IMF Accused of Role in Malawi Famine


By Oroke Garut

One World
June 14, 2002

The International Monetary Fund (IMF) helped cause the famine and death that have beset Malawi since the beginning of this year, according to a major aid and advocacy group.

ActionAid, a network of anti-poverty groups with a leading presence in the Southern African country, blamed bad IMF directives for crippling the Malawi government's ability to prevent or contain the calamity, in a report published Thursday. It put the death toll so far at more than 1,000.

The IMF denied culpability in what it said was the government's decision to sell off its entire strategic grain reserve, and accused Malawian officials of trying to scapegoat the Washington-based institution.

ActionAid acknowledged that the famine's immediate causes, bad weather and failed harvests, had nothing to do with the IMF. It also noted that while the decision to sell the grain reserve followed IMF advice, on reducing buffer stocks by 105,000 metric tons to 60,000, "almost all of the reserve was sold, much of it on local markets, against IMF advice to export it in order to minimize disincentives to maize producers."

Private traders benefited from the sale of the grain by buying, hoarding, and then selling it at exorbitant prices, according to the report, which found that government corruption was also a contributing problem.

However, when deeper economic factors underlying the 2002 famine were taken into account, the IMF had a clear role, said the report. In addition to helping in creation of the commercial debt that the government sought to pay off with proceeds of the grain sale, the Fund had encouraged privatization of the National Food Reserve Agency (NFRA), along with cuts in government spending on agriculture.

Malawi's President Bakili Muluzi declared a state of disaster in February and has asked for US$21 million in international aid for food relief. Close to three million people, or 28 percent of the population, need emergency assistance, according to government and United Nations estimates.

"The death toll is five times that of the 1949 Nyasaland famine, so named by colonial officials," said ActionAid USA's executive director Irungu Houghton.

Last week, finance minister Friday Jumbe told the Reuters news agency that the IMF had urged the government to settle commercial debts by selling the grain reserves.

Girma Begashaw, the IMF's country representative, responded by suggesting that there was "a concerted effort to discredit the work of the IMF in Malawi." Begashaw told the UN Integrated Regional Information Network, "We did not instruct the Malawi government or the NFRA to sell the grain reserves...They did not even keep the 60,000 [metric tons] that their own policy required them to keep and are now looking for someone to blame for the situation."

Despite Begashaw's disavowal, Houghton said, "there is some soul-searching at the Fund regarding the causes of the crisis and the state's inability to respond...Nevertheless, the Fund has to be more sensitive to local context and accept responsibility for its advice even as it insists that its programs belong to local governments."

ActionAid released its report, 'State of Disaster: Causes, Consequences & Policy Lessons from Malawi,' along with a policy paper, to coincide with the World Food Summit in Rome and in anticipation of meetings next month at which the IMF's executive board will review Malawi's poverty reduction program.

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