” and that
many need a “tightening of macroeconomic policies.”
But the real changes – the ones that have contributed to the rebound in
the economic growth that has taken place in low- and middle-income
countries over the last decade --have been the loss of much of the Fund’s
influence on policy that it had ten or 20 years ago. This is especially true
for middle-income countries – in Asia, most of Latin America, Russia, and
others, although many low-income countries are still dependent on the
Fund and its allied lenders. The IMF’s lending fell precipitously from 2003
to 2007, and although it has recently come back to 2003 levels, the Fund
does not have nearly as much influence in middle-income countries as it
once did. So hopefully fewer countries each year will have to listen to the
IMF’s advice – unless they want to focus on Strauss-Kahn’s lofty Keynesian
rhetoric.
Oil politics: Charge them with manslaughter
Nnimmo Bassey First Published in Pambazuka 18 April 2011
People who have suffered the impact of unjust practices and those who
have been victims of abuse from corporate impunity will heave a sigh of