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economy

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The International Monetary Fund (IMF) has a long history of providing financial support to various African Countries that are facing Economic hardship. The IMF is involved in financial assistance to various African countries through different ways such as loan and  grant. Most African Countries are collecting loans from the IMF with the intention of stabilizing their economic hindrance. However in most cases the conditions attached to the IMF loans are not in favor with the economic situations of most of the countries. In this article we will examine the implication of International monetary policy’s (IMF)’s loan policies to the economic hardship of African countries.

IMF Loan Policies: An Overview

For the IMF to give loan to any country the country most abides by the policies designed by IMF, this includes implementation of structural adjustment programs which include austerity measures that aimed at reducing buffet deficit, the increment of taxes in the country, reduction of public spending and market reforms. In most cases the policies attached by the IMF loans create an adequate increment of economic hardship to the people and the countries benefited with the loan.

Austerity Measures and Economic Hardship in African Countries

One most difficult and controversial policy attached to IMF loans is the impulsion of austerity measures. Austerity measures involve the cutting off the amount of money spent to the public essential services such as funding in education sectors, healthcare and social welfare services. In some African countries these policies involve the reduction of public officers salaries and other difficult economic decisions that endanger the welfare of the citizen and crippling economic stability of the countries. Fifty Years of Failure: The IMF, Debt and Austerity in Africa

The Long-Term Effects to African Economic Development

While the intention of IMF loans is the promotion of the economic stability of the benefited countries. In Africa the long-term effects of the IMF loans on the economic improvement of the most beneficiary countries is very compromised. Sometimes the reformation of economic structures promote economic growth and stability of the benefited nation but in most cases this economic growth failed to meet the benefit of the highest number of the vulnerable populace of the countries. In some countries such as Tanzania and Mozambique, IMF Loans  conditions have been attached to the increased foreign investment and economic growth, but the benefits have not been equally and adequately distributed.

Although, the focus on short-term fiscal stability can come with the long term economic benefit. The reduction of the investment in the public sectors such as education, healthcare and social welfare may provide a short term economic improvement but it can cause a long term effect to the economic growth and development.

Lastly, the intention of IMF loans in Africa is to ease the economic hardship to the African countries but the policies and conditions attached to the loans is creating long or short term economic difficulties to many African countries.

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