IMF can safeguard women’s equality in an age of austerity

The IMF will be a critical focus this week of CESR’s efforts to promote human rights in fiscal policy. Through its thought leadership, technical assistance and lending power, the Fund exercises un-rivalled – if not unlimited – power over national tax and budgetary decisions. Now in a new briefing for the Bretton Woods Project to be launched this week, CESR Program Directors Niko Lusiani and Kate Donald analyze the IMF’s influence over budget decisions that affect women’s rights and gender equality. 

While much maligned for its lionization of macro-economic stability and aggregate growth without much regard to the social consequences, the IMF has recently undergone a welcome policy shift. The Fund – which had previously been an uncritical proponent of the “cut-to-grow” myth of austerity (or “fiscal consolidation”) in countries under budgetary stress – recently admitted that the real costs of austerity had often been underestimated and acknowledged the serious distributional effects of fiscal consolidation. Its research has also underlined that more robust and progressive taxation is not detrimental, but actually critical to public financing in times of economic stress. 

As for women’s rights in particular, the Fund has recently started to address gender equality in its work. To its credit, it has devoted considerable research efforts to exposing the economic consequences of gender inequality; it has supported gender budgeting; and has provided gender-specific policy advice to two dozen countries. In general, the Fund’s approach is to ameliorate the gender impacts of fiscal adjustment through targeted gender programs that promote women’s entry into the labor force. In Egypt, for example, the Fund designated $13 million of its loan for public nurseries in the context of harsh cutbacks in social services funding. Certainly, providing services that make it easier for women to take on paid work is crucial, and to be welcomed. 

Yet, over-emphasizing these relatively small-scale budget allocations can be a distraction from the larger context, and in particular the macro-critical interventions needed to prevent the pain of austerity to begin with. After all, austerity in many countries has also pushed many women out of the labor force, through for example cutbacks in public sector employment. As CESR has documented in Egypt, austerity-driven public sector layoffs disproportionately disadvantage women, who, as the World Bank acknowledges, earn much less than their male counterparts in the private sector.

Despite its new research findings and more positive public stance on inequalities, the IMF continues to be a proponent of austerity in its country work. In CESR’s briefing on expenditure policy, we find that such a posture undermines the Fund’s positive work towards gender equality. CESR’s research in austerity-hit countries shows that public spending cuts in health, education and social protection hamper progress towards gender equality in several ways.  Women’s income and economic security are threatened, as is their access to essential services. Women’s burden of unpaid care work increases as allocations for public provision of care services recede. In many countries, governments’ fiscal adjustment models may not even be politically or economically viable were these gendered costs to be actually assessed—thus creating an illusion of efficiency, masking the fact that the costs are simply transferred to women.

Brazil provides a stark example of the IMF’s high-profile commitment to gender equality failing to translate into reality on the ground. There, the IMF has unabashedly supported the caretaker government’s move to constitutionalize austerity by freezing real federal public spending for two decades. While minimum social spending floors were established and the Fund spoke of “social safety nets for the most vulnerable,” the Fund failed to call on the government to protect key social programmes for women, such as childcare, education, and healthcare. Instead, it has taken the opposite track, calling on the government to “remove the obligation to dedicate an increasing share of net federal revenues to spending in education and health.” Human impacts are already starting to show. As our partners Instituto de Estudos Socioeconômicos (INESC) are skillfully documenting in collaboration with CESR, health and education spending within this year’s federal budget dropped by 17 and 19 per cent respectively, and programs fighting violence against women were cut by 52 per cent. Women in Brazil will foreseeably and disproportionately pay the costs of these measures—driving ever deeper gender and economic disparities. 

What might a more holistic and meaningful approach to gender equality look like for the Fund? Our briefing closes with a number of detailed recommendations. As a start, we suggest the Fund should refrain from condoning any fiscal contractions before assessing their net impact on gender equality and women’s human rights. Ideally, the Fund could play a unique and proactive role by more fully supporting progressive and equalizing public financing alternatives that place the costs of adjustment on those most able to pay, rather than further disadvantaging low-income women and their families. Instead of presenting fiscal consolidation as the default while scrambling to mitigate some of its harmful gender impacts, the Fund should engage meaningfully with in-country civil society and experts who are developing public financing alternatives. More effectively taxing capital, tackling personal tax evasion and corporate tax avoidance, and detecting the negative spillovers of financial secrecy jurisdictions are all viable means of increasing revenue without compromising human rights enjoyment.   

The IMF should be applauded for recognizing its responsibility for promoting gender equality as macro-critical, and for taking preliminary steps in that direction. However, if it wants to avoid charges of tokenism when it comes to gender protections, the Fund and its Board should consider the net effects of its fiscal and macro-economic influence on gender equality. Crucially, sweeping fiscal consolidation programs based on the fallacy of “expansionary austerity” are very rarely compatible with improving gender equality and the progressive realization of women’s economic and social rights. As the Fund increasingly emphasizes its commitment to the Sustainable Development Goals and its role in reaching them, a critical and holistic assessment of its impact on inequalities of all kinds is now more essential than ever. 

CESR events and appearances at the World Bank/IMF Annuals Civil Society Policy Forum: