Loans, Leverage, and Loss: The Human Cost of IMF and World Bank Policies

The International Monetary Fund (IMF) and the World Bank were both established after the Second World War. Forty-four nations convened in Bretton Woods, New Hampshire, where they laid the foundation for organising the global economy to promote economic stability and ensure long-term peace and security. The IMF focuses on providing countries with loans, promoting free trade and open markets, and assisting in managing economic performance. Similarly, the World Bank offers long-term loans and also provides training and policy advice to developing countries.

Japanese currency (Yen) on a table

Structural Adjustment Programmes (SAPs) are a set of economic reforms imposed by the IMF and World Bank as a condition for receiving loans. These reforms typically include the privatisation of public companies, cuts in public spending, and the devaluation of currency to boost exports. However, these measures are widely believed to have deprived lower-income populations in affected countries of their basic human needs.

Zimbabwe, during the 1980s and early 1990s, was known for its strong healthcare and education systems. At one point, it was considered to have the best healthcare system in Africa. In 1991, SAP reforms were introduced, which removed access to free healthcare and education for many citizens who had previously been eligible. A 30% cut in the healthcare budget resulted in shortages of medical supplies and trained medical personnel, leading to a doubling in the number of maternal and infant deaths during childbirth in Harare. Furthermore, cuts to the education system meant that fewer people could afford to attend school, which later contributed to limited job opportunities. According to the United Nations Development Programme, the gap between the rich and the poor in Zimbabwe doubled, rising by 200% within a decade.

In 1992, SAPs were implemented in India. Within a year, 6.6 million people lost their jobs due to the privatisation of public enterprises. The reforms encouraged India to open its markets and integrate more deeply into the global economy. As a consequence, agriculture (India’s main source of income)was neglected and underfunded. Local farmers were unable to compete with imported foreign goods. This also stifled industrial growth, as many consumers turned to cheaper imported products, particularly from China, instead of supporting locally made items.

The effects of SAPs were overwhelmingly negative in many developing countries. In Argentina, severe pension cuts led to elderly citizens taking their own lives in protest. In Brazil, the proportion of the population living in poverty increased from 24% to 39%. In Kenya, primary education, which was previously free, began costing $44 per month, making it inaccessible for many families and reducing school attendance rates.

Based on these findings, it is evident that SAPs imposed by the IMF and World Bank have done more harm than good in many developing countries. The original intention of these loans was to support economic development and improve living standards. Instead, they often resulted in people being deprived of basic needs and sustainable sources of income. These reforms have contributed to a cycle that keeps the poor in poverty by limiting access to healthcare, education, and economic opportunity.

The IMF and World Bank appear to prioritise recovering their loans over safeguarding the welfare of the people affected by the conditions they impose. For this reason, I believe these institutions are more focused on financial return, even when it comes at the cost of human lives.

— Arina

References:

Kawewe, S. M. and Dibie, R. (2000) ‘The Impact of Economic Structural Adjustment Programs [ESAPs] on Women and Children: Implications for Social Welfare in Zimbabwe’, The Journal of Sociology & Social Welfare, 27(4), pp. 79–107. Available at: https://scholarworks.wmich.edu/jssw/vol27/iss4/6 (Accessed: 21 June 2025).

Sangla, S. (2023) ‘Structural Adjustment Programme: India’, International Journal of Social Science and Economic Research, 8(6), pp. [insert page numbers if known]. Available at: https://ijsser.org/2023files/ijsser_08__110.pdf (Accessed: 21 June 2025).