Zambezia (1993), XX (i).THE RICH SHALL INHERIT THE EARTH:TOWARDS AN ANALYSIS OF THE ROLE AND IMPACTOF IMF STRUCTURAL ADJUSTMENT PROGRAMMES INSUB-SAHARAN AFRICAA. S. MLAMBODepartment of Economic History, University of ZimbabweAbstract'The rich shall inherit the earth' analyses the role and impact of International Mon-etary Fund (IMF) Structural Adjustment Programmes in Sub-Saharan Africa and arguesthat the programmes are mis-targeted, ineffectual and harmful to these countries. Itcontends that IMF programmes in Sub-Saharan Africa have resulted in reduced in-comes, increased poverty, deteriorating social conditions, reduced growth potentialand the deepening of dependency. Moreover, IMF austerity regimes worsen the condi-tions of the poor through, inter alia, growing unemployment, declining incomes,escalating prices for basic commodities and declining access to medical and educa-tional facilities. The laissez-faire ideology which the IMF promotes benefits the indus-trialized countries at the expense of the societies and economies of developingnations. The study recommends that ruling elites re-think their development strategiesin order to reduce balance-of-payments problems, minimize external borrowing, useavailable resources responsibly and thus avoid the need for IMF-type adjustmentprogrammes.In October 1990 Zimbabwe embarked upon its Economic Structural Adjust-ment Programme (ESAP), becoming one among five dozen countries, manyof them in Sub-Saharan Africa, who have turned to the IMF1 for funds torevive their economies and resolve their balance-of-payments problems.Zimbabwe's involvement with the IMF comes at a time when the role of theIMF in developing countries is becoming more and more controversial asits critics charge it with acting as an agent of Western imperialism whichseeks to reinforce neo-colonialism and dependency in the developingworld.21 While this article concentrates on the International Monetary Fund, it should be notedthat IMF structural adjustment programmes are designed jointly by the IMF and the WorldBank. In addition, the World Bank runs its own adjustment programmes which are fundedthrough its Structural Adjustment Loans (SALs). Comments advanced in this study on IMFadjustment programmes thus apply equally to World Bank programmes.2 Critics of the IMF include the following: C. Payer, The Debt Trap: The InternationalMonetary Fund and the Third World (New York, Monthly Review Press, 1974); C. Payer, 'The IMFand India1, in J. J. Havnevlk (ed.), The IMF and the World Bank in Africa: Conditionally, Impactand Alternatives (Uppsala, Scandinavian Institute of African Studies, 1987); J. Roddick, TheDance of the Millions: Latin America and the Debt Crisis (London, Latin American Bureau, 1988);D. Nabudere, Imperialism in East Africa: Vol. I (London, Zed, 1987); D. Nabudere, The PoliticalEconomy of Imperialism (London, Zed, 1977).5354THE RICH SHALL INHERIT THE EARTHCriticisms of the IMF focus mainly on the ideological underpinnings ofthe IMF structural adjustment strategy, the harsh conditions that alwaysaccompany the implementation of IMF programmes and the negative impactof IMF programmes on the economies of developing countries in generaland the poor in these countries in particular. On the other hand, supportersof the Fund hail it as an agent of economic development and a saviour ofthose countries facing serious balance-of-payments problems.3Developing countries criticize the IMF not because it is a harbinger ofpainful austerity programmes Š the need for austerity measures to solveeconomic problems is not at issue here Š but because its version ofausterity is perceived as one designed to benefit the powerful industrializedcountries at the expense of the economies and peoples of the developingnations. This view was clearly articulated by the former President ofTanzania, Julius Nyerere, in a speech in 1987 when he declared that theIMF was not 'a friend of poor countries' but an 'organization that is usedby imperialist countries, which actually run it, to control the economies ofpoor countries and to destabilize governments of the countries theydespise *The IMFs agenda, it is argued, is demonstrably injurious to both the^fT intereStS °f the P°or nations- especially since theIMFS adjustment Programmes is not to promote^H -C and ^K11 °m°US devetePment but to tighten theTheSptottnll f1^ !hC resources °f the recipient countries.ZJlA g with deliberately promoting the redistribution ofthe World Bank, at the post-Second World War £i Ł * '£** or«anizatiotl-- were determined, through these Sins to " W°°dS Conferenceand practices of economicliberalism tha" would°aPromotehthe Principlesinterests throughout the world Th«« Ł». ula aavance their economicfair, or free-ma^et princTpStSrtL^Mrch^^^^^^these are the same ideological tenets thaVnaWTPl°nS> eSpeCiaUy slncethe expiation of the developing ^^^^^< Economist Intelligence Unit,A. S. MLAMBO 55majority of the world's population to poverty and marginality in worldaffairs.6OBJECTIVES AND METHODOLOGYIn this article I seek to make a modest contribution to the growing debateon the IMF and its role in the developing countries by analysing theexperience of certain selected countries in Sub-Saharan Africa under theIMF regime. The study begins with a critical analysis of IMF adjustmentpackages for developing economies. Thereafter, using data from, and theexperiences of, these Sub-Saharan countries I attempt to evaluate theimpact of IMF programmes on these countries in general and the poor ofthose countries in particular. Finally, I will draw some general conclusionsbased on my findings.Because of the disparities in living standards in the various countriesthat will be examined and because income and poverty datum levels(PDLs) are likely to differ from country to country it would be futile toattempt to define 'the poor' precisely in dollar terms. For the purposes ofthis study, therefore, the poor are broadly defined as those groups whocomprise the majority of the populations of Sub-Saharan Africa, those whoare commonly referred to as 'low-income groups', that is, those whoseincomes are at the lowest end of the national scale.ROOTS OF IMF INTERVENTION IN SUB-SAHARAN AFRICAThe IMFs major role in recent times has been one of providing short-termloans to countries facing a balance-of-payments disequilibrium to helptide them over until they can balance their external accounts. IMF loansare designed to assist countries facing such crises so that they do nothave to resort to devaluation, import restrictions and other measuresconsidered injurious to free global trade and investment flows.7 While anumber of industrialized countries have borrowed from the IMF from timeto time, it has been the developing countries which have repeatedlyrequested the Fund for assistance. This can be explained by the chronicbalance-of-payments disequilibrium that continues to plague developingcountries Š which have been caused by a number of factors, both internaland external.6 S. Krasner, Structural Conflict: The Third World against Global Liberalism (Berkeley andLos Angeles, Univ. of California Press, 1985), 136. Krasner writes: 'The conditions imposed bythe Fund are strongly influenced by conventional market principles. The Articles of Agreementstate that the Fund should defend a liberal open economic order.'7 G. K. Hellelner, The IMF and Africa in the 1980s (Princeton, Princeton Univ., InternationalFinance Section No. 152,1983), 7.56THE RICH SHALL INHERIT THE EARTHBalance-of-payments disequilibrium is caused by, among other factors,overly ambitious government expenditure programmes which lead toexcessive borrowing, investment of borrowed resources in projects thathave inadequate rates of return, lack of central control and monitoring ofthe contracting of external debt, and problems caused by domestic policiesand exogenous factors, or both, that reduce the foreign-exchange resourcesavailable and constrain the country's ability to meet its contractualobligations on its outstanding external debt.