Tuesday, June 18, 2024

IMF Provides No Solution to the Ongoing Debt Crisis in Poorer Nations, Says Socialist Party President Fred M’membe

Share

The International Monetary Fund (IMF) has no credible pathway out of the debt crisis faced by poorer nations, according to Fred M’membe, President of the Socialist Party. In an article published on May 13, 2023, M’membe argued that the IMF’s solution of “fiscal consolidation and growth-enhancing supply-side reforms” would only lead to more austerity and increased debt burdens for these countries.

M’membe cited a recent IMF report that warned of a banking crisis in emerging markets, where up to 29% of banks could breach capital requirements. The context of high debt, inflation, and low growth rates could lead to the collapse of a third of the banks in poorer nations, according to the report.

The IMF’s solution, M’membe argued, would only worsen the situation. He noted that the IMF report urged central banks to “avoid a de-anchoring of inflation expectations” and to ensure that “the tightening of financial conditions needs to be calibrated carefully, to aim at avoiding disorderly market conditions that could put financial stability unduly at risk”. This focus on keeping “the market” happy ignores the downward spiral of living conditions for the vast majority of people on the planet, M’membe said.

M’membe also criticized the IMF’s stance on government attempts to limit price increases through price controls, subsidies, or tax cuts, which it said would be “costly to the budget and ultimately ineffective”. The IMF’s solution of more austerity and debt, according to M’membe, would only lead to the poorer nations borrowing more to provide even low levels of relief to their citizens, thereby perpetuating the cycle of debt and poverty.

M’membe called for a new approach to address the debt crisis faced by poorer nations. He argued that governments should focus on long-term infrastructure projects that could eventually pay for themselves by increasing growth rates and allowing these countries to exit from a permanent debt crisis. The IMF’s current approach, he said, is a “surrender to the prevailing reality” and offers no viable exit from the debt crisis faced by poorer nations.

5 COMMENTS

  1. Very wise words.Just because you use two condoms does not make you wiser or safer than us using one condom. When the sun rises the monkeys walk backwards because life is a journey. Always remember that

  2. He doesn’t believe in chance, though he seems to be waiting on the lucky star.

    They lied to us that IMF will help reform our debt. We are in do nothing mode, hands akimbo, waiting for IMF to give us a victory signal when they triumph. They even refused us to engage our creditors for bilateral talks. UPND and their masters overrate themselves and underrate China’s influence.

  3. Perhaps zambians will realise the problems the previous Gov left us
    Even our granchildren will struggle to pay it off
    Unfortunately the semi literate that constitute 75% of the polulation will listen to the garbage thrown out by opposition

    1
    1

Comments are closed.

Read more

Local News

Discover more from Lusaka Times-Zambia's Leading Online News Site - LusakaTimes.com

Subscribe now to keep reading and get access to the full archive.

Continue reading