The Function and Governance of Imf Lending Policies in Malawi

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in the case of Malawi. These policies have been criticized by the international community to undercut national autonomy and economic development.

According to Collier and Gunning (1999), in the 1980s most African nations adopted Structural Adjustment Programs at the insistence of International Financial Institutions. These SAPs were a combination of short term and long term solutions aimed at stabilizing economies and transforming them from being heavily controlled to being market based economies. In essence, these policies required African Governments to bring down trade barriers and to open their markets for foreign investments (123).

In their Paper, Collier and Gunning (1999), further argue that the SAPs are a disadvantage to the poor since it encourages reduction in government spending on healthcare, education and other essential social services.

This is the time of increasing globalization. The global markets are getting more integrated and interdependent as the time goes, and this means that the collapse of one nation’s economy causes a similar domino effect of world markets. This means that one nation’s economic crisis is a global economic danger. Due to this reason, globalization is more necessary than before which makes global governance essential today.

The actors in global governance, the states, are responsible for providing resources and forming coalitions while the International Institutions serve as a uniting forum. Their main responsibilities include stabilization of world economies and to promote good governance but are they doing that?

According to the theory of realism, each state seeks to maximize its wellbeing because every country is in competition. It further says that International Institutions serve no other purpose but as a tool of power of countries to further their interests.

Take the case of Malawi and the IMF. The policies imposed by the IMF towards Malawi in exchange of loans clearly indicate that the IMF, which is mainly controlled by wealthy western powers, is mainly interested in its interests. The IMFs focus on forceful adoption of new policies poorly suited to the developing nation was done to enable quicker repayments of the loans in detriment to the country’s domestic needs.

The main objectives of the IMF are to promote global economic growth, ensure stability and to fight poverty in developing nations. It purports to do this by offering financial assistance to countries encountering financial crises. This case study shows that the IMF is contradicting itself as the results show that developing nations receiving IMF loans continue to dwell in poverty and rising debts while the standards of living among the poor remains low. Low standard of living fuel political violence and insecurity as people fight for the limited resources.

Works Cited

International monetary Fund website, International Monetary Fund, 2014. Web. 3rd October, 2014.

Collier, Gunning, The IMF’s role in structural adjustments. Oxford, UK: Centre for Study of African Economies. 1999. Print.

Mollina-Gallart, muchhala, Strings Attached; How the IMF’s Economic Conditions Foil Development-Oriented Policies for Loan-Borrowing Countries. Penang, Malaysia. Third World Network: 2012. Print.

Easterly. The Association of Policies and growth with repeated IMF and World Bank adjustment loans. New York, United States: Elsevier Journal of Development Economics. 2005. Print.

Lele. Structural Adjustment, Agricultural Development and the Poor: Some lessons from the Malawian Experience. Great Britain. Pergamon Press. 1990. Print.

Konadu‐Agyemang, Kwadwo. The best of times and the worst of times: structural adjustment programs and uneven development in Africa: the case of Ghana. The Professional Geographer. 2000. Print.

Przeworski, Adam, and James Raymond Vreeland. The effect of IMF programs on economic growth. Journal of development Economics. 2000. Print.