IMF Essay Example | Topics and Well Written Essays - 2000 words - 1

IMF - Essay Example ) as conditionalities for giving loans and grants to developing countries over the years, especially from the 1980s when many sub-Saharan African countries (and some other developing countries) were facing chronic economic catastrophes and had to sign on to the SAPs in order to access needed loans from the IMF. (Musa, n.d.) The SAPs used as conditionalities by the IMF before granting loans for severely indebted countries have increased the leverage of the IMF in the macroeconomic policy direction of many poor countries and Harvard Development Economist, Jeffery Sachs, has described the IMF’s leverage as a proconsular force. (Sachs, 1999) The use of conditionalities by the IMF for granting loans is however not a novel phenomenon. As far back as the early 1950s, the IMF applied conditionalities to loans it granted to countries. (IMF, n.d.) The use of packaged macroeconomic interventions (i.e. SAP) in economies of heavily indebted countries can be traced to the late 1970s during the global economic turmoil epitomised by the oil crisis, debt crisis, ‘stagflation’, and multiple recessions. (World Bank, n.d.) The implementation of IMF SAPs in different developing countries have a lot of similarities though the actual or specific country implementation are not necessarily the same. (Stein, 1992) Some notable similarities in the IMF SAPs include the following: privatisation of state owned enterprises, abolition of price controls and implementation of price liberalisation, elimination of subsidies maintained by governments on food items and other popular consumables, considerable currency devaluation, reduction in public sector expenditures, and public sector retrenchment of workers. (Naiman and Watkins, 1999; Mosley, and Weeks, 1993) Other common features of IMF SAPs implemented in developing countires include trade liberalisation epitomised by free/open market reforms, introduction of firm controls on credit, introduction of user fees for facilities like health