Africa Notes: How the IMF and the World Bank Affect African Decision Making - April 1989

The International Monetary Fund and the World Bank have come to wield unprecedented influence over economic policies a11d institutions in sub-Saharan Africa in the 1980s. This influence, which also has political implications, derives from the interaction of four factors:

(1) The ability of these institutions to provide trade-dependent and import-starved African governments with quick-dispersing foreign exchange to boost imports.

(2) The role of these institutions in certifying a government as eligible for a Paris Club debt rescheduling and deserving of additional resource flows . Donors increasingly require that African countries have in place a stabilization program with the Fund and occasionally a structural adjustment program with the World Bank as a prerequisite for additional aid. An IMF program is required by creditors as a prerequisite for rescheduling any debts.

(3) The practice by the international financial institutions (IFis) of lobbying other donors for additional aid once an African government has an acceptable adjustment program in place. In a number of African cases, the World Bank has used donor "consultative groups" as vehicles for this lobbying. These groups hold periodic meetings, chaired by the Bank, at which governments' policies and overall investment plans are reviewed and donor aid commitments are made. By calling a consultative group session, the Bank puts pressure on donors to provide more funds in support of the adjustment program of a particular country.

(4) The fact that African governments now have virtually no sources for significant increases in foreign exchange other than the international financial institutions. Western donors no longer use their aid programs to compete with each other for influence in Africa as they did in the 1960s and 1970s, and the Soviet Union too has become less inclined to engage in aid competition.