Tuesday, August 09, 2022
LONDON: Lord Aamer Sarfraz, a British-Pakistani member of the House of Lords, and Prime Minister Borish Johnson’s Trade Envoy to Singapore has called on the UK government to urgently work with its allies on reforming the International Monetary Fund (IMF).
Speaking to Geo News, he said: “The IMF is in too many cases attaching shockingly restrictive and regressive conditions to loans. The issue is that unattractive terms from the IMF push countries towards other lenders, which is not in our interest. We need to ensure that the IMF is offering loan terms that countries can accept.”
The statement from the UK PM’s envoy comes as several South Asian nations seek loans from the Washington-based lender, with the IMF linking the bailout package to harsh conditions.
Recently, Pakistan reached a staff-level agreement with the IMF after the country removed subsidies from petroleum products and hiked taxes in the budget, triggering a wave of inflation.
Lord Aamer Sarfraz said: “A recent Oxfam report has found that 85% of IMF COVID-19 loans in the first year of the pandemic encouraged austerity in the recovery period. Even though the IMF’s own research indicates that austerity exacerbates inequality after pandemics.”
He said that the IMF’s conditions for Kenya had hit its poorest people the hardest, in the face of record increases in food and energy prices. He also gave examples of Ghana, Sri Lanka, and Nigeria, all of which have had to comply with strict conditions.
He said the risk is that further measures could have unbearable consequences for the poorest in these countries.
Lord Sarfraz further said he is asking both British prime ministerial candidates, Liz Truss and Rishi Sunak, to urge reform in four areas.
He said: “First, the IMF should resume conditionality-free financing during the ongoing crisis. Second, all conditionality in ongoing loan programmes should be suspended.
"Third, the IMF should be supporting countries to introduce progressive tax measures, instead of imposing harsh austerity measures. And finally, local stakeholders from across the board — businesses and civil society — should have a say about IMF loan programs.”
He stated that the UK is the IMF’s fifth-largest shareholder, and with European and American allies, it should drive forward significant reforms after the new PM takes office.