* These and other factorshave played a leading role in creating balance-of-payments crises in Sub-Saharan Africa.External causes have ranged from declining markets, deterioratingterms of trade and high interest rates to the high oil prices of the 1970s.The fall m the terms of trade for Sul>Saharan countries in the 1970s and1980s was so drastic that the IMF itself characterized the fall as 'brutal'.9Z ? T^ countries of the region obliged to export more of theirprogressivelvless '" foreign currency, but the dramatic? "" f°'1OWing °PEC'S Price increases in thC 197°SgnCUrrenCy reSerVes they had- leaŽ8th""**^international trade andof tL?consumptionlmertS5not contribute to e^onom"patterns by the ruling classPsastrategy iuH^^^^S^^^^of.developmertabound of loan funds £ng^usedL^fŁ£*?* °f the "atiOn- ExamP'eSand other prestige promts which I stad'unis, conference centresnational financialTresourS be^ng 3inhon^° eC°n°mic ***&***. and ofbank accounts. For example ^SvrtSJ0**8" (Particularly Swiss)appropriated about US$71 millionToJ?tJ^e^Tean President, Mobutu,about US$14 million in the first It *heNatll 77 ndc«»e, Mobutu —. ^(ParticulaPresident, Mobutu,Bank in 1977 andinternationalFundA. S. MLAMBO 57with assets estimated at between US$4 000 million and US$5 000 million,including residences in France, Belgium and Switzerland.10In Zimbabwe certain members of the ruling elite have also takenadvantage of their positions of trust and have lined their pockets at theexpense of the more pressing needs of the majority of the people.Corruption in high places, as exposed in the 'Willowgate' scandal, com-pounded with the extravagant use of national wealth in constructingwhite-elephant projects such as the minimally-used National SportsStadium, have placed heavy strains on the economy.11 Meanwhile, thegovernment's socialist rhetoric, often contradicted by the openly bourgeoislife-style of some government ministers, added to the economic problemsof the country by discouraging investment and encouraging capital flight.An unusually large and unproductive bureaucracy absorbed a great amountof public funds, while the government's populist policies, emphasizing re-distribution and consumption rather than the creation of new wealth,inhibited meaningful economic development.12In addition to the irresponsible excesses of the elite outlined aboveone must also consider the fact that the ruling groups in most developingcountries favour a costly and inappropriate development strategy. In theirbid to 'catch up' with the West, elites in the developing countries tend torely on externally-funded development strategies which make use ofexpensive technologies funded through external borrowings. As a result,developing countries have, sooner or later, found themselves facing seriousbalance-of-payments problems.Unable to pay back their debts at ever-mounting interest rates (in1991, Sub-Saharan countries owed no less than US$175 000 million),strapped for foreign currency with which to continue normal trading,unable to secure more loans because of earlier defaults and facing acutebalance-of-payments problems, developing countries are left with no choicebut to approach the IMF for financial help. Since the 1970s the queue ofSub-Saharan countries knocking on the door of the IMF for help has grownsteadily longer.1310 W. J. Leslie, WortdBank and Structural Transformation in Developing Countries: The Caseof Zaire (Boulder, Lynne Rlenner, 1987), 68-75.11 Details of the 'Willowgate' scandal may be found in Zimbabwe, 'Report of the Commissionof Inquiry into the Distribution of Motor Vehicles' [Chairman: W. R. Sandura] (Harare, Govt.Printer, 1989) and Zimbabwe, 'Report of the Second Commission of Inquiry into the Distributionof Motor Vehicles' [Chairman: W. R. Sandura] (Harare, Govt. Printer, 1989). Among otherexpensive projects undertaken since Independence which have been criticized are the HarareInternational Conference Centre and the Heroes' Acre.12 Admittedly, some re-distribution of wealth was necessary to correct the imbalancesinherited from the colonial era. Such redtstrlbutive measures were not, however, alwayscomplemented by effective and meaningful efforts to increase national wealth.'3 M. B. Brown and P. Tiffen, Short Changed: Africa and World Trade (London, Pluto,1992), 5.58 THE RICH SHALL INHERIT THE EARTHIMF CONDITIONS: A CRITIQUEBorrowing from the IMF, however, is a costly exercise both in the shortand long term, mainly because of the conditions which accompany anyIMF loan. Before the IMF extends a loan, it requires that the potentialborrower sign a Letter of Intent agreeing to implement a number of IMF-designed economic reforms. Initial and subsequent financial support fromthe Fund is conditional upon the borrowing country adhering strictly tothe terms and conditions laid out in the Letter of Intent. It is these conditionswhich have made the IMF a resented institution in the developing countries.The standard IMF package requires that the borrowing country under-take measures to restructure its economy through, inter alia, demandmanagement, currency devaluation, trade liberalization elimination °lprice controls, reduction of budget deficits through, among other things,removing government subsidies on a variety of consumer goods andn31?!!1?^1'68* ratCS tO their naturaI market levels to discourage cap**1flight. Other requirements are that governments should reduce state invest-ment in the economy, privatize public corporations such as parastatalsH C 1OCal eC°nOmy to forei*n investment."iS applied toof given ^S^^^f^^TtO ^ SPeCific -rcumstanthat the intention of ihe IMHs ind^o o" ST* ^ CmCiSm ""?&each country in order to hSn£?'£?rOVldea Solution tailor-made V*However, as has been umZ V become economically independent"ensuring the ZSZ'SS^T^ T * ^^ Crested £nomic order based on the fre?,? K*aBc type of international eC<raccording to the principles"f SnSmc ^^^ CaPita»St ^strait-jacket approach to globaler llberalls>n- Given this fact, «£remarkable. 8 ^ economic problems is not particular'^management'prescription^ which^f,? i°*ltS unwaver«ng adherence. Cheru, The Silent Revolution in Africa 37.A. S. MLAMBO 59those of excessive demand but of insufficient production. Developingcountries resort to importing food and manufactured commodities notbecause demand for those commodities is too great for the otherwise
adequate local supply but because local farmers and industrialists do notproduce enough to meet mass demand for essential products. While IMF
measures to curtail local demand might indeed help to balance the recipientcountry's external account, such prescriptions offer only a palliative andnot a cure because they do not address the real source of the problem.A more fundamental criticism of the IMF's programmes is that theyworsen rather than improve the recipient countries' economic situation.Stewart's study reveals that Latin American and Sub-Saharan Africancountries which implemented the IMF's structural adjustment programmesin the 1980s 'found themselves with reduced real incomes, increased
