what are the bad effects of IMF on poor countries?

Answer 1

WASHINGTON -- The World Bank and International Monetary Fund (IMF) are preventing foreign aid from reaching HIV/AIDS programs in the world's poorest countries, according to an assessment appearing in a leading medical journal.

The matter ''reveals the dark underside of the industrialized world's grand rhetoric about improving the health of the poor,'' say Gorik Ooms of the international relief organization Doctors Without Borders and Ted Schrecker of the University of Ottawa in an article in the current issue of The Lancet.

In order to receive debt relief, each of sub-Saharan Africa's 32 most heavily indebted poor countries (also known as HIPCs) must win bank and fund approval for a poverty reduction strategy that includes a budget projection indicating spending targets across various sectors of the government's budget.

In some countries, these targets ''have functioned, at least temporarily, as health-spending ceilings: the requirements of the IMF appear to mean that countries must include the value of all new donor funding received for initiatives such as scaling-up delivery of antiretroviral treatment'' against HIV/AIDS, state the authors, who say they have encountered the problem in Mozambique and Uganda since around 2001.

In other words, ''if a sector receives any new funds that were not initially budgeted for, it forfeits a similar amount from the government coffers,'' they add, citing an earlier news item in The Lancet.

''Such expenditure ceilings create an obvious disincentive for external funders to offer financing that is desperately needed for such interventions,'' Ooms and Schrecker add in their article, which appears in the journal's May 21 edition.

In the case of Uganda, the authors say, the IMF said in September 2004 that the government in Kampala had rejected no HIV/AIDS funding because of expenditure ceilings. However, they add, only $18.6 million of $201 million approved for the East African country were disbursed by the Global Fund to Fight AIDS, Tuberculosis and Malaria.

The bank and fund could not be reached for comment Monday. As the authors acknowledge, however, the ceilings are set because the IMF and finance ministries worry that ''the rapid inflow of foreign exchange associated with increased aid receipts can drive up the value of the recipient country's currency.''

In turn, this could result in an increase in the price of the country's exports, which would undermine its competitiveness.

But the HIV/AIDS pandemic merits a rethink of this approach, the authors say.

First, they cite a 2004 report from the U.N. AIDS agency, UNAIDS, that said ''the short-term inflationary effects of increased and additional resources applied in tackling the HIV epidemic pale in comparison with what will be the long-term effects of half-hearted responses on the economies of hard-hit countries. AIDS is an exceptional disease; it requires an exceptional response.''

Second, they say that ''in many developing countries inflows of development assistance are dwarfed by outflows of funds to repay external debt.''

Existing debt-relief initiatives will eliminate only half of the creditors' claims that hang over the world's poorest economies, say Ooms and Schrecker, ''meaning that without substantial increases in development assistance their ability to make long-term budgetary commitments to improved health will remain fragile and vulnerable to the vagaries of export markets for their products.''

James Wolfensohn, the World Bank's outgoing president, last week said he regretted he was unable to mobilize world leaders and his own organization faster to tackle HIV/AIDS after he took over at the bank in 1995.

''Somehow the penny hadn't dropped,'' Wolfensohn told a bank conference here.

The global pandemic has killed nearly 22 million people since the 1970s, according to UNAIDS. It has laid waste to entire economies by decimating the work force and leaving entire communities populated only by the very old and very young.

Since 1985, more than seven million farmers have died of AIDS in the 27 most affected countries, according to the U.N. Food and Agriculture Organization.

''This was not just another malady. This was something that was really at the whole core of human development. And it was at the whole core of human tragedy for so many people but this was not just a disease, this was a human tragedy and that it could be averted and that it could be treated,'' Wolfensohn added, according to a transcript of his remarks provided by kaisernetwork.org, a unit of Henry J. Kaiser Family Foundation, a private charity.

Wolfensohn, who was appointed by then-U.S. President Bill Clinton, steps down at the end of the month and will be replaced by Paul Wolfowitz, the U.S. deputy defense secretary.

Answer 2

http://www.globalexchange.org/campaigns/wbimf/statesOfUnrest.html