It is the debate of the century on the issue of the right policy format to bring about change, development that is beneficial to the greatest number, helping to reduce poverty fast, and protective of human rights.
These key goals are enshrined in the United Nations Sustainable Development Goals format.
In an illustrative event recently at World Bank-IMF headquarters in Washington, a UN agency, the United Nations Human Rights Council, unveiled a report where the agency’s consultant on the report, Dr. Alfred de Zayas was embarrassingly critical of multilateral financial institutions, especially the International Monetary Fund.
In a ringing presentation he said that IMF policies were undermining human rights and development goals. He underlined that in nations facing poverty and health crises the global lender’s conditions on support can weaken social spending.
The consultant said that this orientation hinders countries’ respect for human rights as it also increases unemployment, lowering labor standards and harming public health and the environment.
He emphasized that the human rights dimension in lending can no longer be ignored, noting embarrassingly that lending conditions of the IMF “sometimes go against the aims of the United Nations, not just in the field of human rights but also in achieving the Sustainable Development Goals.” It is hard to see assailing the IMF being more strongly said, even with the late Nyerere.
Those who know the history of the IMF can rather easily locate the source of the problem, namely in the level of resources that the IMF has been entrusted with, compared to the World Bank for instance.
Interestingly, if the two could change places, the world would become a better place in an instant, but assuming that the other countries would comply. The idea is that the IMF has at most around ten percent of the value of world trade to operate with (the design given at the start) and the US and allies have ensured that the US retains 25% of its voting power.
The US follows a market model of economy which has no state companies that conduct any commerce, and by and large it is regularly the world’s most efficient economy, among the larger countries.
When it comes to governance, the US has the most rigorous checks and balances the world can imagine, and has virtually a segment of itself that reflects any country in the world. It is a haven of emigration.
UN experts as it was the case for Mwalimu Nyerere would have wished for a situation where the IMF has comparable funds to the World Bank, which by some estimates has up to ten times the financial capacity of the IMF, but arguably it is the IMF which makes the difference in global transformation, not the World Bank.
The IMF with its 270bn US dollars has enabled transformation of Eastern Europe and solved countless bank crises, while the World Bank, running a fund lending without collateral to government agencies, has little to show for its trillions of dollars.
The IMF momentarily pushes welfare off track when profound reforms are needed, but countries come off leaner and more dynamic, while the World Bank keeps lethargic state companies in place, with elites igniting wars to rule over the World Bank-tailored rot and inefficiency. There is more to this than meets the eye.