[stop-imf] IMF, BANK WRONGLY TAKE CREDIT FOR POVERTY DROP]

[robert.weissman@essentialinformation.org]

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DEVELOPMENT: IMF, BANK WRONGLY TAKE CREDIT FOR POVERTY DROP

By Emad Mekay   MORE BY THIS AUTHOR
<http://www.globalinfo.org/eng/searchresults.asp?Author=Emad+Mekay>

WASHINGTON, Apr. 24, 2004 (IPS/GIN) - Global poverty has declined over the
past 20 years but the successes are not in countries that have closely
followed the advice of the World Bank and its sister institution the
International Monetary Fund (IMF), a new study shows.

According to the World Bank's own 'World Development Indicators 2004',
which surveys the state of development around the globe, the proportion of
people living on less than one dollar a day in developing countries
dropped by almost half between 1981 and 2001.

The 416-page report shows a fall in the absolute number of people living
on less than a dollar a day in all developing countries from 1.5 billion
in 1981 to 1.1 billion in 2001.

That is a reduction from 40 to 21 percent of the world's population.

But the report reveals that most of the success in fighting poverty
occurred in Asian countries, particularly India and China that, together,
were responsible for lifting 500 million people out of poverty.

At the same time, the record in regions with large World Bank and IMF
programmes, such as Africa, Latin America, Eastern Europe and Central
Asia, has been poor.

"Economic growth in China and India has delivered a dramatic reduction in
the number of poor," said World Bank Chief Economist Franois Bourguignon
told reporters Friday. "But other regions have not enjoyed sustained
growth and, in too many cases, the number of poor has actually increased."

In China, where gross domestic product (GDP) per capita increased
five-fold since 1981, the number of extremely poor people fell from over
600 million to slightly more than 200 million, or from 64 percent to 17
percent.

In India, 359 million people -- 35 percent of the population -- were
living in dire poverty in 2001, down from 382 million, 55 percent, in
1981.

In marked contrast to East and South Asia, poverty actually rose in
sub-Saharan Africa, where many countries closely follow IMF and World Bank
lending plans.

Since 1981, a 13-percent contraction in GDP per capita in sub-Saharan
Africa resulted in a near-doubling of the number of people living on less
than a dollar a day, from 164 million to 314 million, or from 42 to 47
percent of the region's population.

In Eastern Europe and Central Asia, too, high unemployment and declining
output in many of the formerly centrally planned economies drove extreme
poverty rates up from near zero in 1981 to six percent by 1999.

The number of people living on less than two dollars a day in Eastern
Europe and Central Asia rose from eight million (two percent) in 1981 to
over 100 million (24 percent) in 1999, dropping back to slightly more than
90 million (20 percent) in 2001.

In the Middle East, which includes obedient disciples of the policies of
the international financial institutions (IFIs) such as Egypt and Jordan,
the number of people living on less than two dollars a day rose from 52
million to 70 million.

In Latin America the number of people living on less than a dollar a day
rose from 36 million to 50 million during the same period, but remained
constant as a percentage of the total population, at around 9.7 percent.

The number of people in the region living on less than two dollars rose
from 99 million to 128 million, a slight decline from 26.9 percent of the
population in 1981 to 24.5 percent in 2001, despite decades of their
governments adhering to IMF and World Bank-backed policies.

Yet, bank officials here used the lower poverty figures to push for
greater adoption of its policies, which range from privatisation of public
assets to an end to protections and subsidies of local industries and cuts
to social spending.

But critics of the two institutions were quick to note that India and
China are not exemplary disciples of the IMF and World Bank economic
blueprint.

"It's astounding that they can hold up these statistics and drive the
conclusion that they do," said Rick Rowden of ActionAid USA.

"While it's true that India and China have implemented some degree of the
liberalisation and the privatisation agenda, particularly in recent years,
the question is, to what degree?" he added.

"And what the record really shows is that they have introduced these
reforms at a very gradual level after many years of state protection and
state support for industries first, which is unlike Uganda and Venezuela
or Paraguay."

The critics say while it is true that the two countries are among the
biggest recipients of World Bank loans, most of them are tied to specific
projects or to broad programme support, in the case of India, which do not
carry the usual set of conditions associated with the balance of payment
programmes being implemented in Africa, Latin America and the Middle East.

"It's absolutely not the case that either China or India have followed the
typical reform package recommended by the fund and the bank," Kevin
Watkins, head of research at Oxfam International, said in a telephone
interview from the United Kingdom.

