The retreat of neoliberalism | Pambazuka News – For decades African countries have been forced by the World Bank and International Monetary Fund to implement neoliberal policies, including opening their markets to foreign competition, reducing the role of the state in providing basic services and abolishing subsidies to the poor.
However, an IMF internal paper published this month for the first time admits that the neoliberal reforms prescribed by the Bretton Woods organisations are flawed, have increased inequality and have not necessarily delivered economic growth.
The report, headlined “Neoliberalism: Oversold” is written by three leading IMF economists – Jonathan Ostry, Prakash Loungani and Davide Furceri. The report says new research on the impact of neoliberal policies on recipient countries has led to “disquieting conclusions” for the World Bank, IMF and proponents of neoliberalism.
The IMF report specifically looks at two aspects of neoliberal reforms: the removal of barriers to capital flows, called capital account liberalisation, and reducing public spending aimed at cutting fiscal deficits and public debt, called fiscal consolidation, or more commonly austerity.
The report makes three devastating conclusions: One, that the neoliberal reform program has not delivered increased economic growth. Secondly, neoliberal reforms have increased inequality. And thirdly, the increased inequality caused by neoliberal reforms has in turn undermined the level and sustainability of economic growth.