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Series: 1944-2020, 76 years of interference from the World Bank and the IMF (Part 25)
The IMF and the World Bank in the time of Coronavirus: the failed campaign for a new image
by Eric Toussaint , Emilie Paumard , Milan Rivié
9 November 2020

Considering the economic and social tragedy resulting from the structural adjustment policies (SAP) imposed on people in the South from the 1990s onward, several voices have exposed the promoters of such policies, namely the IMF and the World Bank. Criticism reached beyond NGOs and global justice movements, to unexpected quarters, as testified by Joseph Stiglitz, former chief economist at the World Bank, who published an accusation of the IMF in 2002 [1].

In the wake of such condemnations, the rising prices of raw materials from 2003-2004 made it possible for a number of countries to get the necessary hard currencies to anticipate repayment of IMF loans, thus partly escaping the disastrous conditionalities backing IMF loans. At the time, faced with a legitimacy crisis and while the scarcity of clients was taking its financial toll, the Bretton Woods institutions multiplied attempts to build a new image.

When it announced the interruption of the much decried SAPs and its reorienting its action towards fighting poverty from 1999, the World Bank claimed to have embraced a new ethical approach.

While the debt crisis in the North was a good opportunity to recover financially from 2008 onward, IMF executives loudly proclaimed the institution’s allegedly new direction. « On ne reconnaît plus le FMI ? De fait, il a changé ! » (People don’t recognize the IMF anymore? Indeed, it has changed!) [2], as Dominique Strauss-Kahn stated on French television in 2011.

The World Bank also claimed it was fighting climate change.

But is there really anything new about the Bretton Woods institutions?

Definitely not. To start with a telling example: the World Bank still heavily subsidizes fossil fuel production.

End of structural adjustment for the IMF?

In October 2014, in an IEO paper entitled IMF Response to the financial and economic crisis, the IMF claimed to have learned from its mistakes and that since the financial crisis in 2008 none of the loans it had granted were backed on the drastic conditions it had imposed in the past. From 2009, an economic research centre decided to test this claim [3]. The findings were indisputable: out of 41 countries granted IMF loans, 31 led policies of fiscal austerity in a context of recession or slow growth.

The situation deteriorated from 2010 onward. According to Isabel Ortiz and Matthew Cummins “premature expenditure contraction became widespread in 2010, which marked the beginning of a second phase of the crisis, despite vulnerable populations’ urgent and significant need of public assistance.” The authors show that in 2013 the contraction of public expenditure significantly intensified and affected the GDP of 119 countries. They anticipated that there would be 132 countries affected by 2015.

When Mohammed Mossallem, a former World Bank analyst, examined the conditionalities on which loans granted to Tunisia, Morocco, Jordan and Egypt were backed after 2011, he found all the ingredients of the SAPs of the 1980s.

According to Isabel Ortiz and Matthew Cummins, “Regarding austerity measures, a desk review of IMF country reports published since 2010 indicates that governments are weighing various adjustment strategies. These include: (i) elimination or reduction of subsidies, including on fuel, agriculture and food products (in 100 countries); (ii) wage bill cuts/caps, including the salaries of education, health and other public sector workers (in 98 countries); (iii) rationalizing and further targeting of safety nets (in 80 countries); (iv) pension reform (in 86 countries); (v) healthcare reform (in 37 countries); and (vi) labor flexibilization (in 32 countries). Many governments are also considering revenue-side measures that can adversely impact vulnerable populations, mainly through introducing or broadening consumption taxes, such as value added taxes (VATs), on basic products that are disproportionately consumed by poor households (in 94 countries).”

The experience of some Arab countries is illustrative.

As it was concerned, as from 2011, that those countries, under the impulsion of popular uprisings aimed at overthrowing dictators, were shedding the neoliberal hold , the IMF multiplied reassuring statements. In the reports that followed the “Arab Spring,” the institution insisted on the social dimension of the policies it promoted: inclusive growth, social policies for the more vulnerable, etc.

