It was certainly known to the negotiators who crafted the London Debt Agreement of 1953, which dramatically reduced West Germany’s burden of public debt. As the IMF report notes, “unanticipated transfers” to state-owned enterprises and unexpected exchange-rate depreciations could undermine debt-reduction efforts. For decades, IMF programs have assumed that cutting public spending was the only way to deal with debt distress. A similar focus on fiscal balance is evident in other proposed IMF programs in Ghana and Zambia. After decades of causing avoidable misery, it is time for the IMF to put its money where its mouth is.

Source: Ethiopian News April 22, 2023 08:16 UTC