The role of the IMF is to promote global economic stability and provide policy advice to developing countries to build and maintain strong economies. The IMF’s sole purpose is to lead the country in poverty reduction and growth. During the recession, the IMF’s support helped the country grow. Some researchers believe that when countries participate in IMF programs, poverty increases and income distribution worsens. The continuous loan increases poverty and has a significant impact on life’s basic necessities. The IMF loan had a significant impact on the country’s labor force and impoverished classes.
 Structural Condition and Stabilization Condition
The structural conditionality of the IMF exacerbated poverty, whereas the provision of IMF loans with stabilization conditions alleviated poverty. Structural arrangements encompass criteria for structural performance or benchmarks for structural evaluation, while stabilization conditions consist of quantitative performance criteria or indicative benchmarks. The explicit structural factors typically encompass trade, financial, capital account, tax, and labor reforms, institutional restructurings, and the privatization of state-owned enterprises (SOEs). The IMF defines stabilization reforms as “macroeconomic variables that are within the control of the authorities,” such as “monetary and credit aggregates, international reserves, fiscal balances, and external borrowing.”
Loan Polices Linked With Factors
There is a close relationship between structural policies and poverty. Not only does unemployment raise the cost of essential services, but it also reorganizes the collection of taxes and can even have an impact on social security and pensions. Under these circumstances, the idea of privatization becomes more prevalent, and the prices charged by private companies become more open to public scrutiny. This results in the formation of a barrier that forces individuals to fall into poverty. The portion of the poor’s disposable income that is accounted for by consumption taxes is significantly and significantly larger.
The case of the Zambia
Recently, the International Monetary Fund (IMF) and Zambia reached an agreement on a program that involves eliminating fuel taxes, fuel subsidies, and food subsidies. The IMF considers these measures to be untargeted. The problem stems from the fact that Zambia has a substantial population of destitute individuals, which poses difficulties in effectively targeting them. Zambia is home to a substantial number of impoverished individuals, which presents difficulties in effectively targeting this specific group. On the other hand, the UK, with a considerably larger population, experiences a notably higher level of prosperity. Targeting the impoverished population can be accomplished more efficiently, therefore, the recommendations provided by the IMF to the UK can be considered highly suitable. Developing nations frequently prioritize the ability to establish their own policies rather than being obligated to follow the recommendations of the IMF. The UK has the option to deviate from the IMF’s recommendations and, by altering its policies, it can resolve its present circumstances without having to rely on the assistance of the IMF.
African Countries Affected From IMF
The Action Aids (Fifty Years of Failure) report demonstrates how the IMF’s policies impact education and health across the entire African continent. Broader development across the continent suffers. Instead of finding a systemic solution to Africa’s growing debt crisis and tangible alternatives such as progressive tax reforms, the IMF continues to impose public spending cuts that severely harm women and marginalized groups. Recently, the International Monetary Fund (IMF) recommended that eight out of ten countries reduce or freeze their wage bills for the public sector. Indeed, the International Monetary Fund (IMF) effectively advised all ten countries to target lower wage bills for front-line workers in the public sector than the average wage bill for workers in other sectors, such as education and health care. This has halted hiring, even in countries with severe teacher and health worker shortages. Additionally, despite the increase in spending, there has been a freeze on salaries.
The China Role in Financial Loan
China has been playing a significant role in providing more finance for the past 20 years, to the point where countries now primarily rely on China. Others haven’t necessarily been there, and even what China has provided is really a drop in the ocean in terms of what the needs are for, you know, building more infrastructure and all this sort of thing. Climate change is causing an increase in needs, and the challenge lies in the fact that the reforms the institution is currently undergoing are not suitable for its intended purpose. At this juncture, it’s appropriate to focus on a country like the UK, which has the capacity to overcome these challenges in the long run. It has the wealth to do that, but other countries simply do not have that choice.
The More Burden on African Countries Due To External Factors
Among the 35 African countries with low incomes, 19 are currently burdened by debt or facing a significant risk of falling into debt distress. As a result of external factors such as the COVID pandemic, the ongoing war in Ukraine, and the increasing global interest rates, most countries are currently facing a significant crisis in terms of their cost of living and escalating debt. This is mainly because these factors are outside of their jurisdiction. Most often, African governments allocate a larger portion of their funds towards interest payments rather than education or health expenditures. Nevertheless, there has been a lack of substantial endeavor to discover a comprehensive resolution to the debt crisis. Every nation should approach negotiations with the assumption that it is their responsibility to find the most economically efficient solution.
Do not blame IMF?
Why you are not correcting this…. Look belowÂ
The ruling elite class on poor, no participation of poor in decision making
All people come together for vested interests, especially politicians………… Mutual Interest
Unaffordable expenditure…………. Just for enjoyment
Taxing the poor instead of the rich is a good idea?
Huge amount on defense…….. Why
Not use of resources………. Poor management
Generating new resources……………… why not?
Above are the points must be entertained and corrected you can say bye bye IMF………..
Note: This study bases on my research work.
Dr. Abid Hussain Nawaz
