Since decolonization took place, the global south has been grappling with a wide variety of both advancements and challenges. While there are many positives and negatives in the global south’s march towards implementing the UN Sustainable Development Goals, perhaps the biggest challenge is how various nations are financially dependent on the International Monetary Fund (IMF) for funding their government.
The International Monetary Fund can be both a blessing and a curse to nations of the global south. On the one hand, they can provide the developing nations with badly needed financial resources to keep their country financially afloat. However, this support is not unconditional. In exchange for loans, the IMF often requires austerity policies. These are severe spending cuts to a country’s budget along with raising taxes to save money and help get the country out of debt. This means less money for government services and often salary cuts to government workers, and higher taxes leading to less consumption. All of this can lead to an economic slump when the economy needs stimulus, and therefore can cause even more problems. Now, I don’t inherently believe that there is a problem with what the IMF is doing here. They chose to lend out their money, and they have a vested interest to make sure that anyone who takes on their money spends it responsibly. The IMF doesn’t give money away for free; its job is to provide loans. But it still can hinder the development of countries in the global south, even if the organizations actions are totally reasonable.
There is a clear example of this with Tunisia. They are currently in significant debt and must consider IMF loans. However, this could create more problems than solutions as outlined above. Egypt is also in a similar situation, as it has high amounts of debt and may have to take loans out from the IMF. If it did so, many government services would potentially be reduced and therefore it would have a harder time achieving its sustainable development goals. Senegal has also received extensive aid from the IMF, and they have suffered several negative consequences including mass privatization that led to various multinational companies gaining control over parts of their economy.
To conclude, there is a question that I think should be raised. Can nations truly have peace, justice, and strong institutions if they are beholden to an international organization for financial resources? Now I think a country can have peace and justice if they are dependent on the IMF, but perhaps not strong institutions. If we can refer to an entire government as an institution, can it truly be strong if it is dependent on foreign aid (and can be influenced heavily by whether the IMF decides on any given day to give it loans or not? At the same time, while it is unfortunate that the IMF restricts development like this, it is a completely reasonable action from their perspective. They should get to determine who and who not to give their money to.