Mozambican economist defends IMF, World Bank actions

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Mozambican economist defends IMF, World Bank actions

8:35 CAT | 02 Jun 2016

Some strands of current opinion hold that the International Monetary Fund and the World Bank impose governance models on countries accepting their aid which perpetuate their dependence on the institutions.

Mozambican economist Joao Mosca however believes that loans from the IMF and World Bank are aimed at preventing the collapse of the Mozambican economy and that the two institutions are not trying to impose any governance regime.

Mosca believes that the IMF has responsibilities above and beyond those of a normal financial institution, such as ensuring transparency, good governance, integrity and international financial stability.

According to Mosca this means ensuring the stability of member countries, and ensuring that they meet their international financial commitments. For this to happen, there must be a certain macroeconomic stability, “so that countries do not introduce negative elements into the international finance system”.

Mosca says that this is the primary function of the IMF, “and it is within this perspective, with all the criticisms that are possible to make [against the IMF], that the institution has played its role in relation to Mozambique, through the funding that it has given the country to cover the deficit in its balance of payments and the difficulties it would have had without such funding”.

Reacting to the criticism that the Bretton Woods institutions have tried to achieve political hegemony, Mosca explains that it was to ensure that the economies of different countries might grow that the Word Bank emerged as a bank for financing restructuring and economic growth projects.

Admittedly, the IMF also has a certain influence on regional banks like the African Development Bank and the Islamic Bank, which, along with international rating agencies, pay close attention to what the IMF thinks regarding the financial situation of countries.

In this, there are some countries in more positive territory and others in the negative, and the financial sector of the IMF acts accordingly.

Mosca also points out that the gains flowing from World Bank and IMF activities have to do not only with democracy and good governance, but also with profit.

An IMF mission is scheduled to arrive in Mozambique next month, reportedly in an effort to secure the lifting of the suspension of financial aid to the country resulting from revelations of undisclosed state-guaranteed debts in the public accounts.

Source: VOA News