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A Survey of the Impacts of IMF Structural Adjustment in Africa: Growth, Social Spending, and Debt Relief

By Robert Naiman and Neil Watkins (Research Associates at the Preamble Center)
April 1999

Summary:

The data reviewed in this study suggest that the International Monetary Fund has failed in Africa, in terms of its own stated objectives and according to its own data. Increasing debt burdens, poor growth performance, and the failure of the majority of the population to improve their access to education, health care, or other basic needs has been the general pattern in countries subject to IMF programs.

The core elements of IMF structural adjustment programs have remained remarkably consistent since the early 1980s. Although there has been mounting criticism and calls for reform over the last year and a half--as a result of the Fund's intervention in the Asian and Russian financial crises--no reforms of the IMF or its policies have been forthcoming. And there are as yet no indications from the Fund itself that it sees any need for reform. In fact, IMF Managing Director Michel Camdessus has repeatedly referred to the Asian economic collapse as "a blessing in disguise."

In the absence of any reform at the IMF for the foreseeable future, the need for debt cancellation for Africa is all the more urgent. This enormous debt burden consumed 4.3% of sub-Saharan Africa's GNP in 1997. If these resources had been devoted to investment, the region could have increased its economic growth by nearly a full percentage point--sadly this is more than twice its per capita growth for that year. But the debt burden exacts another price, which may be even higher than the drain of resources out of the country: it provides the means by which the IMF is able to impose the conditions of its structural adjustment programs on these desperately poor countries.

Any debt relief that is tied to structural adjustment, or other conditionality imposed by the IMF--as it is in the HIPC initiative--could very well cause more economic harm than good to the recipients. Debt relief should be granted outside the reach of this institution, preferably without conditions. Moreover, the role of the Fund in Africa and developing countries generally, and especially its control over major economic decisions, should be drastically reduced. Any efforts to provide additional funding or authority to the IMF, before the institution has been fundamentally reformed, would be counter-productive.

Full Report:

http://www.preamble.org/IMFinAfrica.htm

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