[stop-imf] IMF/WB role in Sierra Leone poverty

[Robert Weissman]

Awareness Times: Sierra Leone News and Information
http://news.sl/drwebsite/publish/article_2005951.shtml

How to Reduce Poverty in Sierra Leone
By Mohamed A. Jalloh (USA)
Nov 18, 2005, 18:56

Any attempt to address the longstanding problem of poverty in Sierra
Leone which does not start by identifying the reasons why our people
remain dirt poor amidst abundant natural resources, will succeed only by
sheer statistical accident. Therefore, our starting point must be to
find an answer to the fundamental question: *How did a country which is
endowed with great mineral wealth end up depending on international aid
for its small population's daily sustenance, with little hope for
recovery during the average Sierra Leonean's lifetime?* In order to
answer this question, it is necessary to go back to an almost forgotten
period when Sierra Leoneans enjoyed a comfortable standard of living.

Nearly fifty years ago, the newly-independent Sierra Leone was a
peaceful tropical paradise with 24-hour electricity, running tap water,
well-functioning schools and hospitals, and a disciplined civil service,
police and army. Our country exported rice, diamonds, coffee, and other
agricultural and mineral products which enabled us to import consumer
goods, medicines, and other goods that most Sierra Leoneans could afford
because our country was blessed with a stronger currency than the U.S.
dollar. Then came the IMF and the World Bank in the 1970s to join the
APC government of President Siaka Stevens in SL =96 and our once
comfortable country promptly began its inexorable descent into the
basement of the cellar of human development. That steep decline
culminated recently in the cruelest irony and indignity of all -- Sierra
Leoneans became notorious world-wide as the poorest people on earth.

Naturally, the clueless government of President Ahmad Tejan Kabbah, and
his proudly self-proclaimed =93faithful follower,=94 Vice-president Solomon
Berewa, gleefully applauded this collective slap in the face of our once
proud nation, as they shamelessly anticipated the predictable avalanche
of foreign =93aid=94 that would free their SLPP government from their long
unfulfilled sworn obligation of harnessing SL=92s own resources for the
benefit of our long suffering people. How -- the nation wants to know --
did we come to this?

The origin of this wholly avoidable national calamity can be traced to
an unwitting coincidence between the separate motives of the IMF and the
World Bank, on the one hand, and of the successive governments of SL, on
the other, starting with that of President Stevens and including the
current SLPP government of President Kabbah. Among them, they have
concertedly subjected the people of SL over the past 35 years to
sustained attack from three separate, but mutually reinforcing, weapons
of mass economic destruction, namely: Devaluation, foreign =93aid,=94 and
foreign trade.

Thirty-five years ago, the IMF and the World Bank embarked upon various
loan programs targeted at the then-newly independent countries of
Africa, including SL. The stated aim of those programs was to propel
those countries into the age of industrialization and high standards of
living. Today, hundreds of billions of dollars later, and despite untold
hardships endured by ordinary people in recipient countries, most
developing countries, especially in Africa, are universally acknowledged
to have lower standards of living now than thirty-five years ago.

Obviously, corrupt and incompetent leadership explains much of the
abysmal poverty in many third world countries. Not so obvious, however,
is the unwitting role of both the IMF and the World Bank in sustaining
many a third world dictatorship. By lending billions of dollars to inept
governments, particularly in Africa, the Fund and the Bank released
those governments from the salutary necessity to harness and develop
their own indigenous resources. Confident in their ability to borrow
huge sums of money from an acquiescent IMF and World Bank, among others,
third world despots felt no need to restrain either themselves, or their
like-minded ministers and other cohorts, from plundering their own
country=92s treasuries.

Evidence of pillage abounds: Our own country, Sierra Leone, despite
marine and mineral exports estimated at more than $200 million annually,
is now dependent on World Bank loans, and British government and other
foreign =93aid,=94 for monthly oil imports to keep vehicles and factories
running in the country. Which raises a relevant question: How did the
IMF and the World Bank come to be unwitting financiers of predictably
moribund programs in so many third world countries, particularly in SL?

First, the criteria by which the performance of both the IMF and the
World Bank was measured guaranteed that both institutions would promote
quantity over quality in their loans to developing countries. Were the
Fund and the Bank lending to private business organizations, instead of
sovereign states, such a policy would have quickly mired them in severe
financial distress.

However, unlike private commercial debt, loans to countries such as SL
can be carried in the books of the Fund and Bank for many years after
governmental default =96 since it is the country, and not its agent, the
particular borrowing government, which is held liable for those debts.
Consequently, both the IMF and the World Bank, on the one hand, and the
borrowing SL government, on the other, assume little risk regarding IMF
and World Bank loans. Predictably, this has led to a mutually
reinforcing race to build up massive debts on SL, fueled by Fund and
Bank loans.

The resulting unprecedented drain on SL=92s export earnings contributed
significantly to the retrogression of our country=92s economy,
particularly in the 1980s. Unfortunately, the adverse effects of that
gargantuan debt burden were compounded by the results of the programs
themselves financed by the debt build-up.

Thus, a second problem with IMF and World Bank lending to SL, which is
also true for other African countries, is those Bretton Woods
institutions=92 tendency to export traditionally successful Western
economic policies to developing countries. By imposing upon developing
countries like SL =93conditionalities=94 which failed to be informed by the
peculiarities of local economic conditions, the IMF, in particular,
guaranteed the failure of consecutive programs predicated on those
=93conditionalities.=94 The most dramatic example of this misdiagnosis of
the economic ills of our country is that widespread staple of IMF
programs: Devaluation. It will be the subject of my next article.

*=A9 *Mohamed A. Jalloh

*Editor=92s Note*: Part of this article is adapted from the author,
Mohamed A. Jalloh=92s essay, =93Reforming IMF and World Bank Lending,=94
published in New York in November 1993 by /African Profiles
International/. Moh=92m Jalloh, who is Sierra Leonean and lives in
Maryland, USA, has had his views on economics and finance published
multiple times since 1994 in /The Washington Post/, one of the two
leading national newspapers in the USA. His first article in Sierra
Leone, entitled: =93Foreign Aid: A Curse or Blessing?=94 was published in
the /We Yone/ newspaper in 1979, within a year after he became the first
Sierra Leonean to graduate with a B.Sc (Hons) Econ with a major in
accounting from Fourah Bay College.