HOW TO DESTROY AN ECONOMY THE IMF WAY

Good will is something to be weary of, especially when it deals with money. The International Monetary Fund, set up in 1944 to stabilize exchange rates and help in the reconstruction of the world's international payment system, also pledges to "promote high employment and sustainable economic growth, and reduce poverty". But even that claim is somewhat suspected in light of its recent practices, especially when it comes to dealing with member countries in Africa.

The IMF lends money to financially strapped countries using funds deposited by its 186-member countries but these loans often come with conditions attached. Often, these conditions are shrouded in secrecy and negotiated between the IMF and the treasuries of the recipient countries without wider consultation of the public. And, according to the Washington-based non-governmental organization Center for Economic and Policy Research, these conditions do more damage than good to the economies of the recipient countries.

Take the case of Zambia for instance. Twenty years ago, it was one of the richest African countries due to its vast resources of copper, but fell from grace hard when it tangled with the IMF. During the 1970's, to counter the rising price of oil and the falling price of commodities, Zambia decided to take a loan from the IMF to make ends meet.

As a result, Zambia had to cut government subsidies for food and fertilizer, relinquish control over foreign-exchange policy and interest rates, open its markets to cheap imports which damaged its own domestic industries, and abolish price controls. Later, the Zambian government decided to take a stand against the unfairness of the terms and reverted to controlling debt-service payments, foreign-exchange earnings, and price controls. The economy rebounded quickly at a rate of 3.1 percent in 1987, to 5.6 percent the next year. It seemed that the worse was over, but everyone was sorely mistaken.

The IMF threatened to withhold bilateral support and the one billion dollars (in US currency) in aid if Zambia continued to resist adhering to its conditions. The Zambians had no other choice but to succumb to their harsh conditions and had to privatize all of its industries — one of the biggest disasters in Zambian history. It is now one of the poorest nations in the world, and you know whom to blame.

Of course, this is only one of the many countries that have been ruined by the IMF. According to the London-based non-governmental organization World Development Movement, other African countries like Malawi and Senegal have suffered under such IMF influences. Apparently, it has had a long history of giving really bad, unsound advice to countries in need. Next time, we will look at another country and how it fared when it decided NOT to take money from the IMF.

Chasing Autumn