The International Monetary Fund And The World Bank Were

After Zambia gained political independence their economy was doing better. Their economy was surrounded around their primary natural resource, copper. As copper sales went up, new medical buildings and schools were built, they had a promising textile industry and things were looking up. Until an unexpected rise in the price of oil in tandem with the dropping prices of copper forced Zambia to borrow from the IMF and world banks at extremely high interest rates. Soon Zambia found itself in a mountain of unpayable debts and to repay creditors, spending was cut to education and health and other infrastructure projects. Eventually all of the progress they have made goes to waste as it can not be maintained. Foreign countries currently dictate the economic policy via structural adjustment, i.e. policies that “should” increase revenue and allow them to pay the loans off. This inevitably leads to a country that is so dependent on foreign aid because their own industries have been destroyed by foreign influences.

By the year 1930, the United States of America’s economy was in a “critical [state of] national emergency” (Roosevelt, 1933). With reference to F. D. Roosevelt’s “New Deal” – the policies of economic reform introduced to rebuild the American economy – this essay will compare and contrast the economic situation of present-day South Africa, with that of the United States of America in the 1930s, and will serve to explore the economic theory supporting the major policies implemented in attempt to alleviate the stress on the economy. Lastly, it will build on this theory to suggest two supply-side fiscal policies – education and skills development, and tax reform – which, if implemented effectively by government, would contribute to addressing unemployment and poverty in South Africa.

The political and economical issues spread beyond the government and to the community in Zimbabwe. For 15 years prior, the economy is Zimbabwe had been slowly fading but after the recent election the unemployment rate rose to eighty percent (“Govt” 1, 2). The number for jobless people increased to a massive number of nearly 200,000 making the eleventh year high up to 3.33 million (“Bankruptcies” 1, 2). This made it extremely challenging for families to afford things like education, health care, and even housing. As a result, this forced people to turn to crime and corruption just to try and make a living. While the citizens were turning to crime, the government was wasting all it’s money for personal needs. It was also discovered that the government had been paying more than 40,000 to what was referred to as “ghost workers” appearing on their payroll (“Govt” 1, 2). As a result of this, Zimbabwe was part of a huge fraud situation with the Nigerian Deposit Insurance. They were accounted for seventy-four cents for all fraud counts (“Our” 1). Soon after this scandal, Zimbabwe had no choice but to declare bankruptcy making the country record, 1082 bankruptcies as of 2008 (“Bankruptcies” 1, 2). After the fraud situation the government tried to cover up by creating an Anti-Corruption Commission (ACC). The government was interested in fixing

More importantly, INDECO failed to advance beyond production of non-durable consumer goods to durable and capital goods. Fourth, the bias against agriculture and rural areas meant the continued dependence on the copper mining industry. Fifth, the bias against exports and import restrictions resulted in higher exchange rates and reduced the gains from exports. Sixth, Zambia’s support for the liberation movements of Southern Africa and the closure of the border following the Unilateral Declaration of Independence by Rhodesia seriously affected implementation of development plans, as alternative export routes had to be built, especially the Tanzania -Zambia Railway.

In addition to the drought, Zimbabwe suffers from hyper-inflation as a result of Mugabe's "reforms". He seized all of the farms from white farmers and redistributed them to his supporters. When Mugabe took power in 1980 after the British ceded control of the country, Zimbabwe was poised to be one of the world's most promising economies. Mugabe's policies have thrown the country into economic chaos, however, with its output less than half of what is was nearly 40 years ago.

In Bretton Woods, New Hampshire, representatives from the Allied nations met to change that. The agreement they struck, known as the Bretton Woods system, provided what they believed to be the necessary infrastructure to facilitate this increasingly global economy. All currencies would have a set exchange rate, in gold-backed dollar terms. This would, in theory, make global transactions involving different currencies simple and easy to regulate. The International Monetary Fund was established to make sure that these exchanges ran smoothly and that countries could meet their obligations.

Affordable: Southerly Africa 's monetary as well as fiscal policies authorized your financial system to build through the 1990s for the oncoming from the world-wide economic crisis. However, america saw growing joblessness a result of the replacement associated with labour within a lot of the employment-generating areas. Furthermore, your nation 's growing public debts as well as abnormal power always deter people.

Angry protesting, political upset, governments falling, privatization failing, and money lost are a few outcomes that influence the public opinion on the World Bank, and its involvement in many underdeveloped countries. While the World Bank claims that reducing poverty across the globe is its foremost priority, many opponents believe that it is responsible for increasing poverty. The World Bank is a multifaceted organization that loans money to government around the world for development.

This would not be an issue if all nations were to start on the same playing field. However, it is some of the same developed nations that benefited from the oppression of indigenous people and races that are imposing this ideal of development on developing nations. As such, these global institutions reinforce this narrative of the value of society being in its economic output and growth. In that respect, some developing nations in pursuit of those goals borrowed extensive money from the IMF that eventually resulted in heavy debt due to these countries not having sufficient resources to develop their economy. What makes it worse is that developing nations would then have to prioritize paying back their loans and not necessarily in developing their industries in the first place.

Some international development banks have been blamed for imposing policies that ultimately destabilize the economies of recipient countries.

The World Bank and the IMF imposed SAPs on developing countries that needed to borrow money to service their debts. The World Bank’s SAPs, first instituted in1980, enforced privatization of industries ( including necessities such as healthcare and water), cuts in government spending and the imposition of user fees, liberalizing of capital markets (which leads to unstable trading in currencies) market based pricing (which tends to raise the cost of basic goods)

2. A project of the IMF that created problems for Africa after they received it?

For the past ten years, Zimbabwe has been riddled with economic stagnation as well as being the subject of political instability, thus that been the reason why many companies and countries have turned a blind eye as concerns investing. Once known as the bread basket of Africa, Zimbabwe has the ability to rise up again especially with the internationally accepted new government of Unity were the two major political parties, ZANU PF and MDC have come together to work as one for the betterment of the country and to fulfil the needs of the people.

The World Bank is an international organization affiliated with the United Nations with the purpose of financing projects that improve the economic development of its members. The World Bank is headquartered in Washington D.C and it is the main source of financial assistance to developing nations. The Bank also provides technical support as well as policy advice and oversight on behalf of international creditors in the implementation of free-market reforms in developing countries. Along with the IMF and the WTO, the Bank plays an important role in the establishment of economic reforms in public institutions in the developing world an it also has the function of setting the global economic agenda (Chossudovsky, 2017).

Economic reforms dictated by the IMF and the World Bank brought in a wave of reforms in the revenue collection capacities of state and its agencies. Aside from the introduction and implementation of user fees in services departments such as schools, clinics and hospitals, the reforms culminated in the combination of the two key departments to form the Zimbabwe Revenue Authority (ZIMRA), headed by a Commissioner General. ZIMRA was established on 19 January 2001 as a successor organisation to the then Department of Taxes and the Department of Customs and Excise following the promulgation of the Revenue Authority Act on February 11, 2000. Among other reasons for this amalgamation were the world trends, desire to improve efficiency by reducing bottlenecks and duplication of roles. This harmonized revenue collection agency worked at purging corruption particularly at border posts, by implementing a complete