poverty, deteriorating social conditions, reduced growth potential andoften with no significant improvement in their external accounts'.16Sudan's experience during its adjustment period (1977-1984)corroborates Stewart's conclusions. By all economic indicators, Sudan'seconomy was worse off in 1984 than it had been in 1977. In the eight yearsof the IMF regime, Sudan's current account deficit increased from 6 per
cent of GDP in 1977/8 to 11 per cent in 1983/4, the total foreign debtincreased from US$2 000 million to US$86 000 million and the debt-serviceratio rose from 19 per cent in 1978 to over 150 per cent in 1984.Other indicators of the poor performance of the Sudanese economyinclude the steady depreciation of the Sudanese pound to 27 per cent ofits 1978 value, the decline of GDP per capita from US$483 in 1977 to US$344
by 1984, the rise in the annual rate of inflation from 20 per cent in 1977 to
over 40 per cent in 1983, and an increase in the government's budgetarydeficit from 5 to 9 per cent of GDP. In addition, Gross National Savings fell
from 2 per cent to 0,3 per cent of the GNP in the same period.17A 1989 United Nations Economic Commission for Africa report castserious doubt on the efficacy of IMF/World Bank structural adjustmentprogrammes in Sub-Saharan Africa by demonstrating that in the period1980 to 1987, non-adjusting countries experienced economic growth whilethe economies of the strong adjusters actually declined. The Commission'sfindings are presented in Table I which clearly shows that IMF programmeshave not promoted economic growth in Sub-Saharan Africa.The IMF always insists on liberalization of trade through the removalof exchange and import controls. As Payer notes, this is a strange16 F. Stewart, 'Should conditionality change?', in Havnevik (ed.), The IMF and the WorldBank in Africa, 29-45.17 R. Brown 'The rationale and effects of the IMF stabilization programme in Sudan', in B.Campbell (ed.), Political Dimensions of the International Debt Crisis (London, Macmillan,International Political Series, 1988), 28.60THE RICH SHALL INHERIT THE EARTHTable ICountryStrong adjustersWeak adjustersNon-adjustersAFRICAN1981%-3,015,443,92ECONOMIC GROWTH, 1980-19871982%0,333,463,351983 1984% %(1980 =-3,85 -4,310,66 -1,293,53 3,681985%0)6,330,136,401986%2,824,013,621987Aoemge% %-1,971,88-2,51-0,532,003,50Lf i£V\£les quoted in United Nations Economic Commission for Africa.80s (Addis Ababa, United Nations Economic Commission for Africa, 1989)-requirement since developing countries impose exchange and importcontrols precisely to conserve scarce foreign currency resources.18 Toprescribe the removal of such controls to a country which is alreadysuffering from a scarcity of foreign exchange - which is why the IMF loanwas necessary in the first place - is, in effect, to accelerate the loss d3 UrrCnCy u tO enSUre that what may h^ been a temporarya chronic or teŽinal disease. The only countries likelytohwas forced totrade leads to a floodin8 of the loc*g°°dS Which ultil"ately destroy local busi'S^"-On the availab»«y of a protected market-V 'Ster f°r Local Government, Paul Bomari-paSf^miLe^BOMaSo" ^ H^ ?*""Ł* ^ mxM°greduce production because the a P°rat'°n that " had been forced t0.foreignmatches.'9WhrieatmavD;?re[Kment W3S all°Win8 the imP°rt °(inefficiencies in business"Sm o^ ftpr°teCtedmarketsm^ypromotedeath of indigenous enterSe « ' rema'nS to be Proved that thefrom more developed couS^aLn1,0' Unrestricted competitionIn any case, the recent SpiTes?1ZTŽ"Ž * ^ long rUn"show that countries do not have nV7n » Korean economic successesto develop their economiesTcVori? W 'MF liberAii^on prescriptionsJapanese Ministry of rZe £^ Indus^rv. H ""^ **"** repOrtS' th6Łn the book to transform thrjar*Z! ^ CVery interventionist trickfrom import restrictions foreiCT^h eCOnomy- Measures used rangedns, foreign-exchange control and protection of local'"Payer, The Debt Trap, 33,4Economist Intelligence I init TUnit, Tanzan,a and Mozambiaue: Country Report WT>, —. 15.A. S. MLAMBO 61industries to selective nationalization of key economic sectors. WorldBank experts themselves acknowledge that Korea's success was notachieved by a close adherence to the principles and practices of neo-classical economics based on the operation of unimpeded free-marketforces but through the use by Korean authorities of the 'entire register ofPolicy instruments' of planned economies. The Korean strategy 'brokeevery single one of the commandments' prescribed by the IMF and WorldBank for Africa.20 Why the strategy that the experts acknowledge washighly beneficial for Korea is considered to be extremely harmful forAfrica has not been fully explained by IMF experts.H liberalization is harmful, devaluation is even more deleterious to therecipient countries. The IMF argues that a devaluation of a country'scurrency makes its exports cheaper and therefore more attractive tooreign buyers. A country which increases its exports, it is argued, must ofnecessity increase its foreign currency earnings. Is this in fact true?^dence suggests otherwise. Because of the ever-deteriorating terms ofade for primary products, the reduction in the value of a nation's currencyaV indeed lead to an increase in the external demand for its products buthout necessarily increasing its net earnings. According to one study,19s'n ^merica increased its export volume by 7 per cent between 1980 and4, but export revenue on each unit exported actually fell by 6,5 perent during the same period.21_'n any case, given the fact that developing countries tend to produceilar products for the same market and that IMF structural adjustmentt_ Srammes are implemented in many developing countries at the samejs e> the competitive edge which is supposed to result from devaluationha U ec* by the fact that many producers of the same commodity (whichco °OW Deen made cheaper through the devaluation exercise in eachCo n*r^ se" their product in the same market, resulting in intense"j^M d dd iCoth "j^Mon among them and exerting downward pressure on prices inthr ernational market. The gains that are supposed to accrue to countries°u8h devaluation may thus turn out to be more imaginary than real.o{ Another problem with the devaluation strategy is that while the pricesfro c°untry's exports fall the cost of acquiring manufactured inputsirn ^ t*le industrialized countries continues to rise, making it increasinglyl9>?Ss'ble for domestic consumers to afford imports. For example, inlat Tanzania could buy a seven-ton truck for 38 tonnes of sisal: 10 yearser Tanzania had to pay 134 tonnes of sisal for the same type of truck.