Austerity and the IMF: An Appeal for Responsibility

English

October 23, 2019

During the first ten days of October, thousands of Ecuadoreans took to the streets, demanding an end to an International Monetary Fund-imposed austerity package that eliminated fuel subsidies and mandated public sector wage cuts. Indigenous activists led the protests, voicing an additional condemnation of the ongoing plundering of their lands and violations of their economic and social rights by extractivist oil and mining practices that operate in tandem with austerity. After the tragic deaths of eight activists, and with at least 1,000 injured, the government of Lenin Moreno eventually agreed to withdraw from the IMF-backed Decree 883, which raised fuel prices, and to work with Indigenous leaders to develop a compromise economic program. 
 
The IMF said that it welcomed the government’s decision and any attempt to “make decisions about macro reforms taking into account the various communities that are going to be affected by it.” However, civil society including CESR have been pushing for the IMF to undertake precisely this kind of impact assessment of its policy advice and loan conditions for many years, with nothing in the way of concrete commitment in return.  
 
To that end, immediately after the Ecuadorean government’s announcement, CESR and partners in Latin America issued an appeal to the IMF asking that it take responsibility for influencing the adoption of regressive fiscal policies and the violation of human rights obligations and democratic procedures in various Latin American States, such as Ecuador. The statement, which criticizes State repression and the excessive use of force as responses to demands for social rights, also asks the Fund to adopt corrective measures. It can be read here.
 
Last week, CESR also took its message to the World Bank/IMF Annual Meetings, where it challenged the IMF’s role in driving austerity measures in countries throughout the world and creating an environment that contributes to the erosion of human rights.  In the past ten years, disruptions like the mass protests in Ecuador have taken place throughout the Global South when fiscal adjustments prompted by the IMF have given rise to increasing hardship for the poorest sectors of society and exacerbated economic, gender and social inequalities. In countries such as Brazil, Argentina and Egypt, to name a few, these developments have stirred popular outrage and emphatic demands for change. The current protests in Chile and Lebanon have also been sparked by austerity-related tax and price hikes widely perceived as inequitable.
 
At the meetings, CESR advocated for more sufficient, equitable and accountable fiscal policies at four events centered on the impact of IMF loan conditions and advice on human rights and inequalities, presenting evidence and analysis drawn from national-level work with partners in countries such as Brazil and Egypt (in particular the Egypt Social Progress Indicators). The debates with IMF staff, academics and other civil society advocates covered the IMF’s commitments, influence and impacts in areas such as the Sustainable Development Goals (SDGs), women’s rights, and rights to decent work and food.  Overall, the discussions highlighted the significant gulf between the IMF’s (often admirable) rhetoric and analysis on inequalities, and the way that their programs and prescriptions continue to play out in specific countries. At the root is a disjuncture in the vision of the role of macroeconomic policy: for the IMF, a tool for promoting economic stability and growth; for CESR and its allies, a crucial potential means of tackling inequalities and resourcing the realization of rights. The profound constraints which IMF policy has placed on rights enjoyment—in Ecuador, Egypt and elsewhere—is precisely why holistic impact assessments and structural change are necessary, not piecemeal palliative efforts to correct for the brutal blow of austerity. 
 
As one senior IMF official recognized during the discussions, there is an intersection between human rights and the IMF’s mandate, and “where there is an impact on human rights, we have to take it into account.” CESR’s commitment is to continue bringing evidence of these impacts, and proposing concrete and rights-aligned alternatives to squeezing rights in the name of downsizing deficits and securing so-called stability. 
 
In photo above, panelists from CESR, INESC, Oxfam and Shirakat discuss the gendered impacts of IMF conditions and policy advice with Fund representatives.
 
 
 
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