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	What helps a country to get out of poverty? by Mark Weisbrot, Johann Hari The Guardian / The Independent   July 2011   The experience of debt-ridden Jamaica shows the damage that can be done when the interests of creditors are given too much weight, by Mark Weisbrot.   As the eurozone authorities move closer to the accepting the inevitable Greek debt default/restructuring, there are some who have pointed to the Jamaican debt restructuring of last year as a model.   It''s hard to imagine a worse disaster for Greece. It is worth a closer look at what has been done to Jamaica, not only as a warning to Greece, but to shed some light on the damage that can be done when "the international community" is willing to sacrifice a country for the sake of creditors'' interests.   Jamaica – a middle-income developing country of 2.8 million people – has one of the worst debt burdens in the world, with a gross public debt of 123% of GDP.   At first glance this looks better than Greece (166% of GDP) but the more important number is the interest burden of the debt: for Jamaica it has averaged 13% of GDP over the last five years. This is twice the burden of Greece (6.7% of GDP), which is in turn the highest in the eurozone. (It is worth keeping in mind that the burden of the debt can vary widely depending on interest rates, and on how much is borrowed from the country''s central bank – Japan has a gross public debt of 220% of GDP but pays only about 2% of GDP in annual net interest, so it doesn''t have a public debt problem.)   Not surprisingly, a country that is paying so much interest on its debt does not have much room in its budget for other things. For the 2009/2010 fiscal year, Jamaica''s interest payments on the public debt were 45% of its government spending. This crowding out of public investment and social spending has hurt Jamaica''s progress towards the Millennium development goals.   Jamaica''s coverage rates for detection and treatment of tuberculosis declined from 79% in 1997 to 43% in 2006, the worst decline of 77 countries for which data was available. The net enrollment ratio in primary school declined from 97% in 1991 to 87% in 2006/2007.   Jamaica''s long term development failure is striking, and has a lot to do with its debt burden. For the 20 years from 1988-2008, real income per person grew by just 14%, which is incredibly dismal. The the country was hit by the U.S. and global recession at the end of 2008, losing export revenue, remittances, and other sources of aggregate demand.   The government turned to the IMF, which had already had a terrible track record in the country with almost continuous programmes from 1973-1996. Unfortunately the 2010 IMF prorgamme called for policies that would be expected to worsen the recession, including a reduction of the fiscal deficit, as well as real decreases in spending on health, education, and childhood development.   In February of last year the Jamaican government reached agreement with creditors on the Jamaica Debt Exchange, which restructured Jamaica''s debt with the support of the IMF. The restructuring extended the average maturity of the debt and lowered interest rates enough to reduce the government''s interest burden by about 3% of GDP annually over the next three years.   This would be quite substantial if Jamaica had a debt burden the size of Greece or Ireland, but unfortunately it still leaves the country with unbearable interest payments. There was no reduction in the principal, and Jamaica will have to refinance some 46% of its debt within the next one to five years – which could prove disastrous if there are unfavorable market conditions.   Jamaica''s debt burden is outrageous, and needs to be drastically reduced. It is difficult to imagine the country making much progress in economic development while so much of its resources go to interest payments.   While the situation of every over-indebted country is different – in terms of the burden and structure of the debt, whom it is owed to (international or domestic creditors, official creditors such as the IMF or World Bank, and other specifics) – the most important issue is the same: how much should a country sacrifice in order to keep paying off its debt?   Unfortunately the people making these decisions – the European authorities, the IMF, the Paris Club and allied institutions – look at this issue from the point of view of the creditors.   But a responsible government will make its decisions on the basis of the needs of its people – for employment, economic growth, and better living standards. It is this conflict of interest that underlies the debt crises we are looking at in most over-indebted countries.   * Mark Weisbrot is Co-Director of the Center for Economic and Policy Research (CEPR), in Washington, DC. Published by The Guardian.   