The International Monetary Fund (IMF) faces competition from China as African nations reject its austerity demands, an academic says.
A new report by British charity Oxfam found that 13 out of 15 IMF loans made during the second year of the COVID-19 pandemic required the countries receiving them to introduce austerity measures, including raising taxes on food and fuel or cutting public spending, including on healthcare.
Linwood Tauheed told Sputnik that "the IMF giveth and the IMF taketh away."
"In order to get those loans, those countries have to agree to austerity cuts in social spending," Tauheed said. "Even if some of the loan is spent on social programs, that is taken out of the economy in order to pay off this debt."
The reason the IMF wants to get poorer nations into the debt trap, the academic said, was to ensure that "the Western countries have control over not only the finances of those countries, but also the resources that those countries need to sell to the West in order to get the dollars in order to pay off those loans."
While the IMF has stuck to that strategy for decades, it doubled down during the pandemic to impose "even greater sanctions on countries that need all of the income they can generate just to buy vaccines and and other kinds of of of healthcare items in order to keep their population from dying of COVID," Tauheed said. "If you can't pay, well, then you have to sell your country and the resources of your country and maybe cheap labour in order to pay off their debt."
By contrast, China's loans to African states come with no such strings attached, he stressed.
"They don't have austerity, what's called structural adjustment processes," Tauheed said. "So countries that are borrowing money can use that to increase social infrastructure and programs without having to raise taxes and impoverish the people in the country at the same time."
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