More than 500 organizations and academics from 87 countries, have issued a statement today calling on the International Monetary Fund (IMF) to stop promoting austerity and instead support policies that advance gender justice, reduce inequality, and put people and planet first.
Civil society organizations have signed a letter to the President of the IMF, expressing their deep concern over the IMF's advice towards countries to return to austerity once the current crisis has receded, expressing their concern for progress towards the Sustainable Development Goals (SDGs) and holding Governments accountable for the fulfilment of human rights issues.
The statement considered that the COVID-19 pandemic had revealed the difficult consequences of systematically vulnerable investments on health, education, and social protection, which were directly affected by the most vulnerable groups, including women, the elderly, ethnic minorities, informal workers and low-income families. This highlighted the appalling and worsening gap between the rich and the poor.
The signatories said that the IMF must use its influence and authority to support countries in reducing inequality, especially as it has repeatedly spoken of the need to reshape the way we live and build a greener, smarter, and more just world. The IMF has also spoken of economic and gender inequality, climate change and mismanagement that could weaken growth and undermine stability.
The signatories to the statement - including the Phenix Centre for Economic and Information Studies, which works to promote economic and social rights and the principles of sustainable development in Jordan - said that despite the IMF's ongoing warnings of deepening inequality, it has already begun to lock countries into conditional long-term austerity loan programmes in the past few months.
Beyond the requirements of these recent programs, the statement states: "We note that a large number of IMF emergency financing packages contain a language that reinforces fiscal consolidation in the recovery phase”. While governments are struggling to pay their increased debt and are expected to continue to need extraordinary levels of external financing for years to come, the IMF's loan programs – and the conditions that accompany them – will play a very influential role in shaping the economic and social landscape in the aftermath of the Coronavirus pandemic.
The statement emphasized that austerity and fiscal consolidation would only exacerbate poverty and inequality and undermine the realization of economic and social rights. This confirms the research by the IMF that, instead of achieving growth, some neo-liberal policies have led to increased inequality.
The statement noted that fiscal consolidation driven austerity would only worsen poverty and inequality and undermine the achievement of economic and social rights. The IMF’s own research corroborates this. Time and time again, rigid, and rapid fiscal consolidation conditioned in IMF programs has meant devastating cuts in health and education investments, losses of hard-earned pensions and social protections, public wage freezes, layoffs, and exacerbated unpaid care work burdens. In all cases, it is the most vulnerable people in societies who bear the brunt of these reforms, while the elite, large corporations and creditors enjoy the benefits.
The statement emphasized that financial restraint did not guarantee economic recovery nor create new job opportunities, and rapid integration might further deepen the economic downturn.
The statement called for the need to give governments the time, flexibility and support to achieve a sustainable, inclusive and just recovery. Immediate and urgent steps are needed to support the financial health of countries through grants and other highly concessional financing, supporting debt cancellation and restructuring, and issuing a new allocation of Special Drawing Rights. Medium to longer term recovery efforts, however, should continue promoting further fiscal and policy space that allows for an increase, rather than a decrease, in social spending, and progressive tax policies that collect sufficient revenue and redistribute wealth fairly.
The statement stressed on the priority of a systematically assessing the impacts of fiscal policy reforms on gender and economic inequality and rejecting those that have negative social impacts. It means negotiating agreements transparently with input from a range of stakeholders, including civil society, through national social dialogue.
The statement recommended and promoted progressive tax reforms such as taxes on wealth and the excess profits of large corporations, meaningfully combating tax evasion, avoidance, and illicit financial flows. And it means systematically supporting governments to restructure their debts so that they can prioritize investments in quality public services.
The statement concluded that the global economy “stands at a crossroads between further decades of austerity and debt crises, or adopting a macroeconomic framework compatible with fighting inequality, pursuing climate justice, realizing human rights and achieving the Sustainable Development Goals. Ahead of the 2020 IMF Annual Meetings, we call on the IMF to turn away from the mistakes of the past and finally close the dark chapter on IMF-conditioned austerity for good.”