What helps a country to get out of poverty, by Johann Hari. (The Independent)   The International Monetary Fund (IMF) official job sounds simple and attractive. It is supposedly there to ensure poor countries don’t fall into debt, and if they do, to lift them out with loans and economic expertise. It is presented as the poor world’s best friend and guardian. But beyond the rhetoric, the IMF is dominated by bankers and financial speculators. The IMF works in their interests.   Let’s look at how this plays out on the ground. In the 1990s, the small country of Malawi in Southeastern Africa was facing severe economic problems after enduring one of the worst HIV-AIDS epidemics in the world and surviving a horrific dictatorship. They had to ask the IMF for help.   If the IMF has acted in its official role, it would have given loans and guided the country to develop in the same way that Britain and the US and every other successful country had developed – by protecting its infant industries, subsidizing its farmers, and investing in the education and health of its people.   That’s what an institution that was concerned with ordinary people – and accountable to them – would look like. But the IMF did something very different. They said they would only give assistance if Malawi agreed to the ‘structural adjustments’ the IMF demanded. They ordered Malawi to sell off almost everything the state owned to private companies and speculators, and to slash spending on the population. They demanded they stop subsidizing fertilizer, even though it was the only thing that made it possible for farmers – most of the population – to grow anything in the country’s feeble and depleted soil. They told them to prioritize giving money to international bankers over giving money to the Malawian people.   So when in 2001 the IMF found out the Malawian government had built up large stockpiles of grain in case there was a crop failure, they ordered them to sell it off to private companies at once. They told Malawi to get their priorities straight by using the proceeds to pay off a loan from a large bank the IMF had told them to take out in the first place, at a 56 per cent annual rate of interest. The Malawian president protested and said this was dangerous. But he had little choice. The grain was sold. The banks were paid.   The next year, the crops failed. The Malawian government had almost nothing to hand out. The starving population was reduced to eating the bark off the trees, and any rats they could capture. The BBC described it as Malawi’s “worst ever famine.” There had been a much worse crop failure in 1991-2, but there was no famine because then the government had grain stocks to distribute. So at least a thousand innocent people starved to death.   At the height of the starvation, the IMF suspended $47m in aid, because the government had ‘slowed’ in implementing the marketeeing ‘reforms’ that had led to the disaster. ActionAid, the leading provider of help on the ground, conducted an autopsy into the famine. They concluded that the IMF “bears responsibility for the disaster.”   Then, in the starved wreckage, Malawi did something poor countries are not supposed to do. They told the IMF to get out. Suddenly free to answer to their own people rather than foreign bankers, Malawi disregarded all the IMF’s ‘advice’, and brought back subsidies for the fertilizer, along with a range of other services to ordinary people. Within two years, the country was transformed from being a beggar to being so abundant they were supplying food aid to Uganda and Zimbabwe.   The Malawian famine should have been a distant warning cry. Subordinating the interests of ordinary people to bankers and speculators caused starvation there. Within a few years, it had crashed the global economy for us all.   Whenever I travel across the poor parts of the world I see the scars from IMF ‘structural adjustments’, from Peru to Ethiopia. Whole countries have collapsed after being IMF-ed up – most famously Argentina and Thailand in the 1990s.   Look at some of the organization’s greatest hits. In Kenya, the IMF insisted the government introduce fees to see the doctor – so the number of women seeking help or advice on STDs fell by 65 per cent, in one of the countries worst affected by AIDS in the world.   In Ghana, the IMF insisted the government introduce fees for going to school – and the number of rural families who could afford to send their kids crashed by two-thirds. In Zambia, the IMF insisted they slash health spending – and the number of babies who died doubled. Amazingly enough, it turns out that shoveling your country’s money to foreign bankers, rather than your own people, isn’t a great development strategy.   The Nobel Prize winning economist Joseph Stiglitz worked closely with the IMF for over a decade, until he quit and became a whistle-blower. He told me a few years ago: “When the IMF arrives in a country, they are interested in only one thing. How do we make sure the banks and financial institutions are paid?... It is the IMF that keeps the financial speculators in business. They’re not interested in development, or what helps a country to get out of poverty.”   