[stop-imf] IMF's Contradictory Commitments & Zambia to use debt relief to hire doctors, teachers]

[Robert Weissman]

[forwarded from Jubilee USA]

   1. *The Post (Lusaka), The IMF's Contradictory Commitments On
      Poverty, February 2, 2006***
   2. *Reuters, Zambia to use debt relief to hire doctors, teachers,
      January 6, 2006*



*1.  The Post (Lusaka)
EDITORIAL*

*The IMF's Contradictory Commitments On Poverty**
February 3, 2006
*

The International Monetary Fund's (IMF) concern over the widespread
poverty in Zambia is hypocritical.

Their cries about poverty in Zambia can be said to be a crocodile's
tears. It is their policies that have contributed greatly to the
deepening of poverty in this country. And if the executive board of the
IMF is serious about poverty in this country then they should
immediately stop imposing strict spending limits on our already very
weakened government.

The IMF's anti-inflation policies and the World Bank, which is bound by
them, are making it impossible for our government to make much progress
either in achieving the Millennium Development Goals (MDGs) or in
promoting democratic institutions. The MDGs include achieving universal
primary education, cutting hunger and poverty in half, and sharply
reducing maternal and infant mortality by 2015.

But what the IMF and the World Bank are doing in our country is
effectively tearing the heart out of our democracy. Holding periodic
elections like we will do this year doesn't mean much when a nation's
economic direction is hammered out between the IMF, the Bank of Zambia
and the Ministry of Finance behind doors that are closed to the voters
of this country.

The indirect control exercised by the IMF over our country's
macro-economic policies is straitjacketing government's ability to deal
with urgent social, health and economic issues, such as the HIV/AIDS
pandemic, and likewise the ability of this country's voters to influence
those policies.

Our people, especially those who vote, strongly favour greater efforts
to improve the health and welfare of the poor, if only because the poor
make up the vast majority of our country's people.

But even as our government feebly struggles to respond to these demands
from the people, it is effectively and able to do so subject to the
IMF's policies and power. For instance, it is an open secret that our
government, in tandem with our Parliament, doesn't want to privatise
Zambia National Commercial Bank but it can't openly say so in fear of
the IMF's influence and power. This is what former Tanzanian president
Benjamin Mkapa meant last year when he said, "We are caught between a
rock and a hard place in terms of managing IMF requirements and then
dealing with the demands of our electorates."

Clearly, our government's decisions are subordinate to the IMF's rules
and directions, and our country is held captive by these decisions
without much recourse. There is a fundamental contradiction here,
between the need to greatly scale up social spending to fight HIV/AIDS
and what can actually be spent under the IMF's current low-inflation
monetary policy, which traditionally aims to keep annual inflation rates
under five per cent.

How can significantly more money be spent in our economy without
producing high levels of inflation that the IMF's low-inflation policy
permits? But we cannot ignore the fact that because donor governments
and other financial agencies, including the World Bank, treat compliance
with IMF target as the seal of good housekeeping, failure by our
government to meet those targets risks a cut-off of external credit.

The IMF can effectively switch-off foreign aid flows to our country if
it feels we are not satisfactorily adhering to the agreed macro-economic
framework. The MDG of providing universal primary education by the year
2015 is also threatened by the IMF's imposition of budget targets on us.
To meet this MDG, we have to sharply increase our investment in building
schools, training and employing teachers, and in making education more
accessible to the poor and other disadvantaged children.

But, to a large extent our government cannot do so without exceeding
spending limits imposed by the IMF, thus making it effectively
impossible for our government to meet its MDG commitments and the
demands of our people, of the voters. Clearly, the IMF's policies are
having a disastrous impact on the ability of our government to both curb
the spread of HIV/AIDS and treat its victims. But the constraints faced
by our government as a result of its dependence on the IMF's seal of
approval have become ever more obvious since the MDGs were first adopted
at the Millennium Summit by global leaders in 2000.

