[stop-imf] Criticism of IMF role in poor countries

[robert weissman]

Trocaire, a Eurodad NGO member has produced a new paper providing an
alternative analysis of the IMF=92s role in Low Income Countries (LICs).
The paper is based on primary research in three countries (Honduras,
Zambia and Rwanda) and secondary research in other LICs.

=93The Other Side of the Coin=94 finds progress in implementing the key
features of the Poverty Reduction Growth Facility (PRGF) =96 the IMF=92s
concessional lending facility - slow and uneven across countries. In
countries facing unstable economic and political situations, such as
Honduras and Zambia, the report finds that the IMF has not changed its
way of operating and has not been willing to explore alternatives to its
standard neo-liberal policies.

The paper calls for the framework around the PRSP to be radically
reformed on the basis of partnership and ownership. As a short-term
measure, the paper proposes that the principles underpinning the PRSP
approach be applied to the development of any new PRGF. Specifically,
the paper calls on the IMF to:

=95 Release draft PRGF documents to all stakeholders to allow informed
debate on the government=92s options
=95 Outline the rationale and assumptions behind their policy proposals
for PRGF programmes
=95 Carry out independent Poverty and Social Impact Assessments (PSIA) on
any contested policy proposals
=95 And not finalise any PRGF until it has gone through this process.

This would, the paper argues, address the problem of aligning the PRGF
to a weak PRSP, by applying the PRSP process to developing a
macroeconomic framework for the PRGF.

The paper also proposes to replace the IMF=92s signaling role with
country-based agreements on the conditions under which aid would be
suspended or reduced. These agreements would be made under joint donor /
government =91performance assessment and harmonisation frameworks=92.

Conditionality, including macroeconomic and structural reforms, would be
based on government-specified targets drawn from the PRSP and agreed by
all donors under this framework.

Finally, the paper also notes that it is imperative that the Highly
Indebted Poor Countries (HIPC) initiative be delinked from the PRGF.
The Other Side of the Coin: An alternative perspective on the role of
the International Monetary Fund in low income countries September, 2004:
http://www.trocaire.org/policyandadvocacy/policyandadvocacyhome.htm