IMF and WB prioritize the fight against inequality, but support opposite policies

2024-04-15 13:54:45Biznes SHKRUAR NGA REDAKSIA VOX

Income inequality is high, or widening, in more than 60% of countries that are currently included in the support or assistance programs of the International Monetary Fund and the World Bank. Sometimes reaching an alarming level, points out a report published by the non-governmental organization Oxfam.

According to this report, 64 of the 106 countries receiving support or aid from international financial institutions have seen significant increases in inequality, with it being particularly high in nearly 40 countries, including Ghana, Honduras and Mozambique.

The IMF and the World Bank present the fight against inequalities as a priority, but at the same time they support policies that increase them. Ordinary people are increasingly suffering from budget cuts in health, education and transport. "This high-level hypocrisy must stop," said Oxfam's head in Washington, Kate Donald.

Rising public debt, especially due to rising interest rates, reduces the ability of these countries to finance health, education and social welfare to the extent necessary to reduce inequalities.

Aid for developing countries, especially those in or at risk of debt crisis, will be among the main topics of discussion at the annual meetings of the IMF and the World Bank, being held this week in the US capital.

Necessary public spending to support economies during the pandemic, following shocks from global inflation and the war in Ukraine, has forced many countries into debt as interest rates rise, with central banks in major economies taking decisions to tame inflation. This particular cocktail raises to inconceivable heights the cost of servicing the debt of some countries, which often fail to meet the deadlines or spend more than half of their budget on it.

The IMF often says that there is a need for governments to protect the most vulnerable groups of their population. While, at least in theory, the main missions of the World Bank include its contribution to the fight to end poverty at the international level.