Our future is public: Why the IMF and World Bank must support public services
This paper has been written and coordinated by Eurodad, and supported by Action Aid, The East African Center for Human Rights, Initiative for Social and Economic Rights, The Global Initiative for Economic, Social and Cultural Rights, Oxfam, Public Services International and Transnational Institute. It argues that international financial institutions such as the World Bank and the IMF are not doing enough to protect public services, despite their rhetoric arguing the opposite. It is time for a new approach, and a break with the mistakes of the past.
The Covid-19 pandemic exposed the failures of austerity policies and the detrimental consequences of the systemic underfunding of public services for people’s lives. It also highlighted how market-based models cannot be relied upon to deliver on human rights and the fight against inequalities. The upsurge in the cost of living in 2022 and the increasingly frequent natural disasters associated with the climate crisis further highlight the failures of the current economic model and the urgency of building a different one.
The World Bank and the International Monetary Fund have positioned themselves as the ‘first responders’ to the multiple crises of the past three years. This larger role has made more evident their often problematic approach to public services and the gap that both institutions maintain between their occasionally progressive global rhetoric on public services and their practices at country level.
IFIs such as the World Bank and the IMF continue to fail to protect public services, despite their rhetoric arguing the opposite. It is time for a new approach, and a break with the mistakes of the past. The World Bank and IMF must do their part with a fundamental shift in their policies and practices that finally closes the gap with their rhetoric. They must adopt a rights-based approach to public services, meaning that they must unambiguously support strong, publicly provided, publicly financed, gender sensitive and democratically controlled services that provide universal access and universal coverage. This should be reflected in their financing and support to countries, as well as in their global political influence.
In particular, to close the gap between their rhetoric and practice on public services, the World Bank and the IMF should implement the following 10 points:
- Increase support for publicly financed and delivered services, and refrain from promoting and financing the commercialisation, financialisation and privatisation of public services including PPPs. Support adequate regulatory capacities and ensure grievance redress mechanisms for citizens utilizing private services
- Conduct comprehensive independent evaluations of World Bank Group and IMF interventions on public services, including on healthcare access, with a focus on their impact on human rights, poverty and inequalities
- Adopt a ‘do no harm’ approach through systematic assessment of their policies and programmes on economic and gender inequality and on human rights, including helping countries integrate Human Rights Impact Assessments (HRIA) into their policy making
- Support countries to abolish user fees for education and healthcare, and to address other financial barriers to accessing these and other public services, including by providing the necessary financing
- Put an end to the use of economic policy conditionality, particularly when focused on fiscal consolidation and enhancing the role of the private sector in public services delivery
- Support countries to increase their fiscal space to build strong, sustainable public services, including by supporting fair and progressive taxation measures and by refraining from promoting regressive tax policies, in particular VAT
- Review their Debt Sustainability Framework and methodology, in order to evolve towards a more adequate debt sustainability concept, one that includes human rights and other social, gender, climate and development considerations at its core
- Facilitate debt restructurings and debt cancellation of developing countries in a timely, efficient and sufficient manner and work towards the creation of a multilateral sovereign debt workout mechanism under the auspices of the UN
- Approve a new allocation of Special Drawing Rights (SDRs), preferably targeted exclusively to developing countries, to create much needed liquidity to face the crises
- Protect and support the financing and expansion of the public sector workforce, including by moving away from recommending overall public sector wage bill constraints
It is imperative that these institutions set out a path for rethinking the role of the state and the private sector in development, one that puts people and the planet before profit and is aligned with international human rights obligations, including on economic, social, cultural and environmental rights, the Sustainable Development Goals and the Paris Agreement. Movements all around the world are already mobilising to build a future that is public.