An economist and critic of long-term aid to Africa says she approves of International Monetary Fund support for developing countries – at least to help mitigate fall-out from the global financial crisis.
The World Bank and IMF are holding their spring meetings April 25-26 in Washington to review annual progress in general, and to determine how best to manage financial support for the developing world, in particular. A few weeks ago, officials of the world's largest economies, the G-20, promised over a trillion dollars to the IMF to help cushion developing and emerging economies from the global recession.
Dambisa Moyo specializes in international finance and has worked at Goldman Sachs and the World Bank. She's best known today as the author of the controversial book Dead Aid.
Moyo says long-term aid to Africa has made the continent's leaders dependent on foreign support and more responsible to donors than to their own people. In her book, she argues for an end to aid and the creation of incentives that encourage African leaders to find other ways of raising funds, such as increasing trade and investment.
"The problem with the aid model," she says," is that governments are dissuaded from doing the right thing, because someone else is going to do it. The IMF sits down and writes the policy strategies for these countries. Which begs the question: why aren't these countries themselves putting together these proposals and where do they see long-term development [going ]?"
But Moyo says she supports short-term support for Africa during the global financial crisis, where recession affects national budgets, currency rates, capital flight and balance of payments.
"The IMF in particular," she says, "has tried to be quite clear its mandate is not to provide long-term financing for development. They view their interventions as temporary -- they are not designed to be an open-ended commitment to Africa. This is an important statement because it delineates bail-out aid from long-term aid for development, open-ended commitment."
Moyo says she's concerned about unexpected consequences of aid: "One of the big concerns that is going to emanate from the interventions from developed countries is the issue of inflation. Although it's largely anticipated to be on its way in most of the developed countries, there's a sense they will have the tools and mechanisms to more aggressively combat the problems that emerge from having …high inflation rates. I think one of the big concerns with spurring inflationary demand in more emerging economies, is that the [tools] to quell inflationary pressures are more limited, and it can be quite destructive in terms of longer-term growth."
