By Brian Okoth
The United Nations (UN) has said that the International Monetary Fund (IMF) has benefited rich nations only since its inception in 1944.
The poor countries are yet to benefit from the international lender, which has been repeatedly accused of setting unfavourable loan conditions for the developing countries, says the UN Secretary-General Antonio Guterres.
He made the remarks in a statement on Thursday ahead of a two-day meeting called by French President Emmanuel Macron in Paris to address reforms of the multilateral development banks.
Guterres wants the IMF and the World Bank “overhauled” in efforts to make them beneficial to all countries, regardless of a nation’s economic muscle.
The UN chief’s remarks echo sentiments made by other critics, who see the IMF and the World Bank as entities controlled by a few powerful nations.
Several countries in the developing economies, largely in Africa, have been subjected to tough terms and conditions by the IMF and World Bank before loans can be granted to them.
Some of the conditions appear to interfere with the internal politics of the respective nations.
Kenya, Nigeria, Ghana, Zambia and Egypt are some of the African countries that were asked by the IMF to remove subsidies on basic commodities and fuel before loans could be extended to them.
Some of these nations were also asked to restructure their public institutions before they could credit.
Citizen-unfriendly
Idayat Hassan, the head of the Centre for Democracy and Development, says the conditions set by the IMF, especially on developing countries, border on being overbearing.
“The conditions are not citizen-friendly; they affect the citizens’ welfare [in the long run]. At the end of the day, the much touted economic growth [upon removal of the subsidies and meeting other terms of engagement] is rarely achieved,” Hassan tells TRT Afrika.
Kenyan economic analyst Jesse Ludenyo says African nations impose the subsidies to cushion the citizens against exponential price hikes on basic goods.
According to Ludenyo, the condition set by the IMF – that the subsidies have to go for loans to be granted – is “punitive”.
“Governments introduce subsidies to protect consumers by keeping prices low,” he tells TRT Afrika.
Tunisia rejects IMF terms
Tunisia, seeking a $2 billion loan, recently asked the IMF to review its lending terms and conditions before the country can accept credit from the lender.
Despite an agreement in principle on the loan, which was brokered in October 2022, talks with the IMF have stalled for months over President Kais Saied not committing to restructure public bodies and lift subsidies on basic goods.
Speaking at Carthage in the capital Tunis on June 11, Saied stated that “solutions can never be presented in the form of diktats”.
“The IMF must review its proposals and then a solution can be reached,” he said.
The president further said he won’t allow his country to “fall deeper into debts” as a result of the unfavourable IMF conditions.
“If Tunisia is currently going through a difficult financial, economic and social situation, it is because Tunisians have long been the victims of the repercussions of past domestic and foreign policies,” he said.
Consequently, Tunisia resorted to internal funding from local financial institutions, raising some $320 million from the local lenders.
Guterres has since said it’s time for the boards of the IMF and the World Bank to right what he termed the historic wrongs and “bias and injustice built into the current international financial architecture.”
That “architecture”, according to the UN boss, was established when many developing countries were still under colonial rule.
