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Should IMF Repossess Loans to Developing Countries?

A new study looks at the effects of IMF loans on developing countries. Are they helping?

Many nations who have turned to the International Monetary Fund for loans may soon be in trouble. But can you repossess a country?

IMF's strict regulations forces recipients to spend a portion of their loan on health, development, and concerns surrounding poverty. Despite the rigid conditions, a study out of Oxford today finds that many loan holders are not upholding the health and developmental regulations.

Today's Guardian reports that

Poor countries that borrow from the International Monetary Fund are spending just one cent in every dollar received in health aid on improving the medical care of their populations. This ratio can then be contrasted by countries without IMF support, which spend 45 cents of every dollar of aid received - a portrait that casts a dim light on IMF loan policies.


The catch-22 is that often other restrictions placed on countries don't allow for a greater amount of aid to be spent on health concerns. David Stuckler of the University of Oxford indicates that the source of this problem stems from the IMF loan regulations themselves,

Countries seeking IMF support are likely to differ from countries that are not and a request for an IMF loan is often associated with severe economic problems. Nonetheless, even in such circumstances, it is reasonable to expect aid from donors to have at least some positive impact on health funding, especially given that health needs are often greatest at such times. This study suggests that countries relying on IMF loans are not spending the aid in the way it was intended.


This news is made all the more alarming by the U.N. Millennium Goals for health, which include targets for reducing infant mortality and maternal health. The Oxford study shows that countries receiving IMF aid are well off-target for the 2015 goals set for health standards in low- and middle-income nations. The good news from the study appears to be that countries receiving aid from NGOs are more likely to reach these goals and spend money on their populations than countries receiving aid from the IMF.

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