IMF offers “help” to Egypt, Tunisia

The International Monetary Fund has offered loans to the new governments of Egypt and Tunisia—a truly bad idea of which these countries’ leaders are rightly wary.

Now, before Tunisia and Egypt even have new governments in place, the IMF has jumped to offer them loans for vast infrastructure projects in the desert—as if the fund didn’t know that young Arabs there want ways to start businesses and have careers, not temporary construction jobs.

The Greek debacle and the North African drama raise existential questions about the IMF. Responsible governments have no business borrowing vast sums from abroad, rather than from domestic sources. That’s what tinpot regimes do. And lending even more to borrowers who can’t pay what they already owe? That’s what loan sharks and mafiosi do.

via Newsweek.

It isn’t hard to imagine the consequences of massive loans 10 or 20 years from now—the Egyptian and Tunisian government unable to pay back the loans, and being forced to cut back public services and sell off national assets as part of an enforced “austerity” program.

I think that this is misguided generosity.  A cynical view would be that this is just what the IMF administrators intend.

Click on What’s Wrong With the IMF for the full article by Amar Bhide and Edmund Phelps in Newsweek.  (Hat tip to National Review Online).

Click on Kudos to Egypt for Ditching the IMF for analysis by Mark Engler in Dissent magazine.

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