IMF wil positiever imago voor zichzelf (en)
EUOBSERVER / BRUSSELS - Following the G20 i leaders' meeting in London this April, Dominique Strauss-Kahn, managing-director of the International Monetary Fund, greeted the media with the simple message: "We're back."
The IMF has indeed had a "good" crisis, with politicians around the world opting to step-up funding and extend the mandate of an organisation whose agenda prior to the credit crunch had become dominated by report writing rather than lending.
Considerable attempts have also been made to shake off the fund's "neo-liberal" image. But a new report out Monday (5 October) by NGO umbrella group Solidar says the fund's policies in countries such as EU member state Latvia continue to hurt poorer citizens.
The Latvian economy was badly hit by the bursting of its real estate and credit bubbles last year, causing the government to secure a joint IMF and EU loan of €7.5 billion in December.
Since then the economy has deteriorated further, forcing the government to introduce more budget cuts in order to maintain loan payments and remain on course to bring its budget deficit to within the 3 percent of GDP level by 2012 as agreed.
The issue is complicated by Latvia's desire to join the euro currency at the start of 2014, but NGO groups such as Solidar say the IMF lending conditions are pro-cyclical in nature and do not constitute a radical departure from previous policies.
"Boosting equitable growth, meeting the most urgent needs of the poor, and laying the foundations for the creation of decent work …should be the main goals of the funding provided to counter the effects of the crisis," says the report.
In practice this is likely to mean a slower reduction of budget deficits.
Donor agenda?
Swedish finance minister Anders Borg issued a stark warning to Latvia over the weekend, following an announcement by the Baltic government that it would reduce agreed spending cuts from 500 million to 225 million lats (€320 million) next year while remaining within agreed deficit levels.
Shares in Swedish banks fell on Monday morning as the market digested the news, a reminder of the huge exposure the country's banks have built up in the Baltic region during the recent boom years.
Solidar accuses Swedish concerns over its banking sector as being a key driver behind the lending terms received by the Latvian government, revised over the summer.
"If you look closely at the negotiations surrounding the Latvian loan, who was leading the charge in that negotiation. It was the Swedish presidency [of the EU], together with the European Commission," the group's international co-operation co-ordinator, Andrea Maksimovic, told EUobserver.
Such issues are unlikely to be aired at this week's IMF annual meeting (6-7 October) in Istanbul, Turkey, where participants will digest the recent decisions made by G20 leaders in Pittsburgh.
But criticisms over excessively restrictive lending conditions may have to be addressed in the future if the organisation is to finally shake off its reputation as a vector for Euro-Atlantic interests.
This point was made clear last week when Mr Stauss-Kahn became the latest target of a shoe-throwing incident as he addressed students in Istanbul.
Report
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