{"id":116775,"date":"2021-08-04T16:33:39","date_gmt":"2021-08-04T23:33:39","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=116775"},"modified":"2021-08-04T16:33:39","modified_gmt":"2021-08-04T23:33:39","slug":"hype-over-imf","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2021\/08\/04\/hype-over-imf\/","title":{"rendered":"Hype over IMF"},"content":{"rendered":"

Shenali D Waduge<\/strong><\/em><\/span><\/h2>\n\n\n
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Both the World Bank and the IMF were founded in 1944 at the\nBretton Woods conference. The World Bank is tasked to aid developing nations in\nreducing poverty and increasing their well-being. The IMF\u2019s main purpose is to\nstabilize the international monetary system and oversee the world\u2019s currencies.\nThe World Bank offers financing, policy advice, and technical assistance to\ngovernments, and also focuses on strengthening the private sector in developing\ncountries. The IMF keeps track of the economy globally and in member countries,\nlends to countries with balance of payment difficulties, and gives practical\nhelp to members.\u201d Thus IMF & World Bank are the left & right hands of\nthe Western economies \u2013 the former colonial rulers that inadvertently control\nworld systems via international entities they indirectly control &\nmanipulate. Since 1944 how many decolonized\ndeveloping countries has IMF transformed into successful economies via their\nself-claimed success blueprints & policy decisions or better still how many\ncountries have become economic disasters after taking IMF advice?<\/strong><\/p>\n\n\n\n

IMF\nis NOT a LOAN AGENCY. All loans given by IMF are CONDITIONAL. Countries taking\nIMF loans MUST implement its Structural Adjustment Programs & have to pay\nback what is borrowed with INTEREST. As of April 2018 IMF member funding\ntotaled $692billion. This money did not fall from the sky. All money is created\nand printed. What gives or who has given certain countries and certain monetary\nentities to dictate and determine how much should be given, when &\nconditions for its use and deadline for return.<\/p>\n\n\n\n

IMF\nis funded by quota subscriptions paid by member states. The size of the quota\nis determined by the size of the country\u2019s economy. The country having the\nlarger economies will give bigger quota and will also have a bigger say in the\nIMF. So there is no equality in the IMF similar to that seen in the UN where\none country has one vote whatever the size. The US contributes 17.44%\n($54billion) to the IMF. Seychelles contributes just 0.005%.<\/p>\n\n\n\n

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Further\nfavoritism within the IMF is given to major European economies & the US who\nhave the bigger say when it comes to voting.<\/p>\n\n\n\n

155\nsmaller members combined have just 36.8% say<\/p>\n\n\n\n

The\npowerful 28 EU countries get 32% say<\/p>\n\n\n\n

US\nhas 17.4% say & China the most populace country has just 3.7% say<\/p>\n\n\n\n

Sri\nLanka has 0.1% say.<\/p>\n\n\n\n

Majority\nof IMF loans come from the IMF\u2019s General Resources Account funded by\nsubscription charges of member states.<\/p>\n\n\n\n

While\nthe size of a country determines its weight, the size also decides how much\nmembership it gives and how much it takes. Bigger the country \u2013 bigger the\nmembership quota but able to take bigger loans! Smaller countries give less and\nwill get less too! Bigger the country \u2013 decision powers within IMF are greater\nas well. The quota is calculated by GDO (50%) openness of countries (30%)\neconomic variability (15%) international reserves (5) \u2013 this is known as\nSpecial Drawing Rights (SDR)<\/p>\n\n\n\n

Since\n1944 IMF has been giving loans almost all of the 195 countries in the world \u2013\nthe only countries that IMF has not been able to give loans or advice to is \u2013\nCuba, North Korea.<\/p>\n\n\n\n

Surely\nIMF template should have brought countries out of debt including the major\npowers who are in debt \u2013 making them the top 10 countries in debt!<\/p>\n\n\n\n

