The IMF has been the economic policy guru, overseer and guide in Jordan since 1989.
However, it has also been the subject of heavy criticism from the economic
profession worldwide, including some of the profession’s top scholars, such as
Joseph Stiglitz.
اضافة اعلان
It is important
to establish whether the IMF’s paradigm and policies have been pro-poor or not,
and whether the status of women, among the most vulnerable groups, in terms of
economic empowerment has gained from these programs.
The so-called
reform programs of the IMF make dormant any government involvement that is
aimed at encouraging economic growth; it is the case for Jordan, where the
economy has been in a 12-year depression. Indeed, under the IMF’s ready-made
doctrines, the fiscal policy is one of austerity (cut spending, increase taxes
and tax revenues, and reduce subsidies).
The reduction in
subsidies is supported by the ethos of efficiency: general subsidies are
wasteful and should be replaced by direct and better focused spending.
While the
efficiency doctrine makes sense outwardly, its underlying premise is that the
governments of developing countries, including Jordan, have complete and
prefect data regarding those in need of the subsidy, which is a bogus
underpinning. The governments do not know who and where the poor are, and do
not have current information regarding their precise needs. Furthermore, both
the IMF and the World Bank know fully well how inefficient and ineffective the
social safety nets are.
With the lack of
data and the spread of bureaucratic hurdles, the so-called focused subsidies
may do more harm than good to the poor and vulnerable. Furthermore, the
efficiency argument, espoused by its propagandists, tends to ignore all the
other inefficiencies of the government; it is as if the public sector has
become efficient everywhere and all that remains to be done is fixing the
subsidies.
When it comes to
monetary policy, the IMF endorses increasing the interest rates to stabilize
currencies, even though there are other means to stabilize currencies. Never
mind that raising the interest rate makes it more costly to consume, or invest.
Consequently, for a central bank to gain the praise and accolades of the IMF,
it is to match the interest rate of the US Federal reserve, watch its reserves,
and do nothing else.
Austerity measures, such as cutting subsidies, substituting universal social protection systems with social safety nets, reducing public spending, and increasing indirect taxation worsen structural inequality and ultimately have disproportionate effects on women.
By rendering both
the fiscal and monetary policies inactive, the IMF strips the government of
whatever tools it may have to spur economic growth, thus emphasizing Adam
Smith’s naïve and reckless invisible hand principle (leave the market alone, it
will correct itself), which totally ignores short-term responses, especially in
the poor South, where people cannot bear the wait in hunger.
Interestingly,
research shows that IMF loans and their associated “reform” programs have not
only failed to include gender properly, they have also weakened the status of
women in the economy.
Austerity
measures, such as cutting subsidies, substituting universal social protection
systems with social safety nets, reducing public spending, and increasing
indirect taxation worsen structural inequality and ultimately have
disproportionate effects on women.
Furthermore, the
IMF consistently promoted an increase in indirect taxes, like the general sales
tax (GST) or a removal of GST exemptions on basic goods. Such measures increase
economic and gender inequalities.
It is definitely
appropriate and timely that donor countries and organizations tackle the
adverse impact of the IMF programs on gender and vulnerable groups. Not doing
so may make the IMF inadvertently encourage disparities and more poverty in its
client countries.
Yusuf Mansur is CEO of the Envision Consulting Group and
former minister of state for economic affairs.
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Jordan News
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