The International Monetary Fund and Human Rights -- An Article by Sérgio Pereira Leite, Assistant Director, Office in Europe, IMF

September 4, 2001

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The International Monetary Fund and Human Rights
An Article by
Sérgio Pereira Leite
Assistant Director, Office in Europe
International Monetary Fund

Le Monde
September 4, 2001

Original: Français

In his book "Development as Freedom," Amartya Sen, Nobel Economy Prize winner, encourages us to look into the expansion of freedoms as both the definition of development and the means to achieve it. He notes, for example, that there is no record of a democratic country with a free press that has suffered from famine. He argues that economic indicators, such as GDP per capita or income distribution, fail to capture what is really important to people: the freedoms associated with human rights. His contribution has made many of us wonder whether the IMF could do more for human rights.

Since 1999, the IMF has stressed the central role of poverty reduction in the Fund's strategy for low-income countries. In particular, Managing Director Horst Köhler has emphasized the participation of the poor in the development process, recognizing that growth and macroeconomic stability are not enough to raise living standards, and has suggested that governments need to put in place an environment in which the poor can protect, sustain and enrich their livelihoods. This approach, which seeks to strengthen countries' sense of "ownership" of their economic strategy, by no means prevents member countries from highlighting human rights issues or incorporating them into their poverty reduction strategies.

Because the poverty reduction strategy paper (PRSP) is a country-owned document, what it includes depends on the government's commitment and leadership, including its readiness to take on board priorities identified through the participatory process. For example, Burkina Faso prepared a poverty reduction strategy centered on the concept of human security, which comprises access to education, employment, medical care, basic foodstuffs and safe water, as well as preservation of the environment, respect for the rule of law, accountability, and participation. Nicaragua's August 2000 interim-PRSP proposes measures directed at the demarcation of lands of the indigenous communities, protection of children in high-risk conditions, prevention of family violence and food security. Rwanda's interim-PRSP includes a human rights program, as well as capacity building for Rwanda's Human Rights Commission. Other countries in which the poverty reduction strategy discusses human rights concerns include Bolivia, Cambodia, Cameroon, Uganda, Tanzania and Vietnam.

It is important to remember, however, that the ownership of the poverty reduction strategy needs to remain with the country. While human rights advocates should be given every opportunity to participate in the PRSP consultations, they should not expect the IMF to impose human rights conditions on its assistance to member countries. The IMF simply does not have the expertise required to make judgments in this area. Moreover, international organizations that deal with human rights have found that to impose sanctions on a country is not always effective; working with these countries to resolve abuses over time is often the best option.

Major economic shocks often create winners as well as losers, and the adjustments necessary to overcome an unsustainable economic situation or a full-blown crisis may have negative side effects on the poor. The IMF's financial assistance helps countries protect social expenditures during periods of adjustment, when budget deficits may need to be cut.

Critics of the IMF sometimes imply that there may be some other way to resolve resource constraints of developing countries. Clearly, more foreign assistance would be helpful, and the IMF has been in the forefront of efforts to press the case for increasing resources for development. However, given inevitable constraints on foreign assistance, a balance of payments shock is either financed by further debt or compensated by adjustment. Debt postpones the problem and, as experience has shown us, often worsens it. Adjustment is often the best choice—sometimes the only available choice—but while the costs of adjustment are inevitable, they need not fall primarily on the poor, nor compromise human rights.

The IMF encourages governments to do everything within their power to protect social expenditures. Available evidence indicates that this advice is being generally followed. Data from countries with Fund-supported programs during 1985-99 show, on average, a small rise in social expenditures despite the difficult economic conditions faced by these countries. We must do better: we must get our member countries to increase social expenditures further and make sure that the available resources are well spent.

The International Monetary Fund recognizes that it should be aware of any adverse side effects of policies it proposes. In those cases, it is often necessary to introduce appropriate safety nets to help alleviate adverse social consequences. This is fully accepted by the IMF, and it is not new. Social safety nets have been part of Fund-supported programs for more than a decade, e.g., a social safety net can be found in Mozambique's 1988 structural adjustment program.

The IMF should endeavor to be open to criticism and undertakes to change its policies when results are disappointing. But it should be recognized that the IMF was created to promote international monetary cooperation and orderly balance of payment adjustment.

It should focus on sustainable growth and a stable macroeconomic environment—which in themselves are supportive of human rights—while encouraging member governments and specialized agencies to work together towards designing development strategies that take human rights into account. In particular, governments also need to make wise choices given their limited resources. And both specialized international organizations and civil society should be prepared to engage actively in the participatory process, as well as in the implementation of poverty reduction strategies. If we all work together, human rights will no doubt find its place in poverty reduction and growth strategies, and low-income countries will be one step closer to winning their fight against poverty.





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