What type of loans does IMF\ngive?<\/strong><\/p>\n\n\n\n

  1. Stand-by-Arrangement (SBA) short term financing of balance\npayments (12-24months & not more than 36 months)<\/li>
  2. Extended Fund Facility (EFF) medium-term financing arrangement\nallowing countries to borrow a certain amount over 4-10years. The EFF adopts\nstructural measures and promotes privatization of public enterprises.<\/li>
  3. Poverty Reduction & Growth Facility (PRGF) gives loans at\nlow interest rates & aims to reduce poverty & lay foundation for\neconomic development<\/li><\/ol>\n\n\n\n

    IMF Technical Assistance<\/strong>aims\nto transition economies \u2013 change from centrally controlled to market-run\nprivatized economies.<\/p>\n\n\n\n

    IMF Emergency Funds<\/strong>offers\nloans to collapsed economies ex: South Korea in 1997<\/p>\n\n\n\n

    While\nIMF is not an AID agency and all loans have CONDITIONS while the money taken\nwith interest have to be returned \u2013 IMF is nothing but a LOAN SHARK no\ndifferent to an ordinary person begging to a lending \u2018mudalali\u2019 who happily\ngives the amount asked but places a set of conditions if the money given is not\nreturned! It\u2019s no similar to taking a car lease \u2013 inability to pay lease may\nresult in confiscating one\u2019s car! Govts have no choice in rolling out various\nconditions which are always targeting the poor & middle classes only.<\/p>\n\n\n\n

    Countries\nthat go to IMF or countries that IMF lobby are already in financial\ndifficulties \u2013 how moral is it to provide a presumable \u2018relief\u2019 in form of a\nIMF loan which has \u2018STRINGS attached\u2019 ultimately landing that country in\ngreater difficulty? Eventually countries in debt to IMF end up having to\nsacrifice benefits to citizens to satisfy IMF demands!<\/p>\n\n\n\n

    What are the IMF demands?<\/strong><\/p>\n\n\n\n

    To\nopen up local economies for foreign investments, to give greater access to\nnational resources, to privatize public enterprises, to cut government spending\non health and education to the general public and all this while the IMF main\nsharks strategically get their \u2018investors\u2019 ready to descend and tap into the\nresources, cheap labor, disregard environmental concerns after the IMF do all\nthe dirty work! The governments of these countries have no power o handle the\nsituation having committed to the SAPs in taking loans. Thus, Governments end\nup becoming unpopular among the citizens having to make up various lies to\ncover the agreements made behind closed doors with the IMF.<\/p>\n\n\n\n

    When\nIMF gives a loan IMF self-mandates itself to monitor a country\u2019s economy and\nrecommends policy changes. IMF visits countries, holds discussions with\nGovernment & others. IMF research teams provide the technical assistance\nand training to draft policy changes as per IMF desires. Politicians end up\nparroting what the IMF tells them.<\/p>\n\n\n\n

    Sri Lanka joined IMF on 29\nAugust 1950 \u2013 Sri Lanka was IMF\u2019s 50<\/strong>th<\/sup><\/strong>member. <\/strong>Sri Lanka\u2019s SDR quota is approximately\n$800million. Since 1950 \u2013 Sri Lanka has taken 16 IMF loans. On 6 occasions the\nfull agreed amount was not released citing non-compliance to conditions by Sri\nLanka. Countries like Sri Lanka often get caught in the template and formula\nspells of the IMF which is like the insurance covers \u2013 the smallest ignored\nprints carry the deadliest clauses!<\/p>\n\n\n\n

    IMF came to play a bigger role\nafter 1977, <\/strong>Yet,how did Sri Lanka manage development projects (Gal Oya\nDevelopment scheme, roads, towns etc done with own funds in 3-4 years) WITHOUT\nfalling into debt prior to 1977? How\ndid foreign debt which was $750m in 1977 end up $47307m almost 45 years later?<\/strong><\/p>\n\n\n\n

    Is\nit correct to say that the decisions the successive governments had to take having\nfallen for the IMF trap has brought Sri Lanka to its knees?<\/p>\n\n\n\n