Some people call the IMF “inconsistent”, because the institution supports huge state-funded bank bailouts in the rich world, while demanding an end to almost all state funding in the poor world. But that’s only an inconsistency if you are thinking about the realm of intellectual ideas, rather than raw economic interests. In every situation, the IMF does what will get more money to bankers and speculators. If rich governments will hand banks money for nothing in “bailouts”, great. If poor countries can be forced to hand banks money in extortionate “repayments”, great. It’s absolutely consistent.   A recent detailed study by Dr Daniela Gabor of the University of the West of England has shown its business-as-usual. Look, for example, at Hungary. After the 2008 crash, the IMF lauded them for keeping to their original deficit target by slashing public services. The horrified Hungarian people responded by kicking the government out, and choosing a party that promised to make the banks pay for the crisis they had created. They introduced a 0.7 per cent levy on the banks (four times higher than anywhere else). The IMF went crazy. They said this was “highly distortive” for banking activity – unlike the bailouts, of course – and shrieked that it would cause the banks to flee from the country. The IMF shut down their entire Hungary program to intimidate them.   But the collapse predicted by the IMF didn’t happen. Hungary kept on pursuing sensible moderate measures, instead of punishing the population. They imposed taxes on the hugely profitable sectors of retail, energy and telecoms, and took funds from private pensions to pay the deficit. The IMF shrieked at every step, and demanded cuts for ordinary Hungarians instead.
	Keeping Africa''s Turnaround on Track by Ellen Johnson-Sirleaf Project Syndicate/La Stampa/One Liberia   For more than a decade, much of Africa has been moving forward. Economic growth is rising, poverty is falling and democratic governance is spreading. But the global financial crisis threatens to undo this progress by reducing investment, exports and aid just as they should be expanding to build on these successes.   While international attention has been understandably focused on events in Darfur, Somalia and Zimbabwe, countries across the continent including Ghana, Tanzania, Mozambique and Liberia have been quietly turning their economies around. Economic growth rates regularly exceed 5% in many nations. The key to this progress is stronger African leadership and more accountable governance. Today, more than 20 African countries are democracies, up from just three in the 1980’s. They have competitive elections and improved human rights, and a much freer media. These efforts have been supported by increasingly effective development assistance.   Consider what has happened in my country, Liberia. After 14 years of devastating war, we faced enormous challenges. Our democratically elected government has worked with international partners and a growing number of private investors to turn things around.   In the past three years, we have doubled primary school enrollment nationwide, refurbished hundreds of health facilities, begun rebuilding roads and restoring electricity. We have taken steps to root out corruption and remove unscrupulous officials. Growth has exceeded several percent per year. And, most critical, we are at peace. We are restoring our once-vibrant nation, and the crucial component -- hope -- has already been revived. Without international support, we would not have made this progress and would be at much greater risk of returning to war.   The global economic crisis threatens the progress in my country and elsewhere on our continent. Declining remittances from overseas workers, shrinking trade flows and investment could undermine new businesses, throw thousands out of work, and increase tensions and instability. The crisis -- which Africa did nothing to cause -- demands a strong response. African nations must do their part by continuing to address corruption, eliminate red tape and reduce obstacles to private-sector growth. But just as industrialized countries need a stimulus, African economies need a boost to keep their progress on track.   The G8 nations meeting in Italy this week have a useful role to play. Among other measures, they must keep their promises to increase aid and make it more effective by reducing bureaucratic delays, speeding disbursements and better aligning programs with African priorities. Effective aid is certainly not the only answer, but it has an increasingly vital role to play as other sources of finance dry up. It is needed to lay the foundations to help stimulate private sector growth.   It would be a cruel irony if, just as Africa begins to succeed, its prospects are cut short by a crisis beyond its control. Strong action by African governments and robust support from the international community can keep Africa''s recovery on track. Both must continue to do their part.   * Ellen Johnson-Sirleaf is president of Liberia and the author of This Child Will Be Great: Memoirs of a Remarkable Life by Africa''s First Woman President.
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