^.. Ž°rld Bank, 'Capital Accumulation and Economic Growth: The Korean Paradigm°rt7?8t°n DC, World Bank, Staff Working Papers 712, 1983), quoted in Brown and Tiffenj, ""nged, 14-16.k, Dance of the Millions, 87.62 THE RICH SHALL INHERIT THE EARTHKenya's terms of trade for its tea and coffee exports fell so dramaticallybetween 1960 and 1980 that in 1980 Kenya had to export 40 per cent moretea and coffee in order to import the same amount of machinery and fuelas it had imported in I960.22The IMF's emphasis on trade liberalization and expansion of exportproduction has disturbing implications on the future role of the developingcountries in the international economic system. The IMF's measures arepredicated on its belief that the economic problems of developing countriesstem from insufficient exposure or openness to international influencesand forces. It insists, therefore, that opening up a country's economy isthe crucial first step on the road to economic recovery and development.Most developing countries would not agree with this analysis, for theywould maintain that their problems are precisely the result of the fact thattheir economies have always been too open to Western influences andforces.There is an abundant literature showing how the developing countrieswere incorporated into the evolving world capitalist system as sources ofraw materials and consumers of finished products. The internationaldivision of labour, which evolved over centuries and is characterized bythe pervasive penetration of Western capital into the countries of Africa,Asia and Latin America, underdeveloped these countries while promotingi Development of the economies of the industrialized countries of!iTJiŽTStern Eur°Pe-23 The IMF's emphasis on developing~" ^sector thus reinforces the status quo and ensures''""'wi" remain as suppliers of raw materials to therer notes, countries which implement IMFJ^Ž^1 back into the very economic pattern' " " find that their efforts are rewarded;dSi tscitizens, but with temporaryTeSo eCOnomy and * better Hfe for .'£The export-led grWtTstr*Ji?r Immediate payments difficulties'.24disastrous for developcounSe? Promoted «* «ie IMF is ultimatelybiotechnology which produce suSif^i8115' ta the Hght °f advances ineroding Africa's share of the world te l°T primary Products, thereby'changing the whole nature of thel^f- Bi°technology is graduallyne m«rket for commodities', and is givingEuropa, 19*86) AT'a^aHubb^'Ec^noJ?^^6''j,nAMc? South of the .Sahara /S87(London.a There is a vast array of works on thi dS " Afr'Ca' 1986>I ln lbid' 51-mT)- w""l£i?m a"i Underde^'opmer,t in Lati^^ aŽ%8 w*ich m the following: A G.^' ^"ey How Ean>Pe """erfeoeto^JTfrc"®^Ž York- Mon«hly Review Press,The Mo**Ž World S"/*!"! (Washington Howard Ui Pressow Ean>Pe """erfeoeto^JTfrc"®^Ž York- Mon«hly Review Press,loroLan^wwc6'"1 The Mo**Ž World S"/*!"! (Washington, Howard Univ. Press,European World System in the Sixteenth Centur?>SaPitalist Agriculture and the Origins of therap, 46. tNew York- Academic Publishers, 1974).d System in the Si" Payer, The Debt Trap, 46.A. S. MLAMBO 63manufacturers much greater flexibility in their choice of primary commodityinputs. It is already evident that the days of manufacturers' reliance onone or two sources of primary products are numbered.25 Given thisscenario, should Africa's future really be dependent on producing more ofthe same traditional primary commodities or is Africa soon to find itsproducts irrelevant to the needs of the global market?In any case, export-led growth strategies are being championed at atime when protectionism is on the rise in the industrialized countries. Thesetting up of trade blocs such as the European Economic Community andthe recently established North American Free Trade Area means that, justas the developing countries are moving towards free trade, the indus-trialized countries are becoming more restrictionist.26Furthermore, the emphasis on export production in order to maximizeforeign earnings has a negative impact on both local food production andindigenous manufacturing enterprises. Because exports pay well andprovide access to the much-prized foreign currency, agriculturalists concen-trate on cash-crop production for export rather than food crops fordomestic consumption. The concentration on export production alsoweakens the peasant sector as large-scale mechanized plantations pro-ducing high-quality cash crops Š to be consumed in Paris, New York andLondon Š expand, displacing small-scale peasant farmers in the process.The Sudanese experience clearly shows the negative impact of export-promotion strategies on domestic food production. After the introductionof the IMF structural adjustment programme in Sudan in 1978, the Sudanesegovernment embarked on a massive capital-intensive agricultural projectcode-named the 'Breadbasket Plan'. The emphasis on the production ofcotton and grain under this plan had two very negative effects on theSudanese economy and society. One result was the progressive redistribu-tion of land from the small-scale producers to the wealthy classes (traders,military officials, large landowners and agricultural businesses) whichcould afford the huge capital inputs required under the Plan. Small-scaleproducers were pushed off the land. Secondly, food production for localconsumption fell sharply with the result that by the time of the 1983famine, Sudan was not in a position to avert or minimize the crisis.27In industry, the emphasis on exports means supporting large industrieswhich have the foreign connections and capability to penetrate Westernmarkets. Small industries which lack the necessary capital resources, theexpertise and sufficient knowledge of international markets cannot switchover easily from producing for local consumption to servicing the export25 Brown and Tlffen, Short Changed, 32.» Standard Chartered Bank, Africa Quarterly Review (1992), i, 5.2' J Predergast, 'Blood money (or Sudan: World Bank and IMF to the rescue', Africa Today(1989), XXXVI, ill/iv, 44.64 THE RICH SHALL INHERIT THE EARTHmarket and are likely to be squeezed out by their competitors. They needa prosperous domestic market in order to survive and yet it is exactly thisdomestic market which IMF programmes destroy through wage cuts, hightaxes, high interest rates, price increases and removal of subsidies onbasic consumer goods.High interest rates and credit restrictions, which are the hallmark ofIMF programmes, give multinational corporations a distinct advantageover small-scale local businesses in securing scarce credit for businessoperations. Because of their size and financial muscle, multinationalcorporations can either borrow locally at prevailing interest rates orsecure the necessary funding from parent companies abroad. They willthus be able to survive the credit squeeze, whereas the local companiesfind it difficult, if not impossible, to borrow and must either curtail orcease their operations.The cost of borrowing money at home becomes prohibitive at thevery time that local companies are expected to revamp their operations inorder to produce products acceptable to consumers in the developedworld ,n equal competition with established international companies,.m i/l* daunting task for even the most determined and enterprisingSLJVT ?>erator- Indeed' by October 1992 the Confederation ofICS r* *""* comP'aining that the government's tight^Th KC!ng noiw*P°r«ng companies to the wall.28h ?C balance<rf1«yments situation ""'<* the iMFclaimsJ aUSteri!y measur«, there is little evidence to showSZJZSSZSZ r«2S££th!s Ž ^ther than afiievinidebt levels, both Sudan and T»« account deficits and total foreigndebt burdens undef£e MF I*uoT * reC°rded »«'Ł«Ł« defiC"S ^shown, Sudan's currentac^ntT^ " adjUStment re«ime M ^^between 1977 and SL SiXly ^* increased from 6 to H per centincreased from US$302 million in IQJ3"13 s current account deficitoverall debt rose from US$2 ?43 m!m tO US$425 million in 1"° whUe itSperiod.»It is clear from tfe abtte tnlw^ °?5 ^ million in thft T*nor appropriate in remedying the nrlfi!. schemes are neither effectiveTo conclude this section the ob, ^ "* suPP°sed tO S°lve-the net results of IMF programmes.