Indeed, with multilateral agencies, including the IMF's sister
organisation, the World Bank, warning that progress in achieving most of
the eight MDGs is lagging badly, the IMF's insistence on maintaining
stringent budget limits appears increasingly anomalous, particularly in
the light of endorsement by leaders of the Group of Eight, which
exercises a preponderant influence on IMF policies. The five per cent
inflation ceiling is based on shaky economics and there is little
agreement on the rate that begins to undermine economic growth.

The current IMF policies may have seemed appropriate for combating the
crisis of hyperinflation in many developing countries during the late
1970s and early 1980s, but its tactic of tightly constraining public
spending in order to get inflation down and keep it down is at odds with
what is needed today: new monetary policies that allow for a major
increase in public spending.

The historical record indicates that Latin America in the 1950s and
1960s, and East Asia in the 1960s and 1970s experienced very high
economic growth rates despite inflation levels that averaged 20 per cent
per year.

The short-term inflationary effects of increased and additional
resources applied towards tackling the HIV/AIDS pandemic pale in
comparison with what will be the long-term effects of half-hearted
responses on the economy of our country. AIDS is an exceptional disease;
it requires an exceptional response.

The fact that our government is effectively boxed in by the IMF is doing
nothing to promote confidence in our democratic institutions. What this
all comes down to is that the IMF acts like a school bully, taking power
away from publicly elected officials in our country. This is not a
recipe for working democracy; instead, it could spell democracy's death
knell.

Even the negotiations the IMF claims to be holding with our country from
time to time are fake; they can't be real. The negotiating conditions
are unequal - an influential and powerful institution discussing matters
with a country plagued with problems and difficulties, a country that
has already been undermined and weakened. These are the absolute worst
conditions for negotiating; the negotiating isn't done in conditions of
equality. This is how the IMF is dealing with us. What kind of a future
can our people have under such conditions?

The IMF is doing nothing to get us out of poverty with its contradictory
commitments which are just blocking our progress. We have no alternative
but to struggle and get ourselves out of this quagmire.

Distributed by AllAfrica Global Media (allAfrica.com)





*2.  Reuters*

*Zambia to use debt relief to hire doctors, teachers*

*January 6, 2006*



LUSAKA (Reuters) - Impoverished Zambia plans a mass recruitment of
teachers and doctors using funds freed by debt relief, Finance Minister
Ng'andu Magande said on Monday.

The International Monetary Fund (IMF) said last month its debt
cancellation for 19 of the world's poorest countries including Zambia
had officially taken effect, giving hope to tens of millions of people
living in abject poverty.

Magande said the Treasury would recruit 4,578 teachers and 800 nurses
and doctors to plug a shortage caused by an exodus of the doctors and
nurses to Europe and the U.S in search of better paying jobs.

The move comes after the IMF granted Zambia two separate debt relief
packages, which the Treasury says will reduce the southern African
country's debt to $502 million by July from $7.1 billion.

"We are going to recruit 4,578 teachers and 800 medical personnel,"
Magande said at a post budget meeting in Lusaka.

Treasury data indicates that that only 800 doctors out of the 1,400
required work in Zambia, a nation of 10 million, while more than 2,500
nurses work abroad, mostly in Europe. Zambia only has about 43,000
primary and high school teachers.

The Treasury says the teacher to pupil ratio is one to 60 instead of the
recommended one to 30.

Magande presented a $3 billion budget last Friday, saying 71 percent of
the budget would be locally financed, in a departure from dependence on
western lenders.

About 60 percent of Zambia's 2005 budget was funded by donors while in
recent years as much as 65 percent of the budget has been financed by
aid flows.

Analysts said the budget had created confidence that the government was
serious with reducing poverty levels, currently estimated at 67 percent
of the population.

Magande said Zambia would also spend 18 percent of the $3 billion on
HIV/AIDS treatment, training of medical staff and prevention programs.

The Treasury says AIDS kills qualified professionals faster that it can
train    replacements. One in every five Zambians is HIV positive.