However, when Mohammed Mossallem, a former World Bank analyst, examined the conditionalities on which loans granted to Tunisia, Morocco, Jordan and Egypt [4]
were backed after 2011, he found all the ingredients of the SAPs of the 1980s: lower taxes for the private sector, higher taxes on consumption (the most unfair kind of tax), liberalized investment, fewer State subsidies along with higher energy prices, deregulation of the labour market. As to the content of austerity plans imposed on countries in the Euro zone since 2010, it strictly continues t to inflict the same treatment as upon North African countries.

Mea culpa on austerity: genuine questioning or make believe?

Over the last years, however, there have been a number of internal reports acutely questioning IMF policies:

  1. January 2013: Olivier Blanchard, IMF chief economist, showed that the IMF had very largely underestimated the negative impact of austerity on economic growth. The errors were anything but marginal, since they were estimated at about 300% [5]!
  2. February 2014: After two students ripped apart a study by former IMF chief economists, that claimed that a public debt of over 90% of a country’s GDP automatically resulted in an economic slowdown, IMF experts confirmed that there was no critical threshold for public debt [6].
  3. June 2016: Three IMF economists published a paper entitled Neoliberalism: Oversold?, in which they claim that instead of boosting economic growth, some neoliberal policies increased inequalities, and as a consequence, undercut the possibility of sustainable growth.

Do those several critical voices point to a change of direction for the institution?

First, while newspapers’ headlines may suggest that those who draft such reports are thoroughly heterodox in their views, a close reading of their texts shows that they are actually quite moderate. As an illustration, while the paper “Neoliberalism: oversold?” includes figures that clearly show the limitations of the model, it also claims that the neoliberal has many beneficial aspects [7]. We should also emphasize that the critical and heterodox documents published on the IMF website are the sole responsibility of their authors and not the institution’s position.

The IMF’s intervention in Greece from 2010 is illustrative of this continuity in the implementation of neoliberal policies that favour big capital, aggravate social inequalities and destroy essential social conquests

Besides, playing with contradictions is not really new with Bretton Wood institutions. But the point is to know whether this self-criticism, however limited, results in actual changes in the orientations taken by the institution.

Now the IMF’s intervention in Greece from 2010 is illustrative of this continuity in the implementation of neoliberal policies that favour big capital, aggravate social inequalities and destroy essential social conquests. As early as 2013, an IMF independent evaluation report [8] acknowledged that the first 2010 bail-out programme had resulted in “notable failure.” Yet the same austerity measures have continued to be implemented.

In June 2016, the same independent team produced a report that made the same assessment of the failure of the IMF’s action in Greece. This time round, however, the IMF experts claimed that in spite of the limitations of the IMF’s action, it was impossible to build an alternative scenario. The notorious TINA (There Is No Alternative) is still very much present in the corridors of the institution!

In early October 2020, facing the most serious international crisis of capitalism since the 1930s, IMF researchers announced that public investment had to increase [9]. This is what all governments have done in order to save big capital and avoid the abyss. This increase in expenditure is financed by a staggering increase of public debt and nowhere are governments taking measures to tax big fortunes and large corporations.

The IMF’s and the World Bank’s democratic reform... or molehills dressed up as mountains

Since it was created, the structure of decision-making within the IMF benefits the US and their victorious allies at the end of World War II. The distribution of power flouts any notion of equality since it is based on the rule 1 dollar = 1 vote, a rule questioned by emerging countries that want their share of the cake. To try and establish some pretence of democracy, and to meet the demand of those expanding countries, a reform on the increase of quotas [10] and the transfer of voting rights finally came into force at the beginning of 2016.

Adopting a system that would allow all member countries to have a say was never considered; the aim was rather to accommodate “emerging countries” whose economic weight had become too important to be ignored

In fact, adopting a system that would allow all member countries to have a say was never considered; the aim was rather to accommodate “emerging countries” whose economic weight had become too important to be ignored. While the 6% of voting rights that were newly distributed went to the BRICS (South Africa excluded), those who lost out in the operation were predictably the poorest countries, whose voting rights the IMF cynically committed to preserve. [11] Surely Bangladesh felt it had more leverage given this commitment, with its 0.24% voting rights to defend the interests of its 155 million inhabitants!

The USA on the other hand scored a twofold victory. Not only did they keep their hold on the voting structure, since, as they had only relinquished 0.3% of their voting rights, they retain their veto power [12]; but they are still at the helm of one of the biggest international vessels since the reform also doubled the Funds’ resources that are now close to $660 billion.

