Monday, October 26, 2009


Massive restructuring of the economies of the third world by international monetary agencies, while offering financial support, has helped them to achieve perceptible progress as measured by growth in GDP and infrastructure. But it seems to have changed the social fabric by increasing the disparity between the rich and the poor. True, some developed countries offer economic aid to cushion the effect of such transitional efforts but it is considered too little to make any visible impact. Often such aids come with strings attached and many countries are forced to accept them for their very survival.

Recent economic crisis precipitated in industrialized, rich nations due to mismanagement had the percolation effect on developