Marrakech, MOROCCO – The International Monetary Fund (IMF) has come under fire from Oxfam International, which claims that the IMF’s austerity-driven loan programs have been accompanied by promises of ‘social spending floors’ to protect government expenditure on public services. However, Oxfam’s recent analysis, released on Monday ahead of the World Bank and IMF Annual Meetings in Marrakech, reveals that these safeguards are often a facade for deeper austerity measures.
According to Oxfam, for every $1 the IMF encourages governments to allocate to public services, it mandates six times more in cuts through austerity measures. Oxfam International’s interim Executive Director, Amitabh Behar, criticized this approach, stating, “The IMF is forcing poorer countries into a starvation diet of spending cuts, driving up inequality and suffering.”
Two prominent issues are at the forefront of the Annual Meetings: the debt crisis and the urgent need for increased resources to support sustainable development, climate adaptation, and poverty alleviation in low- and middle-income countries.
Oxfam argues that the proposed solutions from the World Bank, IMF, and their major shareholders will perpetuate the problem rather than solve it. Behar stated, “Their answer to the debt crisis is more austerity, and their answer to the financing gap is more loans. True win-win solutions, such as taxing the wealthy fairly, are being left unexplored.”
Oxfam’s analysis also revealed that over half (57%) of the world’s poorest countries, home to 2.4 billion people, are set to reduce public spending by a total of $229 billion over the next five years. Low- and lower-middle-income countries, under current conditions, will be compelled to allocate nearly half a billion dollars every day for interest and debt repayments until 2029. This situation has led to entire countries facing bankruptcy, with the poorest nations now spending four times more on servicing debts to affluent creditors than on healthcare.
Despite the World Bank’s acknowledgment of a significant increase in global inequality and poverty since World War II, the institution lacks a clear strategy to reduce inequality.
In the Middle East and North Africa, where the Annual Meetings are hosted, Oxfam estimated that the wealthiest 0.05% of the population witnessed their wealth surge by 75%, from $1.7 trillion in 2019 to nearly $3 trillion by the end of 2022. The region’s 23 billionaires, Oxfam added, have accumulated more wealth in the last three years than in the entire preceding decade.
Oxfam proposed a five percent wealth tax on fortunes exceeding $5 million, which could enable countries like Egypt to double healthcare spending, Jordan to double the education budget, Lebanon to increase investment in healthcare and education sevenfold, and Morocco to raise $1.22 billion, particularly important in the wake of a devastating earthquake.
Behar criticized austerity as an ideological concept that has inflicted immeasurable harm and questioned who would deliver healthcare and save lives when nurses and doctors in public hospitals lose their jobs. He urged the IMF and the World Bank to support governments in pursuing economic policies that redistribute income and invest in public goods to bridge the wealth gap between the affluent and the rest of society. ZIJ/10/10/2023