IMF, World Bank And Africa Essay - 2396 Words

IMF, World Bank And Africa An avid viewer of television has seen the commercials portraying shortages of food and mass starvation in Africa. Yet in these times of relative prosperity, little is heard of Africa’s debt problem. Although the total debt of all African countries combined is small in comparison to that of the United States, millions of people suffer as a result. However, it is not until these countries have difficulty repaying their loans that the international community begins to take notice. Many African countries are currently in such debt that all new loans are used to repay old loans in a attempt to salvage any credit rating a country might have (George, 13). Because many banks, particularly in the United states, have†¦show more content†¦These policies become increasingly strict as more Special Drawing Rights (as they are called) are requested. These conditions, when implemented, are called structural adjustment programs. Since these programs seriously infringe upon the sovereignty of the borrowing nation, the IMF is usually turned to as a last report. This occurs when international development banks and private banks, especially fear that a country might default on its loans. As a result, most sources of financing are lost until the debtor country agrees to a structural adjustment program implemented by the IMF. Acceptance of this conditionally suggests to private lenders a willingness to cooperate with the financial community. When this takes place â€Å"private bank loans and development assistance, of magnitude far larger that the fund’s largess, are likely to flow† (Will,54). Since the IMF is the last institution a LDC will turn to, the economy of the country involved is usually in extremely poor condition. When the structural adjustment programs of the IMF are more difficult to institute in the borrowing country and as a result causes much of the blame to be directed towards t he Fund. â€Å"Some 30 African countries have adopted formal structural adjustment programs supported by the IMF and World Bank† (Harsch, 47). Although many studies have been done on the effectiveness of the program, no one is quite sure of the effect the measures have had (NowZad, 196). There are several reasons forShow MoreRelated Failure of IMF and World Bank Policies in Sub-Saharan Africa4500 Words   |  18 PagesFailure of IMF and World Bank Policies in Sub-Saharan Africa Over the last several hundred years, Africa has been deprived of the peace that it so desperately needs. For over 400 years, Africa was subjected to the harsh trans-Atlantic slave trade. Europeans and Americans brutally uprooted millions of Africans and shipped them away. 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