For decades, the IMF had been excoriated for its loans conditional on fiscal austerity policies and adopting “one-size fits all” measures resulting in reductions to health, education and other social expenditures.
Yet in 2020 as the pandemic ripped through economies destroying jobs, closing down businesses and up-ending budgets, the IMF led the international financial response particularly in Africa, Latin America and Asia.
In less than nine months, the IMF approved fast-track loans of $16.2bn to African states and $63.8bn to Latin American and Caribbean states – about ten times its usual volume of lending in that timeframe. Of the more than 100 programmes approved globally worth over $88bn, conditions were attached to just 13 of the credits.
A study by US-based economists Kevin Gallagher and Maldonado Carlin, based on their IMF COVID-19 Recovery Index, concluded the IMF’s response has “proven to be far less conditioned on fiscal austerity and has prioritised health expenditure and social spending to attack the coronavirus and protect the vulnerable.”