http://allafrica.com/stories/200303240605.html

War Eclipses Crucial IMF Report

Some quotes from the article on AllAfrica.com

For the first time the IMF has admitted that forcing developing countries to open their markets to foreign investors could increase the risk of financial crises. That has been said before - but not by IMF - and that is not a sweet story given the way we rush to the IMF to get economic prescriptions.

The report says that in some cases the process of liberalisation - which it imposed on us - has been accompanied "by increased vulnerability to crises", an issue when raised previously by advocacy groups was dismissed with a wave of the hand.

And to twist the knife, the IMF report says there is "little evidence" that its policies on liberalisation encourage economic growth in poor countries.

But the major question is: were we deceived into liberalisation programmes and where do we go from here? The damage, for us, is already done and the warnings are coming too late.... countries are advised to achieve an economic balance by creating strong domestic financial institutions.

Now how do we create such strong institutions when they have all collapsed as a result of opening our markets?

The privatisation schemes that were advocated by IMF stifled economic democracy and people had little voice in determining how national assets were valued and handled. These policies exposed people to risk and the most vulnerable people were left with no access to basics like water, food, and health care.

Subsidy programmes for impoverished people were eliminated, and basics became unaffordable. But what do we get, after all that? The same IMF now turns again to tell us that it has learned that that policy could have been wrong in the first place.

It is time to understand that the so-called integration into the global economy is a hoax ... agricultural production (for food and other domestic needs) is in crisis; public services have been severely weakened

But once the focus shifts from Iraqi war, we still have a bone to pick with IMF. We sure will.

Great (IMF) famine of 2003

what happens when you 'eliminate subsidies for poor people' and force everyone to rely on 'market forces'. You get the biggest famine ever developing in AFrica (40 million dwarfing the previous Ethiopian famine). Furthermore when food reserves must be 'privatized' countries can no longer ride out the famines using social policies as they have done for generations past

http://www.awitness.org/journal/starvation_myths.html

Reuters

IMF - no clear proof globalization helps the poor

Reuters, 03.17.03, 6:15 PM ET

By Anna Willard

WASHINGTON, March 17 (Reuters) - The International Monetary Fund sounded more like its critics on Monday when it admitted there is little evidence globalization is helping poor countries.

The IMF, which has often been the target of violent anti-globalization protests, in a new study found economic integration may actually increase the risk of financial crisis in the developing world.

"Theoretical models" show that financial integration can increase economic growth in developing countries, the research found, but in practice it is difficult to prove this link.

"In other words, if financial integration has a positive effect on growth, there is as yet no clear and robust empirical proof that the effect is quantitatively significant," the new report said.

An overview of the study, which was put together by four researchers including the fund's chief economist Kenneth Rogoff, describes the conclusions as "sobering".

The IMF often recommends that poor countries open their economies to foreign investors and free-market policies. But critics say those policies damage vulnerable economies, raising poverty rates and destroying the environment.

The fund's report found a small group of developing countries have picked up the "lion's share" of capital flows as financial links between countries have become more integrated. Nations with good economic policies are more likely to reap the most benefits and steer clear of financial crisis.

HIGHER RISK OF CRISES

International financial integration should also help countries to reduce economic volatility, the study said, but in reality this has not happened.

"Indeed, the process of capital account liberalization appears to have been accompanied in some cases by increased vulnerability to crises," the report said.

"Globalization has heightened these risks since cross-country financial linkages amplify the effects of various shocks and transmit them more quickly across national borders."

In the last 10 years, developing countries from Thailand and Russia to Argentina, have seen their economies collapse, even though many of them were trying to follow IMF-prescribed open market policies.

CAUTION NEEDED

The paper concludes that countries must carefully balance integration in the world economy with strong economic policies and the building of strong institutions, including banks and regulatory systems.

"The evidence presented in this paper suggests that financial integration should be approached cautiously, with good institutions and macroeconomic frameworks viewed as important," the IMF said.

But the report was unable to come up with a "clear road map" for how this should be done. Such questions should be tackled on a case-by-case basis, the IMF concluded.

Copyright 2003, Reuters News Service

http://www.imf.org/external/np/res/docs/2003/031703.htm