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imf austerity
IMF Austerity Measures Are ‘Undermining Rights’ Around the World: Report
Human Rights Watch looked at 39 loans in 38 countries since the start of the pandemic, and found that 30 of them contained at least one term that threatened human rights.
Sep 26, 2023
The International Monetary Fund continues to impose austerity measures that threaten human rights.
That's the conclusion of a Human Rights Watch (HRW) report published Monday that looks at 39 loans approved in 38 countries between the beginning of the Covid-19 lockdowns in March 2020 and March 2023. While, at the start of the pandemic, IMF managing director Kristalina Georgieva spoke of investing in a recovery that was "greener, smarter, and fairer," the majority of the loans reviewed by HRW still included requirements like lower government spending or higher regressive taxes.
"Despite its promises at the beginning of the pandemic to learn from past mistakes, the IMF is pushing policies that have a long track record of exacerbating poverty and inequality and undermining rights," HRW senior researcher and advocate on economic justice and rights Sarah Saadoun said in a statement.
The loans considered in the HRW report impacted countries home to 1.1 billion people, and 30 of them had at least one requirement that put their rights at risk. Twenty-two of them included limits on public wage bills, 23 included regressive value-added taxes, and 20 decreased or eliminated subsidies for fuel or electricity.
While HRW acknowledged that eliminating fossil fuel subsidies is a necessary part of the transition to renewable energy, this needs to be done in a way that takes the needs of the poorest into account. For example, Saadoun toldEuronews of a woman who works seven days a week as a domestic worker in Sri Lanka.
"The impact of the economic crisis there meant her earnings were essentially cut in half. On top of that, in an effort to reduce public spending, the government cut subsidies for electricity," she said. "She and her son had to move in with her mother, meaning that she is completely dependent on her relatives and her employer to survive."
"I can either get medicine (insulin) for my diabetes or pay for my daughter to go to school or keep the lights on at my house."
HRW argues that both the IMF and the governments they loan to have an obligation to address economic crises in ways that further, rather than retrench on, human rights. At the same time, the IMF's austerity measures fail at its own goal of reducing debt. Its April 2023 World Economic Outlook concluded that they "do not reduce debt ratios, on average."
The report looked at the case of Jordan, which has received IMF loans since 2012, yet has a higher debt-to-gross-domestic-product ratio than at the beginning.
Jordan is also an example of how one measure the IMF has introduced to offset the harm of austerity is insufficient. The IMF has taken to relying on social spending floors or means-tested relief programs. Jordan, for example, instituted a cash-transfer program called Takaful in 2019. While poverty in Jordan increased from 15 to 24% between 2018 and 2022, the program only aided approximately 5% of total Jordanians in 2022, or around 20% of those struggling with poverty.
"While the spending floor and Takaful were an improvement over the earlier programs, they are a bandage on a bullet wound," the report authors wrote. "The reforms generated billions in savings and new revenues through measures that increased the cost of living, yet public spending on health, education, and social assistance did not increase as a percentage of the budget."
HRW had several recommendations for what the IMF could do to reform its programs to bolster human rights. They include conducting human rights assessments of the impacts of these programs, setting different social spending floors for essential services such as health and education, and replacing means-tested programs with universal protections.
If these changes are not adopted, Pakistan offers a warning example. There, a July 2022 agreement between the IMF and the government stipulated higher taxes, a market-based exchange rate, and an end to subsidies for energy and fuel, as HRW pointed out.
"I can either get medicine (insulin) for my diabetes or pay for my daughter to go to school or keep the lights on at my house," a 47-year-old Lahore rickshaw driver told HRW. "I can do only one of the three. The IMF should come and see how I am managing my life."
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Oxfam Report Highlights Deep Harms of IMF 'Austerity Drive' in Poor Nations
"For every $1 the IMF encouraged a set of poor countries to spend on public goods, it has told them to cut four times more through austerity measures," the humanitarian group estimated.
Apr 13, 2023
The International Monetary Fund insists that so-called "social spending floors" enacted as part of its loan programs for poor and middle-income countries help protect critical social services from the kinds of austerity that the powerful institution has historically imposed on borrowers.
But an Oxfam International analysis released Thursday in the midst of the IMF and World Bank's spring meetings found that the fund's spending floors—part of a strategy implemented in 2019—"are proving largely powerless against its own austerity policies that instead force countries to cut public funding."
The humanitarian group estimated that "for every $1 the IMF encouraged a set of poor countries to spend on public goods, it has told them to cut four times more through austerity measures."
"The IMF's 'social spending floors' encouraged raising inflation-adjusted social spending by about $1 billion over the second year of its loan programs compared to the first year, across the 13 countries that participated where data is available," Oxfam estimated. "By comparison, the IMF's austerity drive has required most of those same governments to rip away over $5 billion worth of state spending over the same period."
