IMF can help to end shortfalls in aid that threaten death to the poor
From Prof Jeffrey D. Sachs.
Sir, Thomas Dawson's letter (January 3) contains a number of misunderstandings that I would like to correct. The International Monetary Fund executive board, senior management and professional staff know full well that I have fought against empty money printing for more than two decades, and that I speak loudly and clearly about the need for good governance and full accountability in the use of development assistance. However, accountability must run both ways. My argument is that the IMF should tell the truth and tell it loudly: millions of impoverished people will die this year in dozens of countries with IMF-supervised programmes because the promised aid of the world's richest countries has not arrived.
Let me clarify for Mr Dawson and the IMF exactly what I am recommending that they do in the face of "the backloading of new aid promises and the limited amount of additional cash transfers", which Mr Dawson acknowledges to be a "serious concern". All donors have committed to "make concrete efforts towards the target of 0.7 per cent of gross national product" in development aid, yet the aid shortfall compared to 0.7 per cent of donor GNP is now about Dollars 150bn a year, half of which is from the US alone. The missing aid would save millions of impoverished people this year from imminent death. As Mr Dawson notes, the IMF is committed to the 0.7 per cent target. The IMF should take three urgent and practical steps to help close the aid gap.
First, the IMF should work with the World Bank and the UN organisations to support all developing countries to put in place, in 2006, national development strategies ambitious enough to achieve the Millennium Development Goals (MDGs) by 2015, a step recently agreed by world leaders at the 2005 world summit. Neither the IMF nor bilateral donors are actively supporting governments in preparing such ambitious strategies since the rich-country donors know that properly ambitious strategies would expose the shortfall in aid and the lack of donor follow-through on existing commitments. Thus, poor countries are actually pressured not to take the MDGs too seriously and to scale back their ambitions by aligning public investment plans with the meagre aid now available rather than the level of aid that has been promised but not delivered.
Second, on an operational level, the IMF should systematically report for each programme country what the aid shortfall actually means for the life and death of the people of the country and publish the macroeconomic framework that would be consistent with achieving the MDGs. The IMF routinely works with the finance ministers of impoverished countries to set budget ceilings on health, education, water, sanitation, agricultural infrastructure and other basic needs, in the full knowledge that the consequence is mass suffering and death which would be avoided with more aid. Yet the IMF's country documents nowhere explain the basic truths, not even to its own executive board much less to the broader public, that much more aid could be absorbed with macroeconomic stability and that the aid shortfall results in a human catastrophe, with deaths from hunger, disease and unsafe water on the scale of a world war. The official donors get a free ride in IMF documents, with the aid shortfall registering, if at all, as a regrettable inconvenience rather than as the calamity it is.
Third, the IMF should spend at least as much time, indeed more, with the finance ministers of the rich countries as they do with the poor countries, to work out practical ways to mobilise and effectively use increased aid to meet the MDGs in each of the IMF's member countries. When Ghana's aid falls woefully short of what is needed, rather than simply working overtime with Ghana's finance minister to cut budgets, the IMF should work overtime with John Snow, the US Treasury secretary, and his Group of Eight colleagues to get the aid to the level it needs to be.
This amounts to much more than IMF officials giving speeches about 0.7 per cent of GNP in aid, or expressing "serious concern" about the aid shortfall. It entails the full IMF staff working in detail, and with a sense of urgency, for a scaling up of aid as needed in each programme country. Such an intensive country-by- country effort to mobilise funds up to the 0.7 per cent commitment does not occur today. The US annual aid shortfall alone is approximately Dollars 65bn, money that could save millions of lives from malaria, promote an African green revolution, enable access to safe drinking water and provide for transport, power and communications infrastructure vital for economic growth.
Fortunately, Mr Dawson's senior colleagues and executive board know that the IMF can do much better to promote the MDGs, including through the fulfilment of aid commitments. As the world's leading international macroeconomics institution, the IMF must be a champion of the Millennium Development Goals in each of its member countries, rather than a handmaiden of powerful donor countries that are not honouring their aid promises.
Jeffrey D. Sachs,
Columbia University,
New York, NY 10017, US