Red Flags and Red Lights for IMF Lending to HIPCs
By Ben Leo
May 20, 2010
As the global economic crisis spread throughout the developing world in 2008, some of us waited for the next unfortunate phase for poor, debt vulnerable countries – the resumption of massive IMF lending. This is a movie that we’ve seen many times before. And we know the ending. Sadly, it’s less of a Hollywood ending and more of a Parisian tragedy.
It didn’t take long to get the IMF engine roaring. In 2008 and 2009, the IMF provided nearly $2.7 billion in new loans to Heavily Indebted Poor Countries (HIPCs). And, much more has been set aside for HIPCs and other poor countries. Granted, this lending was important for offsetting the impact of the global crisis and preventing further macroeconomic disruptions. The problem is that it also is greater than the total amount of IMF debt relief provided so far under the landmark 2005 Gleneagles Summit deal ($2.6 billion). In other words, the IMF has wiped out the achievement that civil society groups marched for and ultimately celebrated with only two years worth of new loans.