\u201c@IMFNews has lending conditions for governments designed to promote minimum levels of social spending, to help people cope with economic crisis. But it\u2019s being eaten up by #austerity measures \u2013 that are being pushed by the IMF! \n\nFind out more: https://t.co/rkvjwcOpat\u201d— Oxfam International (@Oxfam International) 1681384739
Oxfam's report comes as poor countries are facing what the United Nations described Tuesday as a "lost decade" due in large part to soaring debt levels and interest rate hikes implemented by the U.S. Federal Reserve and other central banks.
The U.K.-based advocacy group Debt Justice released figures earlier this week showing that in 2023, lower-income country debt payments will reach their highest level in 25 years, endangering spending on healthcare, education, climate action, and more.
For its new report—titled IMF Social Spending Floors: A Fig Leaf for Austerity?—Oxfam analyzed data from 17 low- and middle-income countries that agreed to long-term loan programs with the IMF in 2020 and 2021, years in which the coronavirus wreaked havoc across the globe.
The group found that the IMF's social spending floors were ineffective at achieving their stated goal of preserving minimum levels of social investment.
"Based on the available data, not one of the 17 countries currently has a social spending floor large enough to cover the cost of meeting the World Health Organization's target to reach the Sustainable Development Goal for Health, let alone targets in other areas like education," Oxfam found. "The floors agreed by the IMF with Chad, Cameroon, Jordan, and Madagascar meant that their social spending targets set in the IMF program had actually decreased by 3-5% over the course of their loans."
Amitabh Behar, Oxfam International's incoming interim executive director, said that "to make matters worse, these social floors have become more like ceilings."
"While only half of the 17 countries we analyzed had actually met their minimum social spending floors—which is disappointing enough—just two had spent 10% more than what they agreed with the IMF," Behar added.
The new report was published months after a separate Oxfam analysis found that 13 out of the 15 IMF loan programs negotiated during year two of the Covid-19 pandemic required "new austerity measures such as taxes on food and fuel or spending cuts that could put vital public services at risk," including healthcare.
Half of low- and lower-middle-income countries cut health spending as a share of their budgets during the first two years of the coronavirus crisis, Oxfam and Development Finance International estimated last year.
In its Thursday report, Oxfam suggested a number of improvements the IMF could make to its loan programs to shield poor nations' key public services from cuts.
"The IMF should set social spending levels to at least meet the spending goals and social outcomes set in countries' development strategies," the group recommended. "These should be social spending goals supported by macroeconomic frameworks that enable rapid progress towards the Sustainable Development Goals."
Oxfam also argued that "social spending floors should be increased through progressive revenue-raising measures, especially different forms of wealth taxation, rather than reallocating resources or budget cuts."
"While the 'social spending floors' initiative retains its original urgency and promise," Behar said in a statement Thursday, "it is being undermined by the worst effects of austerity that the IMF is pursuing much more enthusiastically."
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As Pressure Mounts, Europeans Rally in Streets for Greek Dignity
'Europe must belong to everyone, not just to the Germans and the banks,' said a demonstrator in Rome
Jun 22, 2015
As an emergency summit concluded in Brussels on Monday with no clear resolution for the spiraling Greek debt crisis, a call throughout the streets of Europe for lenders to ease their punishing "reforms" in Greece is reverberating.
On Sunday, more than 5,000 protested in Brussels, Belgium--the site of the ongoing negotiations between the Greek government and officials with the International Monetary Fund, the European Central Bank, and the European Commission--while hundreds more marched in Amsterdam.
According to reports, protesters carried banners that read slogans such as, "Our lives do not belong to creditors," and "If Greece were a bank it would have been saved."
Expressing a sentiment that has spread throughout Europe, Sebastien Franco, the organizer of the Brussels demonstration, told Belgian media, "Austerity is not working, it reduces the income of poor people in the name of reimbursement to creditors...who continue to enrich themselves."
Echoing that idea, another protester toldEuronews, "All the things they are doing now to the Greeks they will do it also to us. So that's why we are here. Not only because of Greece but also because of ourselves."
On Saturday, at migrant solidarity marches in Paris, Berlin, and Rome, demonstrators also expressed support for their Greek brethren and against the EU's adherence to austerity at all costs.
"We are here to save our Europe, which includes immigrants, refugees and Greece," said Luciano Colletta, who demonstrated outside the Roman Colosseum. "Europe must belong to everyone, not just to the Germans and the banks."
At the same time, Greeks were also rallying against so-called austerity "reforms," calling on the Syriza government, led by Prime Minister Alexis Tsipras, to stand strong in the face of they characterized as EU "blackmail." Additional marches were reported in Athens on Monday.
The wave of support comes ahead of a critical June 30 deadline, on which Greece is due to pay 1.6 billion euros to the IMF. If creditors refuse to release bail-out funds by that time, Greece risks defaulting on its debts, possibly spurring an exit from the European Union.
On Monday, officials held an emergency meeting at which the Greek government reportedly delivered a last-minute list of reform proposals. According to Guardian journalist Jennifer Rankin, following the talks in Brussels, the Syriza government may have backed down on some of its earlier "sticking points," including raising tax rates and changing the country's pension system. Another meeting is set for Thursday, during which officials say they still hope to reach an agreement.
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