The Imf, World Bank, And Third World Debt Crisis

2469 words - 10 pages

“I sit on a man's back, choking him and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by all possible means – except by getting off his back." (Tolstoy qtd in Jere-Malanda 2). This is a quote by the famous Russian author and philosopher Leo Tolstoy, and it perfectly depicts the current world situation; how those in developed countries say that they will do all they can to help those in the third world, and at the same time make their situation much worse. One of the chief problems for these developing countries is Third World debt, which is that debt that the governments of Third World owe to foreign banks, governments, and international bodies, such as the International Monetary Fund (IMF) and World Bank. The World Bank and the IMF both came into existence in 1944 at the Bretton Woods Conference, which was a meeting to discuss how to help the world recover after the Second World War (World Bank Archives 1). At the time, both the World Bank and the IMF did what they were intended to do; they helped the post war world recover and rebuild. Today the economic landscape of the world looks much different than it did at the close of WWII, and the goals and ideals of these two monetary behemoths have changed. Now, they are lending to the Third World, where there is a huge market for foreign investment and “aid”. This aid is not working. In 1970 the debt owed by the world’s poorest countries was approximately twenty five billion dollars U.S. in external debt, but this debt had increased to over five hundred billion dollars U.S. by 2002 (Shah 1). Therefore, the World Bank and the IMF do not help the third world get out of debt, as they are meant to, but rather keep them in their monumental debt with no ways of paying it back.
One of the main issues with the World Bank and the IMF are their Structural Adjustment Programmes. These Programs imposed by the World Bank and the IMF have failed globally. The success of these projects has been estimated at below fifty percent in the majority of countries where structural adjustment programmes are in existence (Quinlivan 6). In these programs the focus is put primarily on one goal, which is to increase exports (Jere-Malanda 5). On the surface this looks like a good plan; more exports means more money for these countries. However, the governments of these countries are forced to keep prices extremely low in order to keep up with competition on the global trading market. This may benefit large multinational corporations, but it does not serve to keep Africa out of debt. Although the majority of the focus of Structural Adjustment Programmes is put on trade there are other factors that have just as bad of an effect on these indebted third world countries (Jere-Malanda 5). Other ventures within the Structural Adjustment programmes include education, healthcare, and providing food and water. The World Bank has underinvested in these...

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