By Susan Otieno and Niranjali Amerasinghe, Country Directors for ActionAid Kenya and USA
When archaic rules continue to define the highest decision-making at the IMF and World Bank, there can be no surprise that critics are now saying that 80 Years is More than Enough.
Once again, we see the IMF leadership succession being agreed without a proper and transparent process. The gentlemen’s agreement’ which has ensured that the IMF managing director has for 80 years been European and the World Bank president a US national, is evidence of a continuing colonial mindset in these institutions.
Last year, ActionAid’s Secretary General, Arthur Larok, spoke out when Ajay Banga was picked by President Biden for the World Bank Presidency. Now we are forced to speak out again to challenge the legitimacy of European governments effectively anointing Kristalina Georgieva for a second term at the IMF (now approved by the Board on April 12).
For all their rhetoric on supporting developing countries, the reality is that the IMF and World Bank decision making is still rooted in a colonial world order. These institutions were formed before many developing countries achieved their independence. With decision making rights linked to financial contributions, countries that accumulated their wealth through decades of colonial plunder have a disproportionate amount of power. This ‘members’ led decision-making system remains fundamentally unaltered and there is little appetite amongst rich countries to change it.
In October 2023, at the Annual Meetings in Marrakech, ActionAid launched a searing report Fifty Years of Failure: The IMF, Debt and Austerity in Africa. This showed that little has changed since the structural adjustment programmes in the 1980s despite wide agreement that it led to a ‘lost decade’. “The IMF continues to adhere to the cult of austerity despite mounting evidence that it has stifled economic development and human development across Africa … in practice the IMF’s insistence that countries prioritise debt repayments, rather than seeking a systemic solution to debt, is a major obstacle tospending on health, education and climate action.”
In a collective political statement on the eve of the meetings in Marrakech, ActionAid Directors across Africa challenged the IMF and World Bank for imposing “a neo-colonial model of economic development based on exploitation and extraction from the Global South – which has given rise to regular debt and economic crises. These crises have then been used to justify the imposition of harsh loan conditions and coercive policy advice on African governments, perpetuating dependency and stripping away the capacity of States through cuts to public spending.”
As Opa Kapijimpanga, founder of the African Forum and Network on Debt and Development, recently stated, giving loan after loan has become a means for “the continued coloniality of the IMF.”
While Kristalina Georgieva has changed IMF rhetoric on some issues, like climate change, she has not meaningfully shifted the practice of the Fund. Globally 6.6 billion people are now facing austerity, largely owing to the IMF’s reluctance to accept that its neocolonial economic model has failed. Absent radical reform, it is hard to see how the Fund can stop the devastating impact it has had on many Global South countries where there is an urgent need for financing for development at domestic level.
Earlier this year, 526 organizations called for a transparent and merit-based leadership succession process at the IMF. This should not be too much to ask when the institutions, rhetorically at least, claim that they are making efforts to be more representative. If western governments cannot reform their role in these institutions, eventually they will lose what little legitimacy is left.
The United Nations Finance for Development process is an opportunity to advance more ambitious propositions for a new global financial architecture – one which is more representative. We believe that African governments could be a driving force in this, following up on their success in shifting global tax policy making away from the OECD and moving towards a new UN Framework Convention on Tax. We need to see similar collective action on radical debt renegotiation or cancellation, stopping the absurd situation through which the external debts of countries force them into the hands of the IMF and its neoliberal agenda.
IMF Boss 