Is IMF's cure worse than the disease?
The International Monetary Fund (IMF), being the lender of last resort for countries in balance-of-payments crisis or in danger of default, almost always ties its bailouts to excessive austerity measures. Its loans are tied, to use IMF jargon, to "structural adjustment programmes" and "conditionality". These programmes centre on raising taxes and/or spurring tax rate reductions, balancing the budget at all costs, devaluing the currency and increasing interest rates. Such anti-growth policies, delivered in line with IMF diktat, have been shown in the majority of cases to have actually increased the country's dependence on the IMF over time. Just think of what has happened in Argentina, Pakistan, Ecuador, Egypt or Ghana. Since 1980, the conditionality-induced structural adjustment programmes (SAPs) have become a major part of the standard crisis-management and post-crisis economic reform toolkit. According to the IMF, these reforms aim at restoring or mainta...