According to the IEO report, out of every $10.00, only $3.00 of the annual foreign aid increase can be utilised. In addition, the IMF has placed further restrictions by enjoining foreign exchange equivalents of at least two and a half months of imports or spending will be circumscribed.
The IMF requires governments, under its complete supervision, to redirect the use of foreign aid increases to either increment international currency reserves or to render domestic debt.
Even if a country meets the IMF's quotas foreign exchange, the red tape continues to burden that country. The IMF demands that all nations that currently borrow, must maintain yearly inflation rates at 5 percent. If the countries do not follow the IMF's strict guidelines, the countries then must utilise the funds to recover domestic borrowing.
According to the report by the IEO, of the 29 Sub-Saharan African countries reviewed that had inflation exceeding 5 percent could only spend 15 percent of the aid (only $1.50 of every $10.00). Countries that fell below the 5 percent were able to spend 79 percent.
While the IMF was initially created by the major Western Powers to assist in the equalisation of the global economy, well over 100 countries have suffered a financial collapse. The IMF has a long and notorious history of illegitimate and corrupt loan-sharking to poorer nations. Many continue to protest the cancellation of these debts.
The report comes in time for the IMF and World Bank Spring meetings which will take place in Washington, D.C. April 14th and 15th.
Copyright ©2007 Anai Rhoads Ford. All Rights Reserved.