Not only is the overarching criticism incorrect, notes Lindsey, but
the examples that Stiglitz provides of how market fundamentalism led
the IMF astray are vastly over-blown. According to Stiglitz, Russia's
difficult transition from communism, worsening poverty in Africa, the
collapse of Argentina's economy--these all are manifestations of what
happens when the IMF's market fundamentalists get their way. The fact
is that there are all very complex situations on which there was, and
remains to this day, plenty of disagreement about the right way to do
things and who is to blame for things that have gone wrong. The IMF
deserves its share of the blame, but so do many others.
Why is the IMF forcing indebted countries to lower public spending for growth? The IMF alleges that by reducing public spending, it helps African countries achieve greater growth, but in Africa, where there is a infrastructure deficit, I don't see how it can help. Moreover, reducing subsidies to local farmers will increase export deficits because local farmers are unable to compete. Is the IMF's main goal to help rich creditors? Because it would explain why African countries have very few numbers of votes within the institution.
It is claimed that conditionalities retard social stability and hence
inhibit the stated goals of the IMF, while Structural Adjustment
Programs lead to an increase in poverty in recipient countries.
The IMF sometimes advocates "austerity programmes", cutting public
spending and increasing taxes even when the economy is weak, to bring
budgets closer to a balance, thus reducing budget deficits. Countries
are often advised to lower their corporate tax rate. In Globalization
and Its Discontents, Joseph E. Stiglitz, former chief economist and
senior vice-president at the World Bank, criticises these
policies. He argues that by converting to a more monetarist
approach, the purpose of the fund is no longer valid, as it was
designed to provide funds for countries to carry out Keynesian
reflations, and that the IMF "was not participating in a conspiracy,
but it was reflecting the interests and ideology of the Western
If they want to help African countries, why didn't they offer low-interest loans to Africa for massive infrastructure spending?