"Neither of them has liberalised their capital account, which is what the
IMF was going around the world recommending a couple of years ago. Both of
them have liberalised relatively slowly. In the case of China, the
liberalisation didn't start until after the economy had already gone on to
a higher growth path," he added.

The activists also pointed out that the two countries are politically very
powerful.

"Frankly, India is not a country that would react kindly to the type of
advice which the World Bank and the IMF traditionally dispense in Africa,"
Watkins said. "The leverage of the IMF and the World Bank in a country
like India, let alone China ... is as close to zero as you can get."

Using the poverty figures to promote their policies also contradicts the
latest Human Development Report of the United Nations Development
Programme (UNDP), released in June 2003, which contains extensive
discussion on the harmful effect of policies advocated by the IMF and
World Bank, such as user fees for education and health care, efforts to
privatise water and cut social subsidies.

Also contradicting the World Bank's interpretation of its own data is the
fact that the countries that have not done well in the fight against
poverty have in fact been the most faithful followers of bank and IMF
policies, particularly in Africa, Latin America and the Middle East.

Middle Eastern countries, including Egypt, and Latin American nations,
like Argentina and Bolivia, have followed the IFIs' advice to the letter
-- cutting subsides, opening up their economies for trade and selling
public assets. Yet they have poor poverty reduction records, the study
reports.

For example, in 2000 spending on subsidies had been reduced to 51 percent
of total government spending in Europe and Central Asia, 36 percent in
Latin America and the Caribbean and a mere 14 percent in the Middle East
and North Africa. Yet such spending accounted for 59 percent in
high-income economies.

"If you look at the parts of the world that have been most affected by the
conventional IMF, World Bank prescriptions of rapid liberalisation on
trade and capital accounts, you'd have to point to Africa and Latin
America, both of which have performed disastrously in terms of growth, and
in terms of poverty reduction and in terms of income distribution,"
Watkins said.

Yet as he released the report here, the bank's Bourguignon urged poor
nations to adopt "much more openness to trade, and more widespread policy
reforms".

This is not what should have happened, the analysts say.

"If anything the reduction in poverty in India and China is a testament to
what can be achieved if you do not implement these policies favoured by
the IMF and the World Bank," Rowden said.


