Bob Harris, EI's Senior Consultant to the General Secretary, shares information and commentary on the impact of the financial crisis on education funding, and how education can be part of the solution.
The IMF has just released a paper “Fiscal Implications of the Global Economic and Financial Crisis” that rings alarm bells for public finances. Prepared by a staff team from the IMF’s Fiscal Affairs Department, the paper says governments have to balance two opposite risks:
· The risk of prolonged depression and stagnation, as against
· The risk of a loss of confidence in government solvency.
For G20 advanced economies, the report projects that fiscal balance will worsen by 8 percent over 2008-09 compared with 2007. The increase in government debt will be even more sizable. The report also points to risks for pension funds in many countries, particularly those exposed to “toxic” investment such as CDOs and “credit-default swaps”.
The thrust of this report is that governments which have put in place big stimulus packages will soon have to scale back on public spending. Unfortunately, this report confirms the assessment that for public sectors, including education in many countries, the worst is yet to come.
Nota Bene: The report does not say a word about education, neither about the impact of fiscal restraint on education services, nor on the contribution of education to the re-launching of economics.
It does contains useful technical information. Link to the report http://www.imf.org/external/pubs/ft/spn/2009/spn0913.pdf
The second report released by Eurodad, the European network on debt and development, provides a reasoned critique of the IMF. It is entitled “Bail-out or blow-out? IMF policy advice and conditions for low-income countries at a time of crisis”. The report shows how the macro-economic preoccupations of the IMFs play out in actual advice to countries, and indeed conditions imposed on them for IMF support. In these countries, public finances are already being squeezed, often dramatically. Leading examples are counties in Central and Eastern Europe including Latvia, Ukraine, Hungary and Lithuania (http://www.eurodad.org/whatsnew/reports.aspx?id=3679).
The IMF came out of the London G20 in April with an enhanced mandate and more resources, in order to help low-income countries get through the crisis. Despite the welcome statements of the IMF’s Director on the need for coordinated global stimulus and the role of public services, these two reports show that the “old” IMF is still very much in place. Public services and education are likely to suffer as a consequence.
Source: Peter Bakvis, Global Unions Washington Office
· The risk of prolonged depression and stagnation, as against
· The risk of a loss of confidence in government solvency.
For G20 advanced economies, the report projects that fiscal balance will worsen by 8 percent over 2008-09 compared with 2007. The increase in government debt will be even more sizable. The report also points to risks for pension funds in many countries, particularly those exposed to “toxic” investment such as CDOs and “credit-default swaps”.
The thrust of this report is that governments which have put in place big stimulus packages will soon have to scale back on public spending. Unfortunately, this report confirms the assessment that for public sectors, including education in many countries, the worst is yet to come.
Nota Bene: The report does not say a word about education, neither about the impact of fiscal restraint on education services, nor on the contribution of education to the re-launching of economics.
It does contains useful technical information. Link to the report http://www.imf.org/external/pubs/ft/spn/2009/spn0913.pdf
The second report released by Eurodad, the European network on debt and development, provides a reasoned critique of the IMF. It is entitled “Bail-out or blow-out? IMF policy advice and conditions for low-income countries at a time of crisis”. The report shows how the macro-economic preoccupations of the IMFs play out in actual advice to countries, and indeed conditions imposed on them for IMF support. In these countries, public finances are already being squeezed, often dramatically. Leading examples are counties in Central and Eastern Europe including Latvia, Ukraine, Hungary and Lithuania (http://www.eurodad.org/whatsnew/reports.aspx?id=3679).
The IMF came out of the London G20 in April with an enhanced mandate and more resources, in order to help low-income countries get through the crisis. Despite the welcome statements of the IMF’s Director on the need for coordinated global stimulus and the role of public services, these two reports show that the “old” IMF is still very much in place. Public services and education are likely to suffer as a consequence.
Source: Peter Bakvis, Global Unions Washington Office
Education International 2009
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