Promises, Promises…

April 28, 2009

Well, many of us raised an eyebrow when the G20 “comitted” itself to capitalizing the International Monetary Fund to the tune of $500 billion, with $250 billion of “special drawing rights” on the side.

It now looks like that isn’t going to happen any time soon, which is both a good and a bad thing. The depredations of the IMF will be minimized but the half-arsed “solutions” being peddled by the world’s leaders to the ongoing economic crisis are falling apart.

From the Guardian:

At the London Summit, the G20 agreed a $500bn boost to the resources available to the IMF for fire-fighting in emerging economies and a $250bn increase in its special drawing rights, which allow member countries to borrow from each other’s foreign currency reserves. Neither commitment was met when the IMF’s 24-strong steering committee met in Washington on Saturday.

The world’s finance ministers have slapped down their superiors, who probably calculated that this would happen, and would be relatively unnoticed. Meanwhile, the IMF is accusing governments around the world of lying to their people about the state of their economies:

Asked whether Alistair Darling’s budget forecasts were over-optimistic, [IMF managing director Dominic] Strauss-Kahn refused to be drawn. The IMF said that the UK economy would contract by 4.1% this year, and 0.4% next year – worse than the chancellor expects.

“Most governments’ forecasts are better than ours. Part of the recovery relies on confidence and it is absolutely normal that governments all over the world will try to rebuild confidence in looking at the upper part of the range rather than the lower bound.”

Of course, the IMF has long been a foe of social justice advocates around the world due to the economic dogma that it pushes upon vulnerable societies.  For instance, a report from the Global Campaign for Education out soon is set to argue that since the financial crisis erupted, the IMF has continued to impose severe “conditionalities” on poorer nations that are crippling efforts to get more children into school.

Instead of reforming the staff and ideas that lie behind its activity, the IMF is quibbling over whether Belgium should have a seat on its governing council. Countries that contribute little to the Fund will be marginalized and voiceless regardless of how this round of “reform” works out, meaning that the chance of a realignment of how the Fund thinks and acts is vanishingly remote.

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