IMF Under Fire in Kyrgyzstan

Kyrgyz are bitter over what they see as crippling IMF credit conditions

IMF Under Fire in Kyrgyzstan

Kyrgyz are bitter over what they see as crippling IMF credit conditions

For the first time in Kyrgyzstan, disgruntled citizens are aiming their anger at someone other than the government.


The new enemy is the IMF, which many here accuse of setting crippling terms for credit, such as the bankrupting of unprofitable businesses, welfare cuts and the raising of the age of retirement.


Pensioners' leader Lida Fomova is blunt, "This is a programme of extermination for the elderly."


The IMF sent a mission to Bishkek earlier this month to discuss terms for another $60 million slice of credit. (The government spent the last $58 million paying off part of its $2 billion foreign debt, in violation of IMF rules).


With around 80 per cent of Kyrgyz living on the poverty line, earning an average income of around $12 a month, most people find it hard to understand why aid is linked to any conditions at all.


The government says it has to go along with the IMF terms. The fund in turn blames the government, saying that it allocates separate credits for social programmes.


"Our work is transparent," said a spokesman for the organisation. "Your government should account for where the money goes."


And it has a point - much of the population are convinced that funds have disappeared into officials' pockets.


Kyrgyz economists, meanwhile, see the wisdom of the IMF and World Bank programmes - aimed at developing economic sectors capable of competing in world markets, while neglecting those that can't.


Without external aid, Kyrgyzstan would be doomed, as most experts admit. But they would prefer to see aid given to support economic reforms, not dictate them.


The crisis has spawned new activist groups, most of whom want Kyrgyzstan to declare itself poor enough to be able to write off all its debt.


Kyrgyz are not alone in their opposition to the IMF. Last year, a US Congress committee chaired by Professor Allan Seltzer declared the IMF to be "high cost and low effectiveness", and said it put expensive crisis management over real economic development of countries it was trying to help.


The committee advised the IMF to return to its starting point - providing macroeconomic stability for poor countries, with short-term loans. It also recommended writing off the debts of the poorest countries, who were going banckrupt under the burden of huge loan repayments.


But the IMF rejected all suggestions of reform. Together with the World Bank, it continues to hold the keys to the fate of the developing world, even though their programmes have no real economic effect.


Perhaps their bigger concern is maintaining global stability, say some in Kyrgyzstan. "They are lobbyists for rich countries," said deputy Nikolai Bailo. "And they're just interested in creating conditions in which the wealth of those countries can be increased."


Another criticism is the institutions' blanket approach to management of economic reform, which takes no account of the peculiarities of each country's development.


Standard approaches - monetarism, liberation of prices, privatisation, salary freezes etc - cause resentment among local economists, mainly because no-one has yet to see any results.


Opposition politicians increasingly cite the experience of the Latin American countries, which rejected the IMF after 7 years of hardship. Even though the fund increased GNP, they say, the benefits went largely to transnational corporations, not local industry.


The Baltic states are often held up as successful examples of how IMF reforms can work. Unlike undisciplined African and Central Asian countries, they have strictly followed the logic of reforms.


The trick is to stick at it. "We are going from one extreme to another," said economist Murat Sultanov. "An open model one minute, then state interference, now a US model, then a Chinese model. We have to be consistent if we want results."


Though Kyrgyzstan is too poor, and not strategically important enough to be fought over by the West, its economic needs mean it has become politically dependent, say the communist opposition.


"Our leaders accept all the conditions of the IMF and World Bank to get credit," said Bailo. "Our national interests suffer, it's a crime."


Opposition politicians reckon the West gets a kick out of propping up a small country, so it can present itself as truly democratic and benevolent.


Despite all the griping, the World Bank's quarterly bulletin Development Outreach recently put Kyrgyzstan in the A class of countries, its positive reviews better than Russia's.


As is usually the case, the glowing opinions of foreign experts are a long way from the simmering resentment of the population, who have yet to be convinced that anything concrete has been achieved.


Igor Grebenshikov is an IWPR contributor


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