The consequences of getting aid from IMF/ World Bank: Problems for the Third World

It seems the rhetoric of poverty alleviation and debt relief programs have failed to give the poor what they really need. Despite many structural adjustment programs (SAPs) for the developing Asian countries, IMF has remained unable to cater destitution from the South Asian countries. From the East Asian crises till today, IMF has remained unable to maintain International financial stability. However the way IMF was criticized in the 1990s is not seen today for the reason most of the aid acquiring countries are washed away in liquidity. The rest agrees to work with IMF with an aim to alleviate poverty. The fact cannot be ignored that IMF is only concerned about "International" financial stability by considerably heating up its interest rate policies in favour of deepening crises of South Asian economies.

IMF Assistance or long-lasting debt policies:

Under the name of financial assistance, IMF provides long term debts on certain conditions in which a poor country is limited by the policies to get financial aid only from the IMF/World Bank. This is the reason for why today South Asian countries owe greater debt than when they first accepted the aid.

Donation of SAPs:

It is through the financing of big construction projects for which IMF is famous for, that South Asian economies are able to 'prosper' their nations by constructing such economic development. This development is an obvious result of the austere policies of IMF for which no one suffers, but the poor working class.

Favourable conditions for Multinationals and Elites:

There are enormous opportunities for the corporations and upper class due to SAPs which has the following limitations for working class:

Social Expenditures are minimized in order to repay more and more debts on education, health and medical services. As a result the country is confronted to joblessness, illiteracy, and social and environmental insecurity. Budgets are absorbed by cutting down payrolls. Financial regulations are designed in such a manner so that more and more cash is frozen up resulting in low labour wage and job insecurity. Sky-high Interest Rates weakening financial position of banks are followed with uncertainty for the financial institutions are no doubt able to attract investors but at the same time investors are free to drag their investment anytime they want. High interest rates cause companies to be bankrupt, exploited banking system and increased inflation. As a result the capital is blocked and small investors like farmers or land owners are unable to get capital. In case somehow a working class citizen is able to get the capital, the interest rate acts none other than a vampire.

Resources' ownership easily gets transferred into foreign hands. However in some countries where obstructions take place by labour laws, Government does not hesitate to show the corporations in loss and deficit. Privatization is encouraged by the Governments which then give way to multinationals.

Currency devaluation takes place.

Tariffs are eliminated in order to support and promote foreign imports and suppliers. In this way the Government encourages foreign imports by eliminating taxes. Not only it pleases elites who then have the opportunity to buy foreign made items on cheaper prices, but also it attracts the working class who have easy access to imported products in the domestic labour market. However the impact on the domestic producers is poor, for they are confronted to a strong competition against foreign suppliers. As a result, domestic businesses are closed.

Raising cost of everyday items, not only frustrates the working class, but also has a negative impact on destitution. Besides, threat to civil war is always there.

Debt in the third world nations has not been able to balance economic financial stability not even heel the poor people who are already confronted to joblessness and poverty. In such conditions the third world states must take the onus to consider about their frail people, and develop strategies to avoid the curse of owing debt instead of being abducted by high interest.