^rvattons of Payer are instructive onThe programmes result, typically in th^ f .nesses by their foreign competitors The« t?*e<>ver of domestically owned busi-Ł « stabilization programme puts the squeeze» Economist Intelligence Unit, Zimbabwe Co"Brow»- 'MFStabilization ProgrammeTsuH ^ **"*0"3)''' 13"wmbiweCountv Report MonM^£n ,28: Economist Intelligence Unit, Tanzon/ompi]ed from various years between 1984 andA. S. MLAMBO 65on domestic capitalists in several ways. The depression which it causes cutsdeeply into their sales. Devaluation raises the costs, in local currency, of allimports needed for their business, and of all the unpaid debts resulting from pastimports. This, a severe blow in itself, is compounded by the fact that the contrac-tion of bank credit makes it more difficult than before to get the loans they need tocarry on operations. Finally, the liberalization of imports robs them of the pro-tected markets they had enjoyed before.30THE IMF AND THE POORDefenders of the IMF claim that its programmes are necessary to make theeconomy more efficient and responsive to market demand, and thatprotected markets, government subsidies, price controls and other non-market mechanisms create distortions in the economy. From a classicalliberal economic point of view, this is sound reasoning. What the pro-ponents of IMF-promoted free-market economies do not address, however,is the question: efficiency for whose benefit? Which groups shoulder theburdens of structural adjustment and which enjoy the fruits? Who paysboth in the short term and in the long run?The IMF has repeatedly been charged with worsening the livingconditions of the poor and redistributing resources and income to thealready powerful and the rich. Indeed, F. Cheru has labelled the IMF andthe World Bank 'enemies of the poor'.31 The IMF response has been two-fold. Its first defence is that the organization does not concern itself withhow governments distribute the burdens of adjustment. It merely advisesgovernments on how much spending has to be cut, but it is up to theborrowing government to decide where those cuts are to be made.According to one IMF official, 'imposing our own income distributionobjectives on other countries may be considered as infringing on theprerogatives of sovereign governments'.32 This is as a good example ofdouble-talk as any since IMF conditions amount in fact to dictating to therecipient country how to organize its finances.In response to the IMF claim that it is neutral on the issue of thedistribution of burdens, Payer writes:This is simply a lie. The IMF has quite definite ideas about who should bear theburden of spending cuts Š also definite ideas that wages should be repressed andsocial spending curtailed while tax concessions are given to foreign investors andlaws are changed if necessary to facilitate foreign participation in the economy.30 Payer, The Debt Trap, 41.31 Cheru, The Silent Revolution in Africa, 67.32 L. M. Goreaux, 'Responses by representatives from the IMF and the World Bank', inHavnevlk (ed), The IMF and the World Bank in Africa, 85-92.66 THE RICH SHALL INHERIT THE EARTHPayer argues that the IMF ensures that the wealthy, those who enjoyedthe fruits of earlier borrowing and who are responsible for the accumulatedforeign debt, do not suffer from the negative impact of the adjustmentexercise. The IMF targets the poor who have not been 'responsible for thedebt buildup, those who have gained the least or nothing' from pastborrowing but who must shoulder the burdens of the adjustmentprogramme.33Occasionally, the IMF admits that certain groups do indeed suffer as aresult of the adjustment exercise. For instance, one IMF official stated:It has been said that Fund programs have the effect of worsening the situation ofthe urban poor and it is true that the elimination of food subsidies has often hadthis effect. But the great majority of the African population live in rural areas. Tnereduction of subsidies on imported food in urban areas has the effect of improvingthe terms of trade of the rural population in relation to the urban population, anathe rural poor are often poorer than urban poor.34What are we to make of the above statement? That it is fine for thepoor to suffer as long as it is only the urban poor who do so? If so, in whatway have the urban poor been responsible for the economic crisis thatthey should be so heavily penalized?Evidence shows quite clearly that the negative impact of IMF reformsA VSE? PŽnounced on both the urban and rural poor in recipient countries-A 1990 World Bank study defined individual well-being as a product ot arange of factors, including adequate consumption of goods and services.thT # Ł US> achlevement and security, adding that 'because most pithese factors can be attained in the market, available income will generally^S^r !?them md this is the most commonly used measure of" t i fr theaccess toT i!?em md this is the most commonly used measutowertnrL " to aPP«*iate what IMF programmes mean for thhe oro£T gn?UpS °f the reciPient countries, it is necessary to analyseZT^ lmpaCt On real incomes- standards and cost of W**'?* educational services and employment opportunityf3"311 Afrlcan COUntrles imP'ementing IMF prescript^-in mtroduction of IMF austerity measures in ZaU*1*memiuDuSed CS deC"ned drastlcally in the 1980s. By 1985, g"71975 levels TlZT ***** ^ ^ tO leSS than °^third °fi"86 maU°n reached 65 * t d to71975 levels TlZT * tO leSS than °^third ° Uper cent increie",86' maU°n reached 65 *~ Cent compared to *f25 per cent rTZ "?.annual earnings for most workers. This represent**1 a» per cent reduction in real incomes for those working in the for*1*1JhIMF "^ India' 66"7-JR35 WorlJnJank^TT"^ by rePresentatives from the ^F and the World Bank", 87.178. ' e Wort<' Development Report, 1990 (Washington DC, World Bank.A. S. MLAMBO 67sector during that year. In the period 1981 to 1989 average per capitaincome declined from US$685 to US$240.36 Indeed, as Table II shows,workers' real income declined 58 per cent between 1984 and 1990 eventhough wages rose nine-fold in nominal terms.Table IIAVERAGE WAGES IN ZAMBIA 1984-1990 (1983 = 100)Year Nominal wage (ZK) Real wage (ZK)1984 112,0 93^21986 170,8 68,31988 301,0 54,01990 913,0 4U5Source: Zambia, Report of the Commission of Inquiry into Prices and Incomes (Lusaka, Govt.Printer, 1991), quoted in Standard Chartered Bank, Africa Quarterly Review (1992), i, 22.In Zimbabwe, a survey conducted by the International Research andDevelopment Centre in 1993 discovered that, for lower-income workersliving in Kambuzuma, Harare, wage levels lagged far behind the 45 percent increase in the cost of living between July 1991 and July 1992, resultingin a decline of 35 per cent in real income.37 Similarly, following Mozam-bique's implementation of IMF adjustment measures, living standardsplummeted by more than 8 per cent between 1990 and 1992.38 To makematters worse, the decline in real incomes occurred at a time of risingprices for basic commodities as a result of a combination of factors thatincluded high levels of inflation accompanying IMF adjustment programmes,the dwindling purchasing power of the local currency due to IMF-induceddevaluations and the removal of price controls by the recipient govern-ments. Commenting on this phenomenon in 1990, the Economic Intelli-gence Unit stated that in Zambia in 1989 after the removal of price controlsprices have rocketed, pushing