IMF announcements

• 12% unemployment in Eurozone
• More stimulus recommended for Brazil and Indonesia
• Some easing of conditions in Central and Eastern Europe ?
• More lending for low income countries

Several IMF announcements over the last few days have significant implications for EI members and for education funding around the world.

Unemployment will surge in Europe
For 21010 the IMF predicts 12% unemployment for the 16 countries of the Eurozone region. As we said earlier, even as the stock markets in Europe and the US recover (yesterday the CAC40 in France reached the highest level since 9 months), the consequences of the crisis will be felt by working families for months – perhaps years – to come.

More stimulus recommended for emerging economies/middle income countries
IMF released country reports for Brazil and Indonesia endorsing more fiscal stimulus. The Global Unions Washington office says «The Fund may be attempting to respond to widespread criticism, including from trade unions, of the application of a double standard in its policy advice to countries affected by the global recession, whereby rich countries are encouraged to engage in expansionary fiscal policy while developing countries are advised to practice fiscal discipline»
(links: Brazil: http://www.imf.org/external/np/sec/pn/2009/pn0992.htm
Indonesia: http://www.imf.org/external/np/sec/pn/2009/pn0993.htm)

Some easing of IMF conditions in Central and Eastern Europe?
The IMF announced it would accept a bigger deficit in Ukraine, as part of loan conditionality. The IMF has been widely criticized for the severity of its conditions in Central and Eastern Europe, and for applying conditions when helping countries that are in direct contradiction with the calls of IMF Director Dominique Strauss-Kahn in favour of fiscal stimulus. Will the IMF ease its conditionality in countries like Latvia and Hungary as well?
Weblink to the IMF report on Ukraine: http://www.imf.org/external/np/sec/pr/2009/pr09271.htm

More lending for low-income countries – G20 follow-up
The IMF announced «unprecedented measures that will sharply increase the resources available to low-income countries in this time of global crisis». This follows decisions at the G20 London Summit in April. However, as usual, the devil is in the details. The Global Unions Washington office notes that:

- a substantial part of the projected increase will depend on additional bilateral grants from donor countries which have not yet been committed;
- only a small part of the increased resources (called special drawing rights – SDRs) voted recently by the IMF Board will actually go to the 78 low-income countries (US$ 18 billion out of US$ 250 billion).
- IMF language about more flexibility on conditionality is vague, with plenty of loop holes.
- Commitments to increase social spending have not been applied so far in practice.
Weblink to the IMF communiqué: http://www.imf.org/external/np/sec/pr/2009/pr09268.htm

EI and PSI have resolved to mount a campaign aimed at IMF Governors and key funding countries. Details will be posted on the EI campaign site in August/September.

Summer Pause
Much of Europe is on summer holiday break, and the writer of this blog will be taking off 3 weeks too. Back on 24 August!