Globalisation:International Monetary Fund:Policies
Policies
created in 1996 by the IMF and World Bank, the Heavily Indebted Poor Countries (HIPC) is an agreement between creditors to help the poorest and most indebted countries reduce their debt burden. Poor countries owe a combined debt of over $2 trillion to rich countries. The HIPC Initiative enables poor countries to focus on “building the policy and institutional foundation for sustainable development and poverty reduction.” Along with reducing debt, the Initiative reduces poverty, and helps a country’s fiscal and monetary performance.
HIPC is open to the poorest countries that meet the following requirements:
1. A per capita income below $785. 2. Eligibility for assistance from the World Bank’s International Development Association. 3. Have such high debt that they cannot sustain it even after applying debt relief devices. 4. A track reform of trying to reduce poverty and building economic growth.
[1] 26/2/08
The IMF also has a number of policies incorporated into the Structural Adjustment Policies (SAPs). These particular policies involve countries having to meet certain financial conditions in order to recieve loans.Eligibility for loans from the IMF requires governments to be in compliance with the IMF’s Structural Adjustment Programs (SAPs), which aim to reduce a government’s budget deficits through decreasing government expenditure. Among the conditions are increasing exports, devaluing overvalued currencies, trade liberalization, balancing budgets, price controls, privatization, and fighting corruption.
[2] 11/2/08
However the structural adjustment policies have been criticised due to the fact that the debts of the poorest countries have increased rather than decreased. Another possible criticism is that the structural adjustment policies are simply loans which are being added to the ever increasing debt which the poorest developing countries are accumulating.
