The IMF’s recent role has been to bail out countries who have found themselves in great debt, by offering them emergency loan packages which are known as Structural Adjustment Policies (SAPs). The only problem is that these loan packages come with a lot of harsh conditions that are put in place in order to guarantee repayment of the loan. Countries in such a vulnerable state, have no choice but the follow these very stringent conditions if they want to be approved for hefty IMF loans. This can be compared to a country selling its soul to the devil because the IMF will then be able to decide, through its policies, how much money countries may spend on key sectors such as Education and Health Care. These decisions are not always reflective of the best interest of these developing countries.
1. The SAPs are stringent conditions that ensure and strengthens harsh realities onto the people of these developing countries.
The conditions for these loans may be compared to a modern system of colonialism. The conditions encourage countries to reduce spending on key sectors such as environment and health care, hence the populace suffers. Devaluation of the dollar is encouraged in order to facilitate cheaper exports. This in turn results in increased inflation rates on nationals. They encourage the privatization of government assets and this in turn makes these services too expensive and out of reach of the lower class.Also, wage freezes are encouraged, the impact of which is self explanatory. Therefore, with the provision of hefty loans to Jamaica by the IMF, local conditions will worsen for the average citizen and Jamaicans will be faced with high taxation and inflation rates.
2. The IMF is controlled by wealthy countries.
How do you think the IMF gets money to offer to poor countries in need? Surely, this money comes from rich countries that pay into the IMF quota system. Therefore, the common belief that one should put his money where his mouth is, definitely applies here- in a literal way though. Therefore, countries which are able to put the most money into the system, have a stronger vote. Hence, the IMF is not here to serve developing countries- the IMF is here to serve the wealthy countries and their investors and wealthy corporations! Hence, developing countries may very well be bullied indirectly, into accepting and implementing policies and beliefs of these world powers- if they want financial assistance that is….
3. The IMF encourages weakened labour laws
In an effort to encourage investors and multinational corporations to set up businesses in these developing countries, the IMF often encourages the weakening of labour laws and the offering of tax reductions/ breaks. Yes, this creates employment however it also promotes exploitation of workers because it allows these companies to treat local workers badly and to pay them below what they would normally pay workers in their own countries. Also, many of the local laws do not apply and workers who are wrongfully dismissed are unable to seek recourse from the local Labour Board in Jamaica, for example.
4. There are hardly any IMF success stories
During some of the famous financial crises in the world, the IMF has hardly ever been able to sufficiently play its role as a knight in shining armour. The crisis in Mexico 1995, Indonesia, Brazil , Thailand in 1997 saw the problems getting worst and spreading to more countries after the IMF’s appearance. The policies suggested by the IMF proved to be bad advice and was bad for long term development. After the IMF’S influence in Mexico, the poverty level raised by more than 50%.
Therefore, it is safe to say that nothing good can come from this agreement with the IMF. Just look at the current economic and social conditions in Jamaica and you will see that many of the things mentioned here are already happening. Maybe getting back in bed with the IMF as the solution to our problems was not much of a good idea after all…