Bearing the Burden of IMF and World Bank Policies

Against the Workers: How IMF and World Bank Policies Undermine Labor Power and Rights

by Vincent Lloyd and Robert Weissman

After a decade of economic “reform” along lines advised by the International Monetary Fund (IMF) and World Bank, Argentina has plunged into a desperate economic crisis. The economy has been contracting for three years, unemployment is shooting up, and the country is on the brink of defaulting on its foreign debt payments. To avoid default, Argentina has negotiated for a new infusion of foreign funds to pay off the interest on old loans and obligations, and to forestall a pullout by foreign investors.

Traveling down that road took Argentina to the gatekeeper for such loans: the IMF. In August, the IMF agreed to provide a new $8 billion loan for Argentina, intended to forestall default. That followed a nearly $40 billion January bailout package with a $14 billion IMF loan as its centerpiece. MORE>>

Privatization Tidal Wave: IMF/World Bank Water Policies and the Price Paid by the Poor

by Sara Grusky

In July, the World Bank approved a new $110 million structural adjustment loan for Ghana. Before disbursing the loan, however, the Bank forced the government of Ghana to implement seven “prior actions,” including a requirement to “increase electricity and water tariffs by 96 percent and 95 percent, respectively, to cover operating costs.” The effort to attain “full cost recovery” is a prerequisite to privatization. Private companies want to operate systems where consumers meet the expenses of running the systems and pay enough for company profits, too.

Pressured by the World Bank, the government of Ghana plans to lease the Ghana Water Company to two as yet undetermined multinational water companies to provide urban water service. The World Bank included water privatization as one of many conditions that determined the extent of Ghana’s access to the portfolio of loans in the World Bank’s Country Assistance Strategy (CAS). MORE>>

Dubious Development: The World Bank’s Foray Into Private Sector Investment

By Charlie Cray

Traditionally known for lending money to governments, in recent years the World Bank has increasingly loaned to and invested directly in corporations doing business in developing countries. The International Finance Corporation (IFC) — the private sector lending arm of the bank — is now the fastest growing component of the World Bank Group. The IFC says its mission is to “promote private sector investment in developing countries, which will reduce poverty and improve people’s lives.” The idea is that strategic investments and interventions by the IFC can create jobs and spur sustained growth.“Sustained economic growth is essential for poverty reduction, and the private sector is the main engine of growth,” says Ludwina Joseph, a press officer with the IFC.

But critics charge that, as a profit-making concern, the IFC prioritizes the pursuit of profit over economic justice, social or environmental concerns. Rather than promote development and alleviate poverty, they say, the IFC uses taxpayer dollars to subsidize multinational corporations and businesses connected to local elites. Recently, the IFC has attempted to respond to claims of favoritism to big companies with new initiatives; but these new programs themselves raise a host of new questions about institutional accountability. MORE>>

Big Oil And The Bank: Clear And Present Danger

by Stephen Kretzmann

It was early June, in the sweltering heat of Nigeria’s oil capital, Port Harcourt, and the phone was ringing. The man on the other end said he was in town for only a few hours, that he was here representing the International Finance Corporation (IFC), and that he’d like to talk. It wasn’t hard for the staff of Environmental Right Action in Port Harcourt, Nigeria to figure out why he was calling.

Just two weeks before, Washington, D.C.-based nonprofits had revealed that the IFC, the World Bank’s private sector lending arm, was about to approve a $15 million loan which would ultimately benefit Royal Dutch Shell’s operations in Nigeria. Communities, and local environmental and human rights groups, were outraged. Shell is widely blamed in the Niger Delta for the death by hanging of writer/activist Ken Saro-Wiwa in 1995, as well as a host of other human rights and environmental problems associated with oil development. Even the IFC’s own internal documents recognized that association with Shell in Nigeria represented a “reputational risk” to the World Bank Group. MORE>>