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June 20, 2018

IMF: Friend or Foe To Nigeria?

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The International Monetary Fund (IMF) emerged in 1944 (at the end of the Second World War) as a global financial institution charged with economic liberalization, to rebuild the war-devastated Europe. It was designed to salvage the economies of the world from the great depression of the post-war years, which was characterized by hunger and unemployment.

It was established to promote international economic co-operation and provide its member-countries with short term loans to enable them trade with other countries and achieve balance of payments.

From monitoring money exchange among the rich countries, the organization gradually expanded towards Third World states, by lending to poor countries to liberalize their economies. The IMF had since assumed the role of bailing out countries with financial crisis.

Unfortunately, IMF loans have always been hard on its deals, hence many debtor-countries, regard it as an economic vampire, which, once you swallow its hook, you will never recover. Once you collect the loan from IMF, you are forced to swallow a biter pill whether you like it or not. These harsh conditions, often referred to as Structural Adjustment Policies (SAPs) have simply turned the IMF into a global loan shark by the way they are applied. Nigeria’s currency is right now being devalued to meet with one of IMF criteria for the $3 billion loan the Buhari government has been pressurized to go for.

As a debtor-country we have to accept debt repayment under whatever terms IMF gives including cutting of spending on education and health, elimination of basic food and transport subsidies, devaluation of national currency to make exports cheaper, privatization of national assets and freezing of wages.

Nigeria’s first experience with IMF loan was in the mid 80s when the Babangida Administration, against public out-cry went ahead to accept the loan which consequently plunged our economy into a terrible condition and belt-tightening as a result of its Structural Adjustment Programme (SAP). The belt-tightening measures increased poverty, reduced Nigeria’s ability to develop strong domestic economy and allowed multi-national co-operations to exploit workers as well as our institutions.

An economic policy that insists on job cuts, shift from food production for local consumption to production of export crops destined for wealthy countries is certainly not a friendly one, How can IMF be a friend to Nigeria when it frequently advises our governments to attract foreign investors by weakening our labour laws – eliminating collective bargaining and suppressing wages and weakening the naira?

The wealthy countries (Germany, Japan, France, Britain and US) whose contributions to the funding of IMF help them to dominate its decisions always make sure that the poor countries remain indebted. This they do by putting the interests of their bankers, investors and corporations above the needs of the world’s poor majority. This explains the reason why the IMF, World Bank, multi-nationals and the West generally will never be on our side.

They depend on our resources to survive. The IMF makes sure that every time our currency is devalued, our standard of living will fall while the creditor-nations increasingly become empowered. It means with the same dollars, they can get more of our resources and our sweat. On our own part, it means that we have to work harder or give up more money to buy the same quantity of the items we bought from them yesterday.

What this translates to is that the IMF, which was originally designed to help countries with balance of payment challenges to survive, has become an economic vampire that enslaves any country that takes its loan. Once a country takes IMF loan, it is economically doomed. For this reason, it has become necessary to reconsider the relevance and mission of this organization. The present conditions for accessing its loans need serious revision. If not so, the IMF will ever remain a foe not a friend to debtor countries like Nigeria.

 


 

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