Arrested Development: International Monetary Fund lending and austerity post Covid-19
A review of International Monetary Fund (IMF) staff reports for 80 countries, conducted by Eurodad, illustrates a dismal decade ahead for developing countries.
The IMF reports were prepared as part of the process of approval for financial assistance between March and September of 2020. They reveal an insufficient and inadequate multilateral response to the Covid-19 pandemic which will lock a large number of countries in a decade-long crisis of debt and austerity. The need to protect and increase investment to achieve the Sustainable Development Goals (SDGs) and a fair and green recovery features in every public intervention by IMF officials. However, these commitments are difficult to find in IMF program design. IMF programs are on track to arrest development efforts in the next decade.
The main findings of the review are:
- Harder, faster and wider austerity
- A hampered Covid-19 response
- Paying the costs of the pandemic four times over
- The burden shifted on to the vulnerable
- Public services being slashed
- Heavier debt burdens and vulnerabilities
- Arrested development
- All debt and no sustainable development
This report illustrates the dramatic failure of the IMF and the international community to respond to the Covid-19 pandemic. The measures adopted to tackle the ongoing economic downturn fall far short of the effort needed to meet the current scale of need in the global south. The IMF projections and recommendations for fiscal consolidation set the tone for yet another “lost decade” for development. The situation we face in the wake of the pandemic means even greater need for concerted global action that puts human rights, sustainable development, gender equality and climate justice at its core.