The IMF reforms reinforce the central leadership role of the United States in the global economic system. Jacob Lew, US Treasury Secretary, 2015.

As regards the World Bank, the last major reform of this kind occurred in April 2010, when the controversial figure of Robert Zoellick was president. As well as an increase of $86.2 billion in the capital of the IBRD, countries of the South were granted an increase of 3.13% of their voting rights, reaching 47.19% of total votes. Compared with the US’s 15.44%, this is outrageously little for those 135 countries having 85% of the global population. [13]

“DSRP”, “Doing business”, “EBA”… new names, same policies!

From the end of the 1990s, a hail of criticism rained down on the World Bank, to the point where it became increasingly difficult for it to promote the Structural Adjustment Policies (SAP) at the heart of the polemic. Faced with this crisis of legitimacy, the World Bank gave itself up to a flurry of semantic pirouettes without ever touching on the neoliberal logic inscribed in its DNA.

Among these crafty manœuvres, we find for example the Highly Indebted Poor Countries (HIPC) initiative which, through limited debt reduction controlled by the IFI, enabled them… and still does… to impose on the poorest countries policies similar to the SAP and keep them in a spiral of indebtedness. Moreover in 2002, shortly after the World Bank had announced the official end of SAP, as though by chance, it pulled a new instrument called “Doing Business” out of its hat!

The governments of the countries of the South are competing ferociously to offer the private sector the most attractive conditions, aware that the World Bank and bilateral creditors also use the results of that ranking to decide where to place their loans

The annual report sets out to classify the 189 member countries of the World Bank according to their ability to create a good “business climate” for investors based on various criteria: maximum deregulation, taxation favourable to the private sector, legislation that gives workers’ rights as little protection as possible and places them in competition against one another.

The governments of the countries of the South are competing ferociously to offer the private sector the most attractive conditions, aware that the World Bank and bilateral creditors also use the results of that ranking to decide where to place their loans. And the World Bank is overjoyed! In 2014, it was congratulating itself that “Doing Business” had inspired over a quarter of the 2100 reforms recorded since it was started [14].

And why stop when doing so well? At the request of the G8 that in 2012 wanted it to elaborate an index to benchmark countries on the business climate of their agricultural sector [15], it developed an instrument called “Enabling the Business of Agriculture” (EBA) [16]. Financed by the US, British, Danish and Dutch governments and the Bill and Melinda Gates Foundation, the methodology of EBA has been modelled on that of “Doing Business”.

By promoting access to non-organic inputs and by pushing for contract-driven agriculture, EBA enables the big multinational agro-business corporations to spread their influence even further [17]. The World Bank’s logic conflicts with the realities and interests of the family-based agriculture that concerns about 80% of agricultural holdings in the countries of the South.

Limited at first to a pilot project involving 10 volunteer countries, the 2016 report had already spread to include 40 countries with the aim of covering the maximum number of countries as quickly as possible.

In view of all these new mechanisms, it is hard to see how the World Bank can be, as it claims, an organization fighting against poverty.

Controversies around Doing Business

Here again, reality soon caught up with the institution. To the numerous accusations from social movements, trade unions and acedemics have been added those of Paul Romer, then Chief Economist at the World Bank. By emphasizing for example the loss of 23 places by Chile, then under the “socialist” president Michelle Bachelet, Romer also denounces the ideological bias (openly neoliberal) in the report’s methodology and the way it is written. After being reprimanded by President Jim Yong Kim, he immediately handed in his resignation in January 2018. In August 2020, the World Bank itself announced, albeit reluctantly, that publication of the 2020 report had been interrupted due to “[a] certain number of irregularities [having] been reported regarding changes to the data in the Doing Business 2018 and Doing Business 2020 reports, published in October 2017 and 2019. The changes in the data were inconsistent with the Doing Business methodology.” [18]

The World Bank, a “human rights-free zone”

One might reasonably expect of an organization claiming to fight poverty that human rights would be an integral part of its action. Yet even though the World Bank is officially obliged to respect international law [19], for over 76 years those principles have never passed the threshold of its lush Washington offices.

“The World Bank is a human rights-free zone... it treats human rights more like an infectious disease

than universal values and obligations.” [20]
Philip Alston, Special UN Rapporteur on extreme poverty and human rights, 2015.

