NEGOTIATIONS WITH THE IMF AND WORLD BANK

NEGOTIATIONS WITH THE INTERNATIONAL MONETARY FUND AND THE WORLD BANK

It is evident that the I.M.F. was shaken by the break-down of their negotiations with Tanzania and the somewhat similar rupture with Jamaica, and was clearly taken aback by the address of President Nyerere to the Diplomatic Corps (see Bulletin of T8nzanian Affairs No.9). Members of the I.M.F. staff are now emphasising that no conditions had been laid down by the Fund, nor any ideological position adopted. The Fund’s sole concern had been to ensure that any facilities provided brought tangible benefits and did not run into the sand. The Fund retains a high regard for the financial integrity of Tanzania, the lack of corruption and the outstanding leadership of President Nyerere.

The Fund claims that it has no wish to dismantle the import control system, but to help it to work more beneficially for the economy. It also accepts that the liberalisation of import controls in 1977 on the heels of the coffee price boom was over-done – not only in Tanzania, but also in Kenya, Columbia and other coffee producing countries and had led to a ‘spending spree’, rather than providing an opportunity for re-equipment, or other measures of more permanent value.

On the wider issue, the Fund’s officers maintain that they are not trying to force Third World countries to rely solely on the teachings of pure market economics. Their only interest is to secure such changes within the philosophical assumptions of the recipient country as are conducive to economic progress and an improvement of the foreign trading position. The only condition expected by the Fund was, therefore, evidence of a readiness to encourage changes likely to produce permanently beneficial results.

The rupture that took place in January had now, it seemed been repaired and a deputation from the Fund went to Tanzania in April to reopen negotiations for an Extended Fund Facility. This would place resources at the disposal of Tanzania for disbursement over 3 years and refund over 7 years at the Special Drawing rate of interest. The facility, which would not be tied to imports, would probably be much larger than any programme lending by the Bank, or any bilateral facility that the UK, or any other country, would be likely to provide. There seemed every expectation in the Fund and in the UK Office that negotiations would succeed this time.

Earlier this year Mr. Macnamara visited President Nyerere, and as announced in the Press, there was talk of a Structural Adjustment Loan from the World Bank. This is a new type of programme aid just being introduced by the Bank. It is not tied to particular projects, but is designed to help Third World Countries to make structural changes in the face of the energy crisis and the widespread economic problems generated by foreign exchange deficits, inflation and recession. The offer which has now been made to Tanzania is a long term interest free loan of $50 million a year over the next five years.

In late June and early July, about fifty delegates from both developing and industrial countries met in Arusha to discuss the I.M.F. Delegates studied ways of making the I.M.F. more responsive to Third World needs. Later this year the I.M.F. holds a major meeting in Washington at which criticisms of its operation arc expected to be voiced.

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