The world is currently facing a “polycrisis” with multiple dire crises such as climate, hunger, energy, debt, and development occurring simultaneously. The response from international organizations like the IMF and World Bank to these crises is being scrutinized, especially in light of recent events in Egypt and Kenya where austerity measures imposed as conditions for loans have sparked protests.
The IMF’s imposition of surcharges on its most indebted borrowers is making the situation worse by adding unnecessary financial burdens on already struggling countries. The rationale provided by the IMF for these surcharges, such as discouraging unnecessary loans, is debunked by the fact that more countries are being forced to pay these fees. The surcharges also have a procyclical effect, worsening economic downturns during crises.
Countries like Egypt, which are already grappling with a debt crisis exacerbated by IMF loans, are being forced to implement austerity measures that impact their populations, including quadrupling the price of subsidised bread and causing price hikes in essential medicines. This has led to social unrest and discontent among the population.
The IMF’s insistence on continuing to impose surcharges on countries like Egypt and the potential for Morocco to face similar problems in the future highlights the need for a reevaluation of the IMF’s policies. The current approach is not only counterproductive but also hinders countries’ ability to achieve Sustainable Development Goals and exacerbates social unrest.
Rich countries have the power to demand change from the IMF and put an end to policies that disproportionately affect the poor and working class. By supporting an end to surcharges and austerity measures, there is hope for a better future for countries grappling with the ongoing polycrisis.
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