Week #3: IMF & World Bank

The World Bank and the IMF are important international organizations that promote the advancement of developing countries, and help in the collaboration of developed countries investing in developing countries. The IMF in particular “lends to countries with balance of payments difficulties, to provide temporary financing and to support policies aimed at correcting the underlying problems”(IMF Website) these loans are to help reduce poverty in the country and allow the developing country to rise out of its economic turmoil. The IMF also is important in fighting against money laundering and terrorism throughout the world. The harm caused by corruption and money laundering helping criminal networks and terrorism has negatively affected developing countries ability to rise out of poverty making combating of these activities the utmost importance to the IMF. Like the IMF the World Bank also aims to reduce poverty and promote economic development. The World Bank also allows developed countries to loan large sums of money to developing countries for the advancement of industry and eradication of poverty. Some critics however argue that the developing countries are used only to the benefit of the developed and these organizations don’t fight for the developing countries, as they should. When a country gives a large loan to a developing country it seems to be helping the developing country but when we look closer the lines blur, as the developed countries business interests are involved with the development. Causing critics to believe that it benefits the countries that have more, than those in need of help, never truly allowing the developing countries to get out of poverty. While the IMF and World Bank promote ideas of reducing poverty around the world the implementation of these practices is not always the best.

Sub-Saharan Africa ranks last as a region on development goals of halving extreme poverty, of living on less than 1.25 a day, and hunger. One reason for being so far behind is weak government institutions that lack the power to implement effective policy change that would help reach these targets. This alone with the economic slowdown has caused Sub-Saharan Africa to fall short of other regions and “According to World Bank projections, sub-Saharan Africa will be unlikely to meet the target by 2015” (MDG Report 2014). Social spending is important to a country because it is a safety net protecting the worst hardship from the least fortunate. Social spending should try to be saved as it has in some sub-Saharan countries otherwise the affects of extreme poverty will be even more evident. Social Spending is the spending by governments of social programs that help out its citizenry. Programs such as providing basic healthcare and food stores is necessary to fight poverty and hunger because with out them people would suffer at a much greater rate. Keep the MDG’s on track was helped by previous gains during economic upswings but “The crisis was also mitigated by swift and significant assistance from international financial institutions and regional development banks”(The MDG goals 2015) easing the effect of the economic and financial crisis’s that hit the world. The crisis has slowed progress but with these measures in place by developed countries has helped foster sustained achievability of the MDG’s. The human development indicator in the Sub-Saharan African countries is substantially lower than much of the world with one of the lowest cases in the Congo. With the Congo having a .338 HDI we can infer that steps in this country but also region need to be taken to help lift their HDI number and advance these people in extreme poverty.

map_of_democratic-republic-of-congo

Oxfam raises the concern that the MDG’s are unattainable without drastic change. One criticism is “Not only is the quantity of aid insufficient, but the quality and effectiveness of aid has not improved enough either. The Rome Principles for Sustainable Global Food Security 1(designed to ensure national leadership, coordination and predictable funding) are far from being implemented in the field, and aid agencies are still reluctant to abandon the project approach”(Oxfam Halving hunger still possible). They do not believe that the aid being made available will truly allow the MDG to be achieved by its goal of 2015 without drastic measures taking place. Since the goals are so abstract and merely state halving hunger and poverty worldwide it leave little direct policy instructions for individuals countries. Many of these developing countries need more guidance to achieving these goals than simply a deadline for the results to take place. With help from developed countries and international organizations tangible plans can be put into place to help countries combat poverty and hunger.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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