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DEVELOPMENT: IMF, BANK WRONGLY TAKE CREDIT FOR POVERTY DROP
By Emad Mekay   MORE BY THIS AUTHOR <http://www.globalinfo.org/eng/searchresults.asp?Author=Emad+Mekay>
WASHINGTON, Apr. 24, 2004 (IPS/GIN) - Global poverty has declined over the
past 20 years but the successes are not in countries that have closely
followed the advice of the World Bank and its sister institution the
International Monetary Fund (IMF), a new study shows.
According to the World Bank's own 'World Development Indicators 2004', which
surveys the state of development around the globe, the proportion of people
living on less than one dollar a day in developing countries dropped by almost
half between 1981 and 2001.
The 416-page report shows a fall in the absolute number of people living on
less than a dollar a day in all developing countries from 1.5 billion in 1981
to 1.1 billion in 2001.
That is a reduction from 40 to 21 percent of the world's population.
But the report reveals that most of the success in fighting poverty occurred
in Asian countries, particularly India and China that, together, were
responsible for lifting 500 million people out of poverty.
At the same time, the record in regions with large World Bank and IMF
programmes, such as Africa, Latin America, Eastern Europe and Central Asia,
has been poor.
"Economic growth in China and India has delivered a dramatic reduction in the
number of poor," said World Bank Chief Economist Franois Bourguignon told
reporters Friday. "But other regions have not enjoyed sustained growth and, in
too many cases, the number of poor has actually increased."
In China, where gross domestic product (GDP) per capita increased five-fold
since 1981, the number of extremely poor people fell from over 600 million to
slightly more than 200 million, or from 64 percent to 17 percent.
In India, 359 million people -- 35 percent of the population -- were living in
dire poverty in 2001, down from 382 million, 55 percent, in 1981.
In marked contrast to East and South Asia, poverty actually rose in
sub-Saharan Africa, where many countries closely follow IMF and World Bank
lending plans.
Since 1981, a 13-percent contraction in GDP per capita in sub-Saharan Africa
resulted in a near-doubling of the number of people living on less than a
dollar a day, from 164 million to 314 million, or from 42 to 47 percent of the
region's population.
In Eastern Europe and Central Asia, too, high unemployment and declining
output in many of the formerly centrally planned economies drove extreme
poverty rates up from near zero in 1981 to six percent by 1999.
The number of people living on less than two dollars a day in Eastern Europe
and Central Asia rose from eight million (two percent) in 1981 to over 100
million (24 percent) in 1999, dropping back to slightly more than 90 million
(20 percent) in 2001.
In the Middle East, which includes obedient disciples of the policies of the
international financial institutions (IFIs) such as Egypt and Jordan, the
number of people living on less than two dollars a day rose from 52 million to
70 million.
In Latin America the number of people living on less than a dollar a day rose
from 36 million to 50 million during the same period, but remained constant as
a percentage of the total population, at around 9.7 percent.
The number of people in the region living on less than two dollars rose from
99 million to 128 million, a slight decline from 26.9 percent of the
population in 1981 to 24.5 percent in 2001, despite decades of their
governments adhering to IMF and World Bank-backed policies.
Yet, bank officials here used the lower poverty figures to push for greater
adoption of its policies, which range from privatisation of public assets to
an end to protections and subsidies of local industries and cuts to social
spending.
But critics of the two institutions were quick to note that India and China
are not exemplary disciples of the IMF and World Bank economic blueprint.
"It's astounding that they can hold up these statistics and drive the
conclusion that they do," said Rick Rowden of ActionAid USA.
"While it's true that India and China have implemented some degree of the
liberalisation and the privatisation agenda, particularly in recent years, the
question is, to what degree?" he added.
"And what the record really shows is that they have introduced these reforms
at a very gradual level after many years of state protection and state support
for industries first, which is unlike Uganda and Venezuela or Paraguay."
The critics say while it is true that the two countries are among the biggest
recipients of World Bank loans, most of them are tied to specific projects or
to broad programme support, in the case of India, which do not carry the usual
set of conditions associated with the balance of payment programmes being
implemented in Africa, Latin America and the Middle East.
"It's absolutely not the case that either China or India have followed the
typical reform package recommended by the fund and the bank," Kevin Watkins,
head of research at Oxfam International, said in a telephone interview from
the United Kingdom.
"Neither of them has liberalised their capital account, which is what the IMF
was going around the world recommending a couple of years ago. Both of them
have liberalised relatively slowly. In the case of China, the liberalisation
didn't start until after the economy had already gone on to a higher growth
path," he added.
The activists also pointed out that the two countries are politically very
powerful.
"Frankly, India is not a country that would react kindly to the type of advice
which the World Bank and the IMF traditionally dispense in Africa," Watkins
said. "The leverage of the IMF and the World Bank in a country like India, let
alone China ... is as close to zero as you can get."
Using the poverty figures to promote their policies also contradicts the
latest Human Development Report of the United Nations Development Programme
(UNDP), released in June 2003, which contains extensive discussion on the
harmful effect of policies advocated by the IMF and World Bank, such as user
fees for education and health care, efforts to privatise water and cut social
subsidies.
Also contradicting the World Bank's interpretation of its own data is the fact
that the countries that have not done well in the fight against poverty have
in fact been the most faithful followers of bank and IMF policies,
particularly in Africa, Latin America and the Middle East.
Middle Eastern countries, including Egypt, and Latin American nations, like
Argentina and Bolivia, have followed the IFIs' advice to the letter -- cutting
subsides, opening up their economies for trade and selling public assets. Yet
they have poor poverty reduction records, the study reports.
For example, in 2000 spending on subsidies had been reduced to 51 percent of
total government spending in Europe and Central Asia, 36 percent in Latin
America and the Caribbean and a mere 14 percent in the Middle East and North
Africa. Yet such spending accounted for 59 percent in high-income economies.
"If you look at the parts of the world that have been most affected by the
conventional IMF, World Bank prescriptions of rapid liberalisation on trade
and capital accounts, you'd have to point to Africa and Latin America, both of
which have performed disastrously in terms of growth, and in terms of poverty
reduction and in terms of income distribution," Watkins said.
Yet as he released the report here, the bank's Bourguignon urged poor nations
to adopt "much more openness to trade, and more widespread policy reforms".
This is not what should have happened, the analysts say.
"If anything the reduction in poverty in India and China is a testament to
what can be achieved if you do not implement these policies favoured by the
IMF and the World Bank," Rowden said.

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