By Adolf
Across the Global South, the International Monetary Fund (IMF) has come to symbolize not economic rescue but systemic devastation. Sri Lanka is a textbook example. In a desperate attempt to stabilize its collapsing economy, the country turned to the IMF—an act that came at a painful cost to its people. The rescue, though eventually successful, was driven largely by the deft leadership of an experienced president working in tandem with the IMF.
Yet, this so-called recovery pushed over 500,000 middle-class citizens below the poverty line and ultimately damaged the president’s electoral prospects. Ironically, the current president, who capitalized on this crisis by stoking class divisions, now claims credit for the recovery. Everyone knows that’s not true. If he doesn’t get his act together quickly, he could be heading for even bigger electoral defeats.
The IMF Recipe: Pain First, More Pain Later
Despite its professed goals of fostering stability and growth, the IMF’s rigid policy prescriptions often plunge nations into deeper poverty, greater dependency, and endless cycles of austerity and debt. The sequence of destruction is disturbingly consistent—and devastating. It typically begins with enforced economic liberalization. Governments are instructed to dismantle tariffs, eliminate subsidies, and expose fragile domestic markets to unregulated foreign competition. The outcome is predictable: local industries collapse under pressure from cheap imports, jobs disappear, and countries lose the capacity to produce even essential goods.
Economies become dependent on imported food, fuel, and medicine—commodities now priced and controlled by external markets. Next comes the floating of the national currency. Countries with weak exports and low investor confidence watch helplessly as their currency plummets in value. Servicing dollar-denominated debt becomes unsustainable. What once cost one unit now costs two or three—devastating public finances and widening the fiscal gap. With local production dismantled and currency values collapsing, import prices skyrocket. Inflation runs rampant. Wages stagnate while basic living costs soar. The burden falls squarely on ordinary citizens who find themselves struggling to afford food, transportation, and medicine. In response, the IMF insists on aggressive interest rate hikes to curb inflation.
But this move throttles economic activity. Businesses already reeling from the crisis can no longer afford to borrow. Many are forced to shut down. Government borrowing also becomes more expensive, leading to cuts in infrastructure, healthcare, and public services. What follows is a deeper capital and debt crisis. Domestic firms face double-digit interest rates, while foreign competitors thrive on cheap global credit. The IMF then tightens the screws further—demanding tax increases and the removal of incentives. Local businesses are left gasping for air.As the economy crumbles, the IMF deflects blame, citing “corruption” or “inefficiency” within the country. The real damage—inflicted by externally imposed structural reforms—is rarely acknowledged. Instead, more austerity is prescribed: pension cuts, regressive taxation, and the privatization of education and healthcare. The social contract is gutted, and the most vulnerable bear the heaviest burden.
Conclusion
Critics argue this is not a failure of policy but a deliberate model. IMF programs have consistently dismantled national economic sovereignty, prioritized creditor interests, and trapped nations in long-term dependency. The result is a hollowed-out economy: indebted, import-reliant, and stripped of the capacity to achieve sustainable, inclusive growth. The pattern repeats—by design, not mistake. To be clear, the IMF does not force countries to borrow. But when governments mismanage their economies to the point of collapse and then run to the Fund, they must be prepared to face the consequences. The pain is real—and often, it is the people, not the politicians, who pay the highest price.
