The World Bank And International Monetary Fund Essays

The World Bank And International Monetary Fund Essays

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The World Bank and International Monetary Fund (IMF) are two of the most powerful international financial institutions in the world. They are the major sources of lending to African countries, and use the loans they provide as leverage to prescribe policies and dictate major changes in the economies of these countries.
The Problems That the World Bank and IMF Created for Zimbabwe
Zimbabwe had agreements with the World Bank in the later 1980s when it signed an arrangement with the IMF in exchange for a $484 million loan. In order to get the loan, Zimbabwe had to accepted the conditions required by the IMF of the policy changes, which including Zimbabwe to “cut its fiscal deficit, tax rate reductions, the deregulation of financial markets, to dismantle protections for the manufacturing sector and “deregulate” the labor market, lowering the minimum wage and eliminating certain guarantees of employment security” .
IMF’F enforced the policies on removal of the protections for the manufacturing sector, trade liberalization, and reduced government spending combined with a drought that happened in 1992, led to Zimbabwean economy into a recession, which was a great contrast comparing to Zimbabwe’s economic growth during the 1980s, before the implementation of structural adjustment imposed by IMF based on the agreements for exchanging the loan. In addition, reduced protection of the manufacturing sector and the reduction in public spending and labor market deregulation caused real wages dropping and a higher unemployment rate.
In order to meet the IMF’s fiscal targets for adjustment, Zimbabwe had to cut down the expenditures on health care, which led to the quality of public health care dropped. As a result of the wage cuts, many doctors ...


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...in the world, so some of the resources now spent on debt service could be reallocated to spend on vital needs such as health care and clean water.
Although the possibilities exist; the question is if these international financial institutions are willing to make these fundamental changes: To cut the number of constrained conditions that attached to their lending. To stop imposing their economic models and policies which may cause controversial to the borrower nations. To give the borrowing countries the flexibilities to spend the loan on the basic infrastructure and other crucial programs such as clean food, health care and education. To reduce the restrictions and make it possible for many poorest countries to have the access to the debt-relieve programs. To allow the borrowing governments to adjust their economic polies according to their own developing pace.




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