The World Bank, the Monetary Fund, and Poverty

The World Bank, the Monetary Fund, and Poverty

The harsh conditions imposed by both the International Monetary Fund (IMF) and the World Bank upon developing countries belie the concern with poverty expressed in the quotations above. The principle of “conditionality” under which the IMF makes loans available is applied regardless of the hardship it may inflict. Capital flight or “reverse resource flows” —the flow of capital out of, rather than into, developing countries—is disregarded even though well documented. Capital flight has greatly contributed to these countries’ foreign indebtedness and aggravated the scarcity of capital from which they have suffered. “Conditionality” means that the IMF’s terms must be accepted by the borrowing country. Although the IMF may not be the only lender, other (private or public) lenders will likely be guided by the IMF’s action; and important World Bank loan categories have been made subject to IMF conditionality.

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