    • Did the IMF decide how Sri Lanka was to use its foreign\nexchange, usurping the decision taking handled pre-1977 by local policy makers\nwith foreign exchange used only for essential suppliers)<\/li><\/ul>\n\n\n\n
      • Did the IMF task foreign exchange to the banks & based on\nexchange rates decided by foreign banks?<\/li><\/ul>\n\n\n\n
        • Did IMF\u2019s tasking foreign exchange decisions to foreign banks\nresult in a high interest rate, reduction in import tariffs, abolishing of\nsubsidies? Is this how IMF sabotaged development in Sri Lanka & other\ndeveloping countries?<\/li><\/ul>\n\n\n\n
          • Did IMF virtually \u2018bribe\u2019 our leaders with long grace periods to\ntake IMF loans & encouraged lavish spending as they knew that the leaders\nwho took the loans would not be in power when loans had to be paid! It was a\ngood understanding for the giver & takers of all countries who fell for the\ntrap!<\/li><\/ul>\n\n\n\n
            • If Sri Lanka could earn foreign exchange from exports before\n1977 \u2013 why is it impossible now?<\/li><\/ul>\n\n\n\n
              • If dollars from tourist arrivals were encashed & pooled to\nfirstly import essential goods \u2013 why can\u2019t a similar methodology be applied\nnow?<\/li><\/ul>\n\n\n\n
                • If imports were strictly monitored but satisfied the needs of\nthe local industrialists prior to 1977 can\u2019t these good practices be worth\nrepeating?<\/li><\/ul>\n\n\n\n
                  • If pre-1977 government objective was to make Sri Lanka\nself-sufficient in textiles who put a stop to that objective?<\/li><\/ul>\n\n\n\n
                    • If the government had set up research and training units to\nguide industrialists for this purpose before 1977, why was it stopped and close\nto 100,000 handloomers whose products were better than ones overseas were\nimpacted? Did this not happen on the advice of the IMF \u2013 IMF advice being to spend foreign exchange lavishly, import\nanything & everything & cover shortage with LOANS & long grace\nperiods to pay luring politicians with various IMF inducements   <\/strong><\/li><\/ul>\n\n\n\n

                      This\nis how Sri Lanka landed in this soup!<\/p>\n\n\n\n

                      We\nare insane to take more advice from the very entity that brought us to our\nplight.<\/p>\n\n\n\n

                      Former\nGA Gavin Karunaratna proposes that Sri Lanka continue the method that was a\nsuccess pre-1977 handling foreign exchange to buy firstly essentials &\nsecondly to import as per requirement of industrialists & thirdly to\nconsider applicants for foreign travel etc. To come out of this mess, we have\nto adopt some drastic measures but ones that we create and not those imposed\nforcibly by foreign lenders.<\/p>\n\n\n\n

                      Should IMF continue to advice\nThird World?<\/strong><\/p>\n\n\n\n

                      It\nis good for every country that has become a victim of IMF policy and structural\nprograms to review where they have gone wrong against what they were previously\ndoing right. It could be just possible that these global economic institutes do\nnot wish countries to come out of the woods and wish countries to remain in the\neconomic ICU\/ventilator forever \u2013 braindead!<\/p>\n\n\n\n

                      The\nquestion is how many countries has IMF taken out of debt or put into debt? Who\ncan answer!<\/p>\n\n\n\n

                      Shenali D Waduge<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

                      Shenali D Waduge Both the World Bank and the IMF were founded in 1944 at the Bretton Woods conference. The World Bank is tasked to aid developing nations in reducing poverty and increasing their well-being. The IMF\u2019s main purpose is to stabilize the international monetary system and oversee the world\u2019s currencies. The World Bank offers […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"class_list":["post-116775","post","type-post","status-publish","format-standard","hentry","category-shenali-waduge"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/116775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=116775"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/116775\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=116775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=116775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=116775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}