IMF and Ebola spread in West Africa

The International Monetary Fund (IMF) has, since its establishment in 1945, been involved in controversies over its policies and its operations.

Over the years, some critics of the IMF have given it bad names and called for drastic reforms of its policies and operations. Some African heads of state and government officials had in the past seen the IMF as a neocolonialist institution out to undo the countries of the developing world.

In 1985, the then Minister of External Affairs of Nigeria, Ibrahim Gambari, called the IMF “a bad doctor who prescribed the same treatment to all patients no matter what their ailments”.

The late President Julius Nyerere of Tanzania and the late President Siad Barre of Somalia rejected IMF conditions for loans which they said were “detrimental to the welfare of our people”.

President Siaka Stevens of Sierra Leone (now deceased) had described IMF conditions for loans as so killing and capable of landing his country in greater difficulties.

One of the critics of the IMF from the developed world, Mrs Judith Hart, a former British Minister for Overseas Development, accused the IMF for creating social, economic and political instability in developing countries. She described IMF conditions attached to loans as a four-wheeled chariot of destruction in the Third World.

The wheels of IMF chariot, according to Mrs Hart, are: Devaluation of national currency; tightening of money supply; sharp curtailment of public expenditure and wage cuts.

While addressing a meeting of non-governmental organisations in New York in the 1980s, Mrs Hart said the IMF was not “sensitive or constructive enough to apply the same criteria to unindustrialised and developing” nations. Late December 2014, other critics outside the developing world had cause to criticise IMF policies and its operations in poor and developing countries.

A study by researchers from three British Universities – University of Cambridge, London School of Hygiene and Tropical Medicine and Oxford University – has found out that the IMF could be blamed for the spread of the Ebola Virus Disease (EVD) that broke out in Guinea in 2013 and overran Sierra Leone and Liberia in 2014. Ebola has, so far, infected more than 20,000 persons and killed more than 8,000 in the three countries.

In the study, published in the Lancet Global Health, a journal, the authors concluded that IMF policies of aid cuts between 1990 and 2014 contributed to the spread of Ebola in Guinea, Sierra Leone, and Liberia. IMF conditions, the study stated, caused weakened health systems in those countries.

The IMF had asked those countries to exercise financial discipline and to adopt austerity measures by reducing government spending including expenditure on those countries’ health systems.

Such policies made the affected countries unable to combat the Ebola virus effectively, according to Cambridge sociologist, Alexander Kentikelenis. “A major reason why the Ebola outbreak spread so rapidly was the weakness of the health care systems in the region and it would be unfortunate if the underlined causes were overlooked,” the lead author of the study that examined IMF policies and operations in the three West African countries said. He added: “Policies advocated by IMF have contributed to underfunded, insufficiently staffed and poorly prepared health systems in the countries with Ebola outbreak.”

According to the study, IMF directives that government spending be slashed were “extremely strict, absorbing funds that could be directed to meeting pressing health challenges”. Countries affected could not, therefore, hire health staff and pay them adequately.

A co-author of the study, Lawrence King, has stated that Guinea, Liberia and Sierra Leone complied with IMF directives in 2013 just before the Ebola outbreak.

He added that the three countries failed to raise their social spending despite pressing health needs. In a sharp response to the adverse findings in the study on effects of IMF policies in the three West African countries, the IMF said in a statement that it was not true that its policies led to collapse of health systems in those nations.

According to the IMF, health spending in Guinea, Liberia and Sierra Leone had rather increased between 2010 and 2013. An IMF spokesman has said that it was completely untrue that IMF policies contributed to Ebola spread in the sub-region. “Such claims are based on misunderstanding and, in some cases, misrepresentation of IMF policies,” he added.

The IMF also denied asking for cuts in public health workers’ wages. For the past 21 years, Guinea has depended on the IMF for funding; Sierra Leone, for the past 19 years and Liberia, seven years. IMF directives throughout those periods had been directed at reducing government expenditure, paying back foreign and domestic debts and increasing BY UNISALES" HREF="#">FOREIGN EXCHANGE reserves.

According to the study, the IMF had embodied some “poverty reduction expenditure” in its programmes but the three countries could not meet those targets in 2013 when the Ebola Virus Disease broke out in Guinea. In Sierra Leone, community health workers reduced from 0.11 per 1,000 population in 2004 to 0.02 in 2008.

In Guinea, the IMF promoted, from early 2005, fiscal and administrative decentralisation that contributed to weakening of the healthcare system there. The IMF is an international financial institution founded in 1944 under the Bretton Woods agreement and began operations in 1945.

The functions of the IMF include: Promoting international monetary cooperation and expansion of trade; promoting exchange stability and assisting in establishment of multilateral system of payments for current transactions between member-states of United Nations.

As a multinational bank, the IMF is right in asking its customer-countries to exercise financial discipline to enable them to pay back loans and to promote economic growth.

However, in performing its functions, the IMF must not behave like a Shylock who demands his pound of flesh despite the consequences. Ghana is a member of the United Nations and has, since 1983, depended heavily on the IMF for funding and technical advice.

The IMF has assisted Ghana, over the years, to solve its balance of payment problems and to improve economic growth.

The questionable side of IMF in Ghana is that its directives have contributed to making Ghanaians poorer - by demanding the withdrawal of subsides, public sector employment freeze, reduction in government spending, targeting low inflation and dismantling pro-poor and social-intervention programmes, among others.

It demands moral and political courage to defy IMF directives. It is on record, however, that former President John Rawlings in 1999 suspended the deregulation programme on petrol and reintroduced subsides – when crude oil prices started to go up after the oil-price slump of late December 1998 (not December 1989 as stated in last week’s article).

The administration of former President John Kufuor also did not apply IMF prescriptions when it subsidised petroleum, rice and cooking oil in 2007 after their prices rose many folds on the world market. Email: therson.cofie@yahoo.com