Kathmandu:

As in most other developing countries, scepticism of Bretton Woods institutions runs deep in Nepal. And for a good reason. Economic reforms initiated in 1980’s and 1990’s under the one-size-fits-all framework of the International Monetary Fund (IMF) and the World Bank (WB), instead of helping poor Nepalis overcome their pitiable existence, only succeeded in pushing them deeper into the mires of poverty.

Trade barriers were torn down overnight, and privatisation became the new mantra of policymakers. The government was forced to maintain unrealistically low fiscal deficits, the bête noir of IMF mandarins. In an agriculture-based economy, fertiliser subsidies for poor farmers were cut, but the much more ‘expensive’ task of building extensive road networks to help them market their produce wiped off national agenda. The ‘reforms’ had shattered a fledgling economy.

In Globalisation And Its Discontents, Joseph Stiglitz narrates similar tales of exploitation of poor countries by the global financial custodians in IMF, WB and the World Trade Organisation (WTO). Stiglitz, former Chief Economist at the World Bank and winner of the Nobel Prize for Economics in 2001, illustrates the perils of unregulated liberalisation and hasty dismantling of safety nets for those at the bottom rung of economic ladder in developing countries.

According to Stiglitz, IMF policy prescriptions for the third-world are more the fruits of narrow mindsets of a handful of international bureaucrats cherry-picked by the industrialised nations to serve their own vested interests. The developing countries, still the ‘white man’s burden’ for the West, have no say in who gets to formulate the policies that have a direct bearing on the day to day lives of their people.

The author finds it astonishing — and not a little unfair — that a sole IMF country representative who deals exclusively with the central bank governor and other high-powered ministers and rarely, if ever, visits remote areas where the heart of the problems that bedevil third-world countries lie, has the wherewithal not only to obstruct the flow of IMF-WB assistance but also influence the lending decisions of all foreign donors.

Stiglitz attributes flawed fiscal policies of IMF with causing and, after the fact, exacerbating the Asian market crash in 1997, pushing back by years the incremental gains of countries like Thailand and South Korea that had chosen to heed the ‘expert’ advice. On the other hand, China and Malaysia, which decided to ignore standard IMF prescription (privatisation, low inflation and budgetary surplus) managed to wade through the turbulent times in the region without many hassles.

Such stories of misery caused by flawed policies of global financial institutions are testament to the fact that economic assistance divorced from humane concerns only helps make the rich richer, while exacerbating the plight of the poor. Stiglitz advocates for a more humane approach to international development. For starters, why

not make the assistance recipient-driven rather than being dictated to by the donors? Let individual countries decide for themselves which areas they want to more investment in.

That the rich countries

fail to see the win-win bargain of such an approach for both the developed and developing countries is a sad irony of modern international financial order.