World Bank and IMF Debt trap

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Prof. Abdul Shakoor Shah
Borrowing brings sorrowing. The World Bank and IMF are 77 years old in 2021. The twin international financial institutions (IFI) were initiated in 1944 prior to World War II(WWII. WWII was won on two major fronts namely the military and finance. The US and Co graphed the IFI to control the world via financial debt. The IFI scientifically trapped the states via loans for manipulating their natural resources and policies. The IFI datedness is the most potent tool for subordinating the borrowers. The formation of IFI has been breaching international pacts on human rights and empowering dictators. The IFI have proved The Jew of West on the patter of The Jew of Malta loaning and aiming to strangle the poor nations. The US and Co are heading to materialize the dream of World Government and they have penetrated in every region through their debt trap policy via IMF and World Bank. We must realize that the loaners and the donors both are owners. Now, The IFI is taking certain national institutions of paramount vitality as guarantee for borrowing. This is a new tactic of the West like the East India Company. The IFI conditions are Lucifer-Faustian bonds of deception and fraud. The borrowers get nothing but repentance. From the formation of the IMF and World Bank hardly any country has freed itself from the claws of the IFI. In near future the IFI will be further transformed into Soft Finance and Tech-Giants to control the world. Humanity is on the verge of chaos. There is a dire need to decolonize the world from clutches of IFI by substituting them with alternate institutions aimed to help humanity not to trap it. The human right sloganeers have entrapped the world in monetary chains. In the 70s the debt of the developing world jumped at alarming speed as the monetary conditions seemed most favorable. The Third World was tapped to borrow loans from IFI. The end of 1970 brought a sudden twist by increasing interest rates and kicking in the liberal policies. The abrupt boost in interest and decrease in commodities market entirely altered the situation.1980s boomed the creditors. The South East Asia and Korean financial catastrophe made the IFI soar higher than ever before. From 1970 to 1982, the DCs significantly augmented their loans. The entire external debt (public and private) in existing dollars was multiplied by 10 (going from 70 to 716 billion US dollars). The external public debt was also multiplied by 10 (from 45 to 442 billion US dollars). The public external debt owed to the World Bank was multiplied by 7.5. During this period, the net transfer on debt was constantly positive, which means that the DCs borrowed more than they paid back. They were mustered up to borrow more debt since the actual interest rates were awfully low. Furthermore, the export revenue with which they were repaying the debt was mounting, since the price of raw materials was high. accordingly, the DCs on the whole did not have repayment problems. The real interest rates detonated in the start of the 1980s: 8.6% in 1981, 8.7% in 1982, compared with -1.3% (the real interest rate was actually negative) in 1975, 1.1% in 1976, 0.3% in 1977. This drop finally inflected the price of crude oil, the key oil producing debtors, such as Mexico, were unable to pay. This started in 1982. There was a negative net financial flow between 1983 and 1991. 9 successive years of negative net transfer means the borrowers paid back much more than the actual loans. Between 1983 and 1991 it amounted to 632 billion US dollars, which means 81% increased. The borrowers were left with no alternative to borrow more for their survival and the new loans were offered with new conditions and interest rates. It should also be noticed that the net transfer on the external public debt moved into negative values with a time lag of two years. Why is it that in 1983 and 1984 the net transfer on the public external debt was still positive? Because the governments at that point started to borrow considerable amounts (from the IMF and the World Bank) in order to begin to take on debts which had initially been taken out by the private sector but which the government agreed to take over. These enormous loans, which the nation started to pay back a few years later, explain the subsequent negative flow, from 1985 onwards. The circumstances distorted again from 1998 onwards, when the South East Asian crisis and the South Korean crisis occurred, followed by crises in Russia and Brazil in 1999 and in Argentina and Turkey in 2001. Repayments from the private and public sectors were massive and the negative net flow achieved its utmost in 2000-2001.In 2003 and 2004, the net flow remained negative. The net transfer with respect to the World Bank became negative from 1990 to 1996, then positive from 1997 to 1999 before becoming negative again with the greatest negative net flow ever in 2002, 2003, and 2004. The negative transfer over the period 2000-2004 totals a staggering 21.3 billion US dollars. This is to be compared to the total amount provided in loans each year by the World Bank, which is less than 20 billion US dollars a year. What is even graver is that this massive negative net transfer does not in the least lead to the DCs liberating themselves from debt, but essentially leads to a boost in the debt owed to the World Bank. This shows the total cynicism inherent in the system, which results in unnaturally augmented debt loads which in no way correspond to the money injected into the economies of these countries. The IFI, (Barabas) is sharpening the dagger to end humanity supporters from the surface of the cosmos to enchain free souls in debt trap.

(-The Writer is Prof. in English and Freelance Columnist, based in Lahore, Pakistan)