In many developing countries, both fiscal and monetary
policies are restricted by the designs and stipulations of the Bretton Woods
institutions, including the International Monetary Fund (IMF), World Bank, and
the World Trade Organization. Moreover, economic policy is guided de facto by
aid and international aid institutions. Worse still, the capital expenditures
category in those governments’ budgets, which underpins any future domestic
development effort, is dependent upon and relegated to aid funds, which
fluctuate and hinge upon the willingness and mode(s) of the donor economies,
and, thus, derogate development.
اضافة اعلان
The mounting public debt, which results from being unable to
grow economic productivity and development, has proven time and again to be
extremely onerous as governments become unable to repay it. Given that the debt
of countries will have to be paid back with interest, higher taxes and fees
await the future generations of such nations. Consequently, the paralysis of
policy (fiscal and monetary) and present denigration of the economy go on to
generate a dismal future economy. A new paradigm is therefore needed.
The mounting public debt, which results from being unable to grow economic productivity and development, has proven time and again to be extremely onerous as governments become unable to repay it.
In the recently held annual spring meetings of the IMF and
World Bank, some participants asked for a new model between the wealthy and
less wealthy countries. Many developing countries that suffered from despotic
regimes, cronyism, and corruption had borrowed from these institutions and
misspent the funds on non-development-related activities. The funds may have
helped the continuance of many dictatorial regimes and exacerbated the lack of
welfare. However, the countries, not only the governments but the people within
them as well, have become saddled with mounting debt whose burden is passed
from one generation to the next.
If one is to accept this type of thinking, two immediate
thoughts come to mind:
First, the debts of many economies and the interest on them
are hardly a burden to the wealthy nations. Do they need to charge interest,
given that in general, they have not aided the development of these nations but
assisted in safeguarding despotism? Can they not forgive such payments and
enable the people of these countries some reprieve since the majority in these
countries had no say in accumulating the debt and squandering it? They can, and
the world would be a better place as welfare rises among nations; as Adam
Smith, the father of modern economics once said, “As a rich man is likely to be
a better customer to the industrious people in his neighborhood than a poor, so
is likewise a rich nation.”
First, the debts of many economies and their interest are hardly a burden to the wealthy nations. Do they need to charge interest, given that, in general, they have not aided the development of these nations but assisted in safeguarding despotism?
Second, the world has become, with the advances in technology
and mobility, exceedingly entangled. Pandemics, environmental threats such as
global warming, refugees and refugee influx, globalization, and
de-globalization, have shown the need to revise the old paradigm that was until
recently used by donors. COVID-19 crossed countries. Global warming threatens
all. Political instability in the south, may lead to migrations and refugees in
the north.
The world is interconnected and those who have must aid
those who don’t, not only through funds that may or may not benefit those
economies but also through the encouragement of more democratic institutions
and productivity-enhancing paradigms. They should do so, not out of generosity
or some altruistic drive; no, because the world is shared by all, they should
act out of self-interest.
Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs.
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