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Last Updated: Tuesday, 30 December, 2003, 21:43 GMT
IMF 'not always to blame'
By Michael Blastland
Producer, The Poor Wars

How do developed countries treat the world's poorest? Will free trade, the IMF, and the World Bank lift millions out of poverty or serve to exploit them? The BBC Radio 4 series The Poor Wars investigates.

In a primary school in Tanzania, we listened to a class of children in a song of praise to the school and its improved facilities, made possible by Western aid.

This was no flagship school, it was not selected for us by the International Monetary Fund or World Bank.

If it had not come to light in the making of our documentary, we might have doubted it ourselves.

How do you reconcile the IMF and the World Bank's pariah reputation in some quarters with that effusive welcome for them in Tanzania?

Here's the headmistress: "Of course, we are grateful to the World Bank and IMF. They have brought hope."

Here's an 11-year-old student: "They brought books, they brought new buildings, they refurbished buildings, they brought new text books."

And here's the chair of the parents' committee who told us of a large improvement in school enrolment: "Viva IMF!"

Hospital bills

It has been easy for critics to lay developing world deaths at the door of the World Bank, but time and again we found the story is not nearly so simple.

We didn't have to scratch far below the surface to find a more complicated story
In Ghana, we went to find out about a health system that charges for treatment and drugs and which is blamed by some for the death of Ghana's poorest when they cannot pay the bills.

"No money, you die," we were told.

The policy of user charges - "cash-and-carry" as they call it - is often blamed on the World Bank.

We didn't have to scratch far below the surface to find a more complicated story.

A Ghanaian woman draws water from a well
The World Bank invested in Ghana's health and water systems

It turned out that many hospitals and doctors liked and had supported the system because it gave them direct control of the money from fees paid by patients.

In asking critics of the system for alternatives at the time when it was introduced in the 1980s, no-one could suggest any.

The health service was so broke it struggled to provide drugs at all.

Direct charging seemed the only way of having any health service to speak of.

Russia's open markets

In Russia, we looked at the policy of getting rid of exchange controls, known as capital market liberalisation.

Here, it was said, was another IMF policy which let a flood of hot money into the country from Western investors.

When the economy took a turn for the worse in 1998, there was a calamitous pouring out again of both Western money and the cash of newly enriched Russian oligarchs.

This seriously worsened an already desperate situation.

You might remember the news reports of pensioners and workers on the streets, unpaid and hungry for weeks.

Food queues were common in Russian cities in the early 1990s
Russian politicians took the easy route, against the advice of their own bankers, and opened up the flow of foreign money

Was the IMF to blame? Absolutely, say critics. It was a policy forced on Russia to serve the interests of Western speculators.

But when we asked both Russians and academics in the UK who have studied the Russian case, we were told to take a closer look.

Yes, the IMF did support capital market liberalisation, they said, but the Russians liked it too.

Why? Because for a Russian Government struggling to raise funds, it was far easier to get them from abroad, from Western investors, than it was to confront Russian oligarchs with demands for more taxes.

The IMF was also pressing Russia to sort out its taxes. But Russian politicians took the easy route, against the advice of their own bankers, and opened up the flow of foreign money.

Of course, what poured in could then pour out again. Western conspiracy? No.

Privatisation under fire

Yes, the IMF and World Bank have made serious mistakes.

The former chief economist of the IMF, Ken Rogoff, describes the policy of privatisation strongly supported by the IMF as "catastrophic" in some countries.

At the IMF, an independent evaluation office has been examining the record for the first time.

It has been found that countries receiving IMF help have had to go back time and again for more loans, that austerity is sometimes worse than it needed to be.

We found honest people struggling with enormous problems... and being blamed for it

If the policies were working, this ought not to be so. And when things go wrong, it's often the poorest who suffer most.

It is dull to say that IMF and World Bank policy has to be examined case by case, that there is no easy moral or economic judgment to be made. But it is the truth.

We did not discover evil organizations. We found honest people struggling with enormous problems, sometimes getting it wrong, often doing the right but unpopular thing, telling governments the harsh home truths and being blamed for it.

But if that tempts you to feel complacent, the next programme will look at some of the ways the rich world really does hurt the poor.

The second part of The Poor Wars presented by Evan Davis will be broadcast on Radio 4 on Sunday, 11 January at 1700GMT.

The Poor Wars: Programme 1
The IMF and the World Bank

The Poor Wars: Programme 2
Unfair trading practices

Does trade exploit the poor?
06 Jan 04  |  Business
Country profile: Tanzania
08 Nov 03  |  Country profiles
Country profile: Ghana
31 Oct 03  |  Country profiles
Country profile: Russia
09 Dec 03  |  Country profiles

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