Over 500 organisations and academics around the world call on IMF to stop promoting austerity in the Coronavirus recovery period
- Eurodad analysis shows Covid-19 ‘recovery packages’ could force tax increases and spending cuts in 80 developing countries by 2023, threatening achievement of SDGs.
- 59 countries have fiscal consolidation plans over next three years that are almost five times larger than Covid-19 response packages implemented in 2020
More than 500 organisations and academics from 87 countries - including the European Network on Debt and Development (Eurodad) - have issued a statement today calling on the International Monetary Fund (IMF) to stop promoting austerity, and instead support policies that advance gender justice, reduce inequality, and put people and planet first.
The IMF has already begun locking some countries into long term austerity-conditioned loans, while encouraging countries to take such recovery measures through its short-term, front loaded emergency financing packages. Such policies will further entrench gender and economic inequality and undermine any chance of an inclusive recovery, especially as many countries in the global south are expected to need more long-term financing in the near future.
The statement comes ahead of the IMF and World Bank Annual Meetings slated to begin next week (12-18 October).
At the same time, Eurodad has analysed IMF staff reports for 80 countries, prepared as part of the process of approval of IMF assistance between March and September 2020. During this period, the IMF approved 96 programs for 81 countries for a total of US$ 95 billion.
This analysis shows that:
- Between 2021 and 2023, 80 countries will be required to implement austerity measures worth on average 3.8 per cent of GDP.
Future fiscal consolidation represents almost five times the amount of resources allocated to Covid-19 packages in 2020.
- More than half of the projected measures - equivalent to 2 per cent of GDP - will take place in 2021.
- 40 countries have cut public budgets to afford a response to the pandemic.
- 56 countries will be left with higher public debt levels by 2023.
- Out of 80 IMF staff reports, only 20 refer to climate change. Only seven mention the SDGs. In just one case, Samoa, climate change is included as a consideration in debt sustainability assessments.
Jean Saldanha, Director of Eurodad, said: “The urgent need for countries to increase investment to tackle the impacts of the Covid-19 pandemic, and achieve the Sustainable Development Goals, are in every official IMF speech. Yet our research shows that these commitments are not reflected in IMF program design.
“Today we stand alongside organisations across the world to call on the IMF to end the promotion of austerity. Current plans to prioritise debt payments and implement long-term fiscal consolidation will jeopardise the provision of basic public services, and increase both income and gender inequality in the poorest countries in the world. It will also make the achievement of the Sustainable Development Goals all but impossible.
“Instead, Eurodad is calling for a wholesale reassessment of IMF assistance and a post-Covid debt relief and sustainability initiative. In the long-term, we need systemic reform to address this crisis. This includes the establishment of a fair, multilateral framework under UN auspices to support systemic, timely and fair restructuring of sovereign debt.”
Eurodad’s full report, Arrested development: IMF lending and austerity post Covid-19, can be found here.
For more information or an interview with our organisation, or with other spokespeople who have signed the statement, contact: Julia Ravenscroft, Communications Manager, Eurodad: +32 4863456814/ [email protected].