the inflation rate over the 100 per cent mark by theend of the year. Wage Increases have not been sufficient to compensate, and withaverage salaries still in the ZK200-S00 a month range, meat is now about ZK125/kg.Even spinach ... costs ZK15/kg.The escalation in food prices was such that farmers were reported to be'throwing away eggs because people could not afford to buy them'.3936 Standard Chartered Bank, Africa Quarterly Review (1992), I, 22.37 Reported in The Daily Gazette [Harare], 1 Mar. 1993, 10.38 Standard Chartered Bank, Africa Quarterly Review, 15.39 Economist Intelligence Unit, Zambia: Country Profile (1990), i, 9.68 THE RICH SHALL INHERIT THE EARTHIn Zimbabwe the rise in the rate of inflation following the government'sdecision to relax price controls in 1991 led to a rapid escalation of pricesfor basic consumer goods. According to the consumer price index for theyear ended 30 June 1991, prices for all items rose by 22 per cent comparedwith the previous year for the higher income group, while they rose by 23per cent for the lower income group. In the same period, the cost of livingfor the lower income group rose by 16,4 per cent compared with 11,5 percent for higher income groups. Transport prices rose the fastest for thelower income group, at 50,9 per cent, followed by food at 19,4 per cent.40Following yet another dramatic increase in prices for basic consumergoods in Zimbabwe in 1992, the consumer price index for lower incomeurban families rose from 45 per cent in July to 53,9 per cent in October.The fastest growing categories in this index were foodstuffs and transportwhich were 64,7 per cent and 55,4 per cent higher, respectively, than ayear earlier. Meanwhile the Zimbabwe Congress of Trade Unions reportedthat wage increases in 1992 amounted to only between 7 and 15 per centŠ which implies a very substantial cut in the living standards of ordinaryworkers.41The erosion of the real incomes of the poor means that even if theadjustment programme should succeed in increasing goods in the localsnops, the cash-strapped poor still cannot afford them. For example, inlanzania, after a whopping 160 per cent price increase for clothing, farm>mplements and textiles in October 1986 as a result of the devaluation of^ir ShUling' the Britlsn"based Economic Intelligence Unit,***«Ł '" *e shops in Dar-es^alaam andgeneral but particularly^Au^TTmT^ a''" AMca*«» o,theSaharaEconomist Intelligence Unit, Zimbabwe: County Profile (1993), i, 15tconomlc Intelligence Unit. Tanzania, Mozambique: Country Report (l<toT) , 12A. S. MLAMBO 69decline in nutritional standards and access to health care, clean water andaffordable food supplies.43 In Zambia, Tanzania and Ghana, diminishedlevels of immunization were recorded during the adjustment period asgovernments were compelled under the austerity regime to decrease theirbudgetary allocations for health.44 In Zambia the deterioration in healthservices was partly the result of the fact that, as real wages fell in the1980s, doctors and other health professionals emigrated to other countriesin search of greener pastures.45 Similarly, in Zimbabwe the removal ofsubsidies for basic consumer commodities and the ensuing sharp rise inprices eroded the standard of living and promoted a 'brain drain' ofmedical personnel who moved to other countries where opportunitieswere more promising.As expenditure for health, education and other social services are cut,it is the poor (who cannot afford expensive private doctors and privateschools) who bear the brunt of the austerity regime. Primary health-carefacilities deteriorate, child immunization programmes are either suspendedor curtailed, child-feeding programmes are put on hold and housing pro-grammes for the poor are either scaled down or stopped completely.Perhaps most worrying is the fact that the lower income groups areunable to feed themselves adequately.The International Research and Development Centre's survey of theeffects of the adjustment programme in the Kambuzuma high-densitysuburb of Harare found that, as a result of massive increases in foodprices, 'expenditure on food declined ... by 23 per cent' for the poorest25 Per cent of Kambuzuma's population. As one of the interviewees clearlyput it,I ain the only provider for the family. My son has been retrenched. Where can hefind Work? Where? We now live from hand to mouth. We can't save a cent. We usedto eat eggs g^^ fru|t. We used to have soft drinks. We now eat meat only once aweek but even vegetables are expensive.Another respondent summed up the situation neatly: 'Life is much hardernow. if yQu can affor(j to eati yOU eat if yOU can't, you don't.'46^hat statistics are available on the impact of the adjustmentPr°8rarnmes in African countries indicate that the erosion of the living^?ds of the poor has far-reaching consequences for their health. AUNlCEF study entitled Adjustment with a Human Face documented ane |n infant mortality and child death rates in Ghana and Zambia inleru, The Silent Revolution in Africa, 241.,5 sParks, 'Economic trends in Africa south of the Sahara'.,5 ^-herut The Silent Revolution in Africa, 137.^e Daily Gazette, 1 Mar. 1993, 10.70 THE RICH SHALL INHERIT THE EARTHthe 1980s. Other indications of the negative impact of structural adjustmentprogrammes were revealed in declining nutritional standards, and anincrease in disease prevalence and decreasing access opportunities tohealth services. According to the study, Ghana reduced per capitaexpenditure for health in 1982/3 by 80 per cent of the 1974 level. The resultwas an increase in infant mortality rates from 86,0 per 1 000 in the 1970s to107 per 1 000 in the 1980s, while child death rates also rose from 15 tobetween 25 and 30 per 1 000 in the same period. Malnutrition among pre-school children rose from 35 to 54 per cent between 1980 and 1984 whileaccess to and use of health facilities declined considerably as chargeswere introduced by the government as part of its cost-recovery measures.Similarly, in Zambia the percentages of incidence of malnutrition as acause of mortality for the 1-14 years age bracket increased from 27 to 43per cent between 1978 and 1982.47While reliable statistical evidence showing the programmes' impacton malnutrition and child mortality rates and attendance at hospitals inZimbabwe since the introduction of the IMF programme is not available,impressionistic evidence suggests that the poor are beginning to avoidhospitals. This was spelt out during a Catholic seminar held at SilveiraHouse, Harare, in January 1992:The introduction of hospital and treatment fees adds to the decline of the healthsituation. For example the attendance at clinics and at Musami Mission Hospitalnas dropped by over 25% since January 1991. This indicates that people who areunable [sic] just stay away. Lower statistics of attendance don't indicate a betternealth of people but people just suffer without medical care or even die at homebecause of lack of medical care.48In addition to the effects outlined above, the poor are furtheraisadvantaged as governments reduce expenditure in education andintroduce cost-recovery measures by charging market rates for educationalservices which hitherto were either subsidized or provided free of charge,^auction of expenditure on education leads to a deterioration offor e« Ł Standards-A1989 reDOrt °n the state of education in Tanzania,ror example, noted that, because of budgetary austerity, Tanzania's schoolse sintering