TThis week, the International Monetary Fund (IMF) Board of Governors will meet at its headquarters in Washington DC to reaffirm the Fund’s tripartite mandate: financial stability, economic strength and, as its managing director Kristalina Georgieva recently stated, – international solidarity. . “I am determined to support our members however we can,” Georgieva said of the Fund. new spirit. “Now is the time to seize this opportunity to build a better world.”
Georgieva is right: it is now or never. The “longest streak of debt crises” in a generation looms over the global south. Two ingredients make up this debt bomb: rising rapidly levels of public debt among the world’s poorest countries, and a rising rapidly percentage of that debt issued at variable interest rates. The combination of these two ingredients means that even minor rate hikes in rich countries will have explosive consequences across the developing world, just as supply chains grind to a halt, food prices soar and the Covid pandemic. -19 devastates the world’s undervaccinated populations.
In short, the global south has never needed more support in its search for stability, strength and solidarity. But even a cursory look at the IMF’s global activity reveals a systematic violation of this mandate, inflaming, rather than resolving, the compounding health, hunger, and habitat crises in the world’s poorest countries.
Think of Argentina. In 2018, the IMF ignored warnings from your own staff to boost a $57.1 billion loan to the Argentine Republic under President Mauricio Macri: the largest loan in the Fund’s history. Did the loan meet the IMF’s financial stability mandate? On the contrary: inflation rose, employment and capital fell fled the country at record rates. Now, long after Macri was removed from office, the Argentine people continue to pay the price. Argentina’s Economy Minister, Martín Guzmán, put it bluntly in his letter to georgieva last month: “None of the program goals were achieved.”
What about economic strength? At the beginning of the Covid-19 pandemic, the IMF declared its ambition to implement $1 billion to fight the virus, protect the world’s vulnerable populations and sustain their economies during the global shock. “Very unusual for the IMF”, Georgieva saying in April 2020, “I would go out and say: ‘gasp please’. Spend as much as you can and then spend some more.”
Too unusual to be true: Of the 85 countries that received IMF pandemic support, 73 of them have been forced to undertake austerity measures in the name of “fiscal consolidation.” Last years Oxfam Report is a world tour of the IMF’s unfulfilled promise of build and maintain strong economies: reduction of wages in Tunisia, reduction of social assistance in El Salvador, elimination of energy subsidies in Egypt. IMF austerity leaves the top 10% of earners financially stronger, but only by making the bottom 90% poorer.
These statistics spell trouble for the IMF’s solidarity mandate. But perhaps the best illustration of the Fund’s solidarity approach can be found in its surcharges: the punitive, procyclical and completely unnecessary fees that the IMF extracts from its most indebted countries. One could imagine that the IMF would reduce, if not eliminate, its surcharges to align with its “new spirit of solidarity.” But again, the opposite: surcharge fees doubled from $1 billion to $2 billion between 2019 and 2021, while the number of countries facing surcharges increased from nine to 16. By 2025, the IMF waiting That number goes up to 38.
IMF surcharges directly target the world’s vulnerable populations. In Ukraine, for example, where Volodymyr Zelenskiy’s government is struggling to prevent Russian invasion while providing assistance to more than 7 million displaced people, the Fund will have raised $423 million worth of surcharges in just two years: 25% of the entire health care budget of the country. “The surcharges go exactly against what [the IMF is] he’s supposed to be doing,” Nobel laureate Joseph Stiglitz said in a recent event at the Center for Economic and Policy Research. “It is supposed to be helping countries…not extracting additional rents from them because of their dire need.”
The IMF’s unfulfilled mandate may hit the global south the hardest, but its consequences are planetary. In countries like Mongolia and Mozambique, for example, the IMF is promoting coal and gas extraction with tax breaks for fossil fuel companies. It will be the frontline communities in those countries that will suffer the most from climate breakdown. But all nations warm in unison. Even the most air-conditioned countries cannot afford to ignore the IMF’s climate record as an exclusive problem of the poor.
So how does the IMF get away with it? The Fund is a public institution financed with taxpayer money and controlled by member governments. From Argentina for Ecuador, Pakistan for Egypt, people around the world have risen up to protest the IMF’s actions and demand a different course for the publicly funded institution. Experts have added legal substance to this widespread outrage, documenting the IMF’s actions violations of international law and acts of ultra vires.
The IMF just shrugs. “The IMF does not respect UN resolutions or the UN charter,” economist Andrés Arauz told the Progressive International. Inquiry In the past week. This is not a secret: in a letter to Juan Pablo Bohoslavsky, an independent expert from the Office of the High Commissioner for Human Rights at the UN, the The IMF clearly exposes the case of its impunity: “The IMF has not accepted the Declaration of Human Rights as a motivating principle for our operations”.
The IMF’s abuse of power, then, is not surprising. It is a natural response from an institution detached from the laws of its member states and the United Nations that connects them. Modifying the Fund’s mandate will not work. Only solid accountability mechanisms, which change both who decides and how, can put an end to the Fund’s impunity. Fortunately, there is no shortage of proposals for this mechanism, from the UN Economic and Social Council to the international Court of Justice. What we have lacked so far is political will, particularly in the IMF’s largest shareholder and the only one with veto power, the United States of America.
Here, we may have reason for optimism. The United States government appears to have rediscovered its passion for human rights, international law and the Letter ONE. Perhaps this selective passion will blossom into a universal one, and the US will demand the application of these principles to the International Monetary Fund. This week’s spring meetings provide an opportunity for such an intervention. But few of the Fund’s southern members are holding their breath.