THREAD: The #IMF’s offer to provide #Lebanon’s government with technical advice has been met with a resounding "NO THANK YOU!” from many protesters and economists. But others may wonder, why should we reject the IMF’s offer of help?imf.org/en/News/Articl…
1. Firstly, the IMF has not committed to any financial assistance yet, which is always conditioned on economic reforms. For now, it is offering non-binding technical support, advising Lebanon on its budget and austerity measures.
2. That sounds nice enough, so why are people hating? Well, the IMF is typically a proponent of uber-capitalist reforms that focus on numbers, not human lives. Widespread criticism of these tactics have pushed the IMF to work on its image and aim for a more balanced approach.
3. But their policies still overwhelmingly prioritize capital, and lack consideration for how to protect those most affected by recessions and depressions. Put simply, the IMF is not a humanitarian organisation and has no interest in becoming one.
4. In Oct. 2019, the IMF recommended that Lebanon raise taxes, reduce govt subsidies on electricity, review public expenditures on wages and pensions, increase banks' capital buffers and deposit insurance, and "tackle corruption" (no explanation of what that would entail).
5. The IMF was ambivalent about whether the peg should be removed, arguing that, on the one hand, it may help with economic stability, but on the other, allowing inflation would make the portion of the debt owed in Lebanese liras easier to pay.
6. The IMF did not recommend a progressive income tax, which would tax the wealthy more while protecting lower income brackets. Instead, taxes would be applied to purchases of goods, fuel and imports - a policy that will push vulnerable households and businesses over the edge.
7. While the IMF recommended a slight increase to the Social Security Net, their proposal to end electrical subsidies means people will pay more for this terrible service, while lira devaluation will slash many people's earnings and savings in half.
8. These austerity measures will hurt Lebanon's lower-middle-class population, while leaving the banks, wealthy lenders and political elite (who are often one and the same) unscathed.
9. This analysis is based on what the IMF recommended to Lebanon last October. There have been no updates on what is being discussed between IMF and the govt over the last week, which highlights another criticism the IMF often faces - its lack of transparency.
10.There are many highly-capable local economists who’ve been suggesting solutions for handling the debt, all of which with an eye to the well-being of Lebanon’s residents. But the government chooses to seek IMF recommendations instead of utilizing their local brainpower. Why?
11.Because the IMF’s ideas fall right in line with what the government wants to do. When unemployment skyrockets and more than half the population falls below the poverty line (projected to happen soon), they can say “we were just following IMF recommendations.”