shortages of resources, particularly desks and books, whichb^tea^r^8 tea°hing- Many primary schools in niral areas have noJNICFF F"Z,Mbl^tuatlon A"^8'8 of Children and Women in Zambia' (Lusaka, ZambiaP. Balleis, The Social implications ofESAP (Harare, Silveira House, 1992), 6.economist Intelligence Unit, Tanzania and Mozambique: Country Report^1989), iv. I2-A. S. MLAMBO 71Furthermore, education also suffers from a loss of teaching personnelas teachers, fed up with rising prices and declining standards of living,vote with their feet and move to other occupations or emigrate in searchof greener pastures. Governments may also cut down on the number oftheir teaching staff. Because of deteriorating working conditions duringthe years of austerity, the Ghana school system lost no less than 4 000qualified teachers between 1977 and 1981.50 In Zaire 7 000 teachers weretaken off the government payroll in 1984 as a result of budget cuts.51The combination of the loss of qualified personnel, low educationalbudgets, lack of adequate teaching aids and low morale among the teachingstaff results in a serious decline in educational standards. The situation isworsened by the fact that sometimes the teachers who remain in theschool system are compelled to supplement their incomes by engaging inother income-generating activities outside the classroom. For example, by1992 Tanzanian teachers' disposable income had fallen so low thatinstructors 'even at university level are compelled to have two or moreoutside jobs to obtain a reasonable standard of living'.52 Naturally enough,these teachers become less than effective in the classroom.Cost-recovery measures in education frequently lead to a decline instudent enrolment as parents find it more and more difficult to meet theescalating costs of school fees and uniforms and withdraw their childrenfrom school. When school fees were increased in 1982 in the Bendelprovince of Nigeria, primary school enrolment decreased from 90 to 60per cent over the following 18 months.53 Similarly, school enrolmentdeclined sharply in Tanzania after the announcement by the Ministry ofEducation of increases of between 50 and 100 per cent in fees for secondaryeducation in 1988 and a government statement that it would soon shift theburden of paying for university education from the state to universitystudents and their parents. By 1989 only 70 per cent of children of school-going age were enrolled in school as compared to 80 per cent in 1984. Thedrop in the enrolment levels was attributed to the fact that the cost ofeducation had become too high for low-income parents, while economichardships meant that children were now required by their families 'toengage in immediately productive activities to supplement their families'income'.54IMF structural adjustment programmes also increase unemploymentlevels in the recipient country. This is because the economic depression50 UN1CEF, Adjustment with a Human Face, 29.51 Ibid., 73-4.52 Sparks, 'Economic trends In Africa south of the Sahara'.M UNICEF, Adjustment with a Human Face, 34.54 Economist Intelligence Unit, Tanzania and Mozambique: Country Report (1989), i, 9.72 THE RICH SHALL INHERIT THE EARTHinduced by IMF prescriptions frequently cripples the domestic capitalistsector and many local businessmen are forced either to go out of businessor to curtail their operations. As companies contract or collapse, hundreds,if not thousands, of workers are made redundant.According to the Employers' Confederation of Zimbabwe, 7 500 workerswere retrenched in the country's mining and engineering industries betweenJanuary and November 1992. The Zimbabwe Congress of Trade UnJ°J?fgave a significantly higher figure and reported that 7 000, 6 000 and 3 W*»jobs had been lost in the sugar, clothing/textile and leather industries yNovember 1992.55 Meanwhile, it is estimated that, by the end of the ad^~ment programme, job losses will amount to approximately 23 000, 2 Łand 20 000 in the public service, in parastatals and in the private sect ^Altogether, about 27 per cent of all workers who entered employ1*1^,since Independence are likely to be retrenched by the end °'programme.56 Those who retain their jobs may have to take wage cU*S-tvwage freezes which are required by the measures of the auster'programme. wThe unemployment problems in Zimbabwe will be compounded .^the fact that there are over 200 000 school leavers every year who vl°Xleshave found it difficult enough to obtain jobs under normal circumsta110 tbut who are now never likely to become employed since IMF adjusti"6programmes lead to economic contraction rather than expansion. o\To compound the problems further, the poor also run the ris" jtlosing their homes as loss of income or high mortgage rates ^eimpossible for them to keep a roof over their heads. The 2imbadaily newspaper, The Herald, of 16 February 1993 reported that °hundred houses, mostly in Harare's high-density suburbs, hadauctioned by building societies after their owners defaulted onpayments. In the words of the chairman of the Association ofSocieties in Zimbabwe, Graham Hollick, the situation was likeYdeteriorate 'as the number of people being retrenched increases, and -''inflation continues at such a high level leading to a reduction in disposaincome'.57Given the disastrous impact of IMF programmes on the poor it «s 0^isurprising that there have been anti-IMF riots in some Sub^Sah»r vcountries. Examples abound of popular demonstrations against austefi<ymeasures judged by the urban poor to be injurious to their interests- ?°texample, there were widespread demonstrations in Tanzania in Decefl1^55 Economist Intelligence Unit, Zimbabwe: Country Report (1993), i, 14.x L M. Sachikonye, The new labour regime under SAP in Zimbabwe'Political and Economic Monthly (SAPEM) (\992),\,vi\,4\. '57 The Herald [Harare], 16 Feb. 1993.A. S. MLAMBO 731986 against a rail fare increase of between 150 and 200 per cent. In thesame month, university students demonstrated for three days demandinghigher book allowances because of the recent price increases.58 In 1982the Sudanese government's decision to end subsidies on basic commoditiesprovoked major riots, while in 1985, demonstrations against bread andsugar price hikes marked the beginning of a ten-day popular uprising thateventually unseated the Nimeiri Government.59 In 1986 Zambia witnessedwidespread food riots in the Copperbelt which left 15 people dead, and in1987 nurses, teachers and postal and telecommunications workers wenton strike.60 The implementation of IMF programmes promotes anti-government feelings and compounds the recipient governments' problemsof how to manage opposition.The IMFs second defence is that it promotes the redistribution ofincome from the urban to the rural producers in order to boost agriculturalproduction. Evidence suggests that only large-scale and not small ruralproducers benefit from IMF programmes. The peasant producer who issupposed to benefit from higher prices for his commodities is in noposition to produce enough to enable him to take advantage of the newprices. His small plot, already exhausted from years of overuse, cannotsustain such an expansion in production. In any case, the price hikes andremoval of subsidies mean that inputs such as fertilizer become unafford-able. In general, the terms of trade for his primary products, like those forthe nations' exports, are ever deteriorating so that, while he might sellmore and earn more, he