To “justify” this refusal, the World Bank hides behind its mission which, being limited to economic considerations, allegedly prevents it from broaching notions considered too political. It is hard to comprehend why this supposedly technical mission would place it outside or above international law. Moreover the World Bank has never had any problem in finding justifications when it was a matter of integrating issues such as corruption, money-laundering, financing terrorism or governance, none of which were part of its initial prerogatives.

The World Bank, a no-go zone

Considering itself above the law, the World Bank makes no bones about flouting the fundamental rights of the peoples of the South. Among far too many examples, we could cite the field investigation carried out in fourteen countries by the International Consortium of Investigative Journalists (ICIJ) [21], which revealed that projects financed by the World Bank had forced nearly 3.4 million people out of their homes since 2004, sometimes using armed police. Far from being an isolated case, United Nations agencies, national bodies and committees of independent experts constantly confirm that several projects funded by the International Finance Corporation (IFC), part of the World Bank, have given rise to serious breaches of human rights: land-grabbing, repression, arbitrary arrests or murders, in order to silence protest movements that refuse those WB projects.
The outrageous fiasco of “pandemic bonds” issued by the World Bank

In July 2020, the World Bank abandoned the project of re-issuing pandemic bonds after the first issue had been criticized for its tardiness in delivering the aid to poor countries affected by epidemics [22].

Investment funds and private banks that had bought those securities in 2017 had accumulated interest payments of up to almost $100 million by the end of February 2020!

In 2017 the World Bank launched its programme of “pandemic bonds” in the wake of the 2014 Ebola epidemic in Africa. For a country to access this programme aimed at helping it confront an epidemic, it first had to have registered 2500 deaths. In 2018, the Democratic Republic of Congo was obliged to wait until the epidemic had wreaked havoc before being granted any aid. This drew fierce criticism.

In 2017 the World Bank issued 320 million dollars’ worth of bonds, officially destined to help developing countries deal with a serious epidemic of infectious disease [23].

Investment funds and private banks that had bought those securities in 2017 made ample profits since the World Bank had guaranteed a two-figure return, i.e. over 10 %. The owners of those securities, among whom the Scottish hedge fund Baillie Gifford, Amundi (owned by the French bank Crédit agricole) and a New York financial firm Stone Ridge Asset Management, were paid interest of up to almost $100 million by the end of February 2020!

Towards the middle of April 2020, over two months after the virus had started spreading across the world, the conditions allowing the release of almost $200 million were finally met. The 64 countries that were to share the meagre sum of 195 million dollars were entitled, according to size, to between 1 million and 15 million dollars, in other words, peanuts. The highest amount available, of 15 million dollars, was allocated to Nigeria and Pakistan.

A second version of the “Pandemic Emergency Financing Facility” (PEF), the name given by the Bank to the “pandemic bonds”, was to have been launched this year, after the World Bank had declared in early 2019 that it was making adjustments to the structure before it would be ready to commercialize the new product in May 2020 or thereabouts. Finally, in the face of growing criticism, the World Bank renounced before making the new emission.

World Bank / IMF and the 2020 crisis in the context of the coronavirus pandemic

Governments and major multilateral institutions like the World Bank, the IMF and regional development banks have used repayment of public debt to generalize policies that have damaged public health systems. This has meant job cuts in the health sector, job instability, reduced numbers of hospital beds, closing down neighbourhood health services, increased medical costs both for care and for medicines, under-investment in infrastructure and equipment, privatization of various health sectors, public under-investment in research and development for treatments to the advantage of big private pharmaceutical groups and so on.

Even before the Covid-19 pandemic broke out, these policies had already led to enormous loss of human lives and all round the world health personnel were organizing protests.

If we really want to fight the coronavirus and, beyond that, improve the health and living conditions of populations, emergency measures must be taken.

Immediate suspension of debt payments and better still, cancellation of debt, must take priority.

