At what cost? IMF loans could spur the region into yet more revolutions

The International Monetary Fund (IMF) [1] has just signed off on another loan for another poor country: this week it was Egypt’s turn. The fund, set up in 1948, has been the lender of last resort for decades now, but has gained a reputation as an enemy of democracy and the Arab Spring.

Alongside the money comes a whole host of stipulations, usually involving cuts in government subsidies and the kind of neo-liberal economy that makes the rich richer and poor poorer.

The Arab uprisings that started in Tunisia [2], have given the IMF a new lease of life, with its officials being dispatched to almost every nation in the MENA region.

These infant democracies are now battling with economic rules that cut down government expenditure and increase international investment. It’s a potent combination that many believe will leave the Arab world’s revolutionaries little choice but to head back to their squares and demand their leaders’ heads, yet again.

How will the economic policies of this international fund, the notorious IMF, affect a region with so many revolutions?

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Post revolution, Egypt has become the latest country to take a loan from the IMF to the tune of $4.8 billion. A rise in taxes and cut in spending should help the country cut down its 11% budget deficit.

After a revolution sparked by economic crisis, the IMF pledged to loan post-revolution Tunisia enough to see them through. But with all the regulations that come with the money, divisions between rich and poor can only get worse.

Hoping to woo the IMF into lending them money, Jordan’s government massively cut down on fuel subsidies. But the resulting protests have looked revolutionary at their peak.

The IMF and World Bank are sometimes referred to as the Bretton Woods Institutions. They were set up to help redevelopment after WWII but remain the ‘lender of last resort’.

Christine Lagarde is the first woman to head the IMF. Lagarde is a less controversial character than her predecessor, who was accused of raping a hotel maid.

The IMF became notorious after bailing out African countries throughout the 1980s. Their so-called ‘structural adjustment policies’ left many worse off than before.

Canadian economist, Naomi Klein, coined the term ‘shock doctrine’ to describe the IMF’s extreme loan stipulations and how they affected economies round the world. Many claim the same could be said for post-Arab Spring nations relying on the ‘lender of last resort’.

The Arab uprisings were caused, in part, by the dire economic situation in MENA countries. The IMF ‘reforms’, however, will make the cost of living increase and as the Egyptian protestors say: “We know the way back to Tahrir.”