still cannot afford the manufactured products andagricultural inputs he must purchase from the cities.The fact that peasant producers also suffer from the negative impactof structural adjustment programmes was demonstrated by the TanzanianPrime Minister, Joseph Warioba, when he appealed to the president of theWorld Bank for his help in protecting not only the urban workers whowere finding it difficult in the face of increased prices but also the smallrural farmers who were suffering equally because of 'higher prices foragricultural inputs, lack of storage facilities for crops [and] poortransport'.61 The poor, whether urban or rural, are caught in a no-winsituation, whatever the IMF may claim. The economy may indeed becomemore efficient as a result of the structural adjustment exercise as the IMFrepresentatives claim but it is clear that it is not the poor who benefit fromthis increased efficiency.58 Economist Intelligence Unit, Tanzania and Mozambique: Country Report (1987), i, 8.59 Predergast, 'Blood money for Sudan', 47.60 R. East (ed.), Keesings Record of World Events: Volume XXXIV (1988) (Harlow, Longman,1988), 35943. There were also food riots in the Copperbelt in 1989 and in Lusaka in 1990. Forreports on these riots, see Africa South of the Sahara 1993 (London, Europa, 1992), 1105.61 Economist Intelligence Unit, Tanzania and Mozambique: Country Report (1989), II, 11.74 THE RICH SHALL INHERIT THE EARTHIMF structural adjustment programmes result in the suffering not onlyof the present poor but also of their children who will grow up sickly,poorly educated, unemployed and marginalized. The undesirable rippleeffects of the IMF adjustment programme on the Zimbabwean people andeconomy are clearly spelt out by Fr. Balleis:Already now the number of school drop-outs at primary level is significant andmight increase. The problem of street children is the most obvious indicator of thisdevelopment. This means a new increase of illiteracy among the next generationand in general lower standards of education . . . Illiterate or badly educate^children will have no chance at all to find a place in a modern economy in the ye*"to come .... A low standard of education will be an obstacle to real economgrowth itself.62CONCLUSIONFrom the above discussion it is evident that IMF structural adjustrfle*\programm h dl leprogrammes have a deleterious impact on the economies and pe«F"^hethe developing countries. Not only do they worsen the poverty of l"majority of the populations of these countries but they also intensifyl"problems of dependency. Because it is not ideologically neutral and s*ycribes to the politico-economic philosophy of the industrialized countf1^the IMF logically promotes the interests of the powerful industrial*^countries at the expense of those of the developing countries. —,«it is interesting, for instance, that IMF 'advice' does not seek to He £developing countries cut down on unnecessary imports and loan*minimize their balance-of-payments problems, as would be expected o\organization which seeks to help governments manage their economyout coaches them, instead, on how to qualify for more foreign credit. T-means, therefore, that IMF structural adjustment schemes are likely"°»*r only temporary relief to recipient countries without°fdfseq^ibfiumit is rS^i? Sh°Uld bC the IMPs favoured strate8yis no* surprising sl^countr Ł mtereSt °f the industrialized countries to enable develop^*dependent IMptand °" thClr °Wn '** " thiS would make them ^Pro8rammes ar« a wellKralculated attempt to perpetu*ld tO f°'St °" the P°Or counti libl feetr^deoenden attempt to pp?eRimewhyhtld tO f°'St °" the P°Or countries a liberal or free-treŽ , ,has Worked and wil1 con«nue to work to the detriment of *mles of the Poor countries. As one scholar has pointed out,62 Balleis, The Social Implications ofESAP, 7-8.A. S. MLAMBO 75The entire arsenal of IMF conditionally, which seems at first glance too complex, isactually reducible to the opening of the economy to imports and to foreign invest-ment and technological exploitation ... in the material interests of the countrieswhich control the Fund and the Bank.63-The prevailing international economic order, based on the Smithianprinciples of comparative advantage and laissez-faire and controlled by afew rich countries, has created inequalities between the North and Southwhich the current negotiations between the rich and poor countries in theNorth-South dialogue seek to redress. IMF programmes negate the goalsof the North-South dialogue, apart from causing those problems alreadydiscussed. Governments which implement IMF structural adjustment pro-grammes do so, therefore, at the risk of perpetuating rather than endingtheir economic problems and dependency.Moreover, as has already been shown in the cases of Sudan, Tanzaniaand Zambia, IMF structural adjustment programmes can be costly inpolitical terms for those governments which implement them. One studyhas shown that currency devaluation 'roughly triples the probability thatthe responsible finance minister will lose his job within the following yearand roughly doubles the probability that the entire government will fall'.64While the precise accuracy of this claim can be questioned, there is littledoubt that the austerity regime imposed by IMF programmes alienates theelected government from its people and may earn the hostility of the poor,the local businessmen and, indeed, the middle classes whose standard ofliving is eroded by the structural adjustment exercise.Why then do governments in the developing countries continue towork with the IMF given the enormity of these problems? Governmentsresort to IMF funding and continue to struggle to implement IMF pro-grammes despite the risk because they have no choice. They have walkedinto a trap from which there is no easy escape. The IMF is usually ap-proached by borrowing countries as a last resort when there is no otheralternative. The IMF wields enormous power in the global economy, notonly because of the vast financial resources it commands but also becauseall other global financial organizations defer to its opinions. Consequently,very few international organizations will lend to a country which is notapproved by the IMF. Developing countries which need external funding,therefore, have to accept the IMF conditions if they are to receive theloans they require.6563 Payer, "The IMF and India1, 66-82.64 T. Kllllck and M. Sutton, 'Dfsequilibria, financing and adjustment in developing country",in Kllllck (ed.), Adjustment and Financing in the Developing World, 66.65 Ibid.76 THE RICH SHALL INHERIT THE EARTHGovernments find themselves in this untenable position partly as aresult of external and other forces beyond their control but mostly becauseof their unwise and inappropriate development strategies. While little canbe done to control the effects of the first category, much can be done tominimize the effects of the policies implemented by the governmentsthemselves. Perhaps it is time that governments of the developing countriesre-examined their priorities and re-shaped their development strategies inorder to minimize foreign borrowing and to utilize resources, both localand borrowed, responsibly and productively, thus avoiding the perennialbalance-of-payments problems that afflict most developing countries. Thecurrent developmental trajectory of most developing countries whichleads eventually to the IMF and its conditionalities is a dead end