Neither the World Bank nor the IMF have cancelled any debts since the beginning of the coronavirus pandemic. Although they have made endless declarations calculated to give the impression that they are taking very strong measures. This is completely false

Neither the World Bank nor the IMF have cancelled any debts since the beginning of the coronavirus pandemic. Although they have made endless declarations calculated to give the impression that they are taking very strong measures. This is completely false. The mechanism put in place by the IMF, the World Bank and the G20 is identical to the measures taken after the Tsunami that hit India, Sri Lanka, Bangladesh and Indonesia in December 2004 [24]. Instead of cancellation, public creditors simply postponed the due dates. As for the IMF, not only does it not end repayments, but it does not even suspend them. It has set up a special fund financed by rich countries into which the IMF can dip to repay itself.

Worse still, since March 2020, the IMF has extended the loan agreements that entail continuing with the structural measures enumerated above.

As for the World Bank, since March 2020 it has received more in debt repayments from developing countries than it has paid out to finance either donations or loans.

The text is an updated and augmented version of Émilie Paumard’s article, « Le FMI et la Banque mondiale ont-ils appris de leurs erreurs ? » published 13 October 2017 (in French only). Milan Rivié contributed to the updating and Éric Toussaint did additional research and finalized the draft. Thanks to Claude Quémar for his rereading.

Translated by Vicki Briault, Mike Krolikowski and Christine Pagnoulle.

Footnotes :

[1Joseph E. Stiglitz, Globalization and Its Discontents, Norton, 2002.

[2On France 2 on 20 February 2011, quoted in Christian Chavagneux’s article, « Le FMI a-t-il vraiment changé ? », Alternatives économiques n°301, April 2011. See also the report “Recent changes in IMF Lending,”

[4At the time of Mohammed Mossallem’s survey, the loan agreement with Egypt was not yet signed. The IMF eventually sanctioned a $12 billion loan agreement in November 2016.

[7Jonathan D. Ostry, Prakash Loungani, and Davide Furceri, “Neoliberalism: Oversold?”, IMF, June 2006.

[9Vitor Gaspar, Paolo Mauro, Catherine Pattillo and Raphael Espinoza, “Public Investment for the Recovery”,, 5 October 2020.

[10The quota of a member country determines its maximum financial commitment towards the IMF and its voting power.

[11Press Release: IMF Executive Board Approves Major Overhaul of Quotas and Governance, 5 November 2010

[13“World Bank Reforms Voting Power, Gets $86 Billion Boost”, 25 April 2010,

[15Fact sheet : G-8 action on Food Security and Nutrition,” Press release, The White House, 18 May 2012, quoted in The Oakland Institute, “Unfolding Truth: Dismantling the World Bank’s Myths on Agriculture and Development,” 2014, p.5.

[17Rémi Vilain, « La nouvelle révolution verte en Afrique subsaharienne », CADTM, December 2015 (in French).

[18“Doing Business – Data Irregularities Statement,” 27 August 2020,

[19The UN Committee on Economic, Social and Cultural Rights recalled in an official statement on 24 June 2016 that the World Bank, like any other international body, must defend and implement the Universal Declaration of Human Rights, the general principles of international law and the 1966 Covenants on Human Rights. E/C.12/2016/1 “Public debt, austerity measures and the International Covenant on Economic, Social and Cultural Rights”. Statement by the Committee on Economic, Social and Cultural Rights.

[20Philip Alston, “Report of the Special Rapporteur on extreme poverty and human rights”, A/70/274, 4 August 2015.

[21Sasha Chavkin and Michael Hudson, “New investigation reveals 3.4m displaced by World Bank,” International Consortium of Investigative Journalism, 13 April 2015.

[22Financial Times, “World Bank ditches second round of pandemic bonds”, 5 July 2020,

[23Here is what can be found on the World Bank’s website: “The insurance was obtained in July 2017 in two classes and in both bond and swap form. Class A was composed of US$225 million in bonds and US$50 million in swaps, and Class B was composed of US$95 million in bonds and US$55 million in swaps. The bonds were issued under the IBRD’s Global Debt Issuance Facility, under the Capital at Risk Notes supplement which was created in 2014 in part to transfer catastrophe risks to the capital markets.”

[24[See Éric Toussaint and Damien Millet, Tsunami Aid and Debt Cancellation, Mumbai, Vikas Adhyayan Kendra, 2005

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Emilie Paumard
Milan Rivié

CADTM Belgium
milan.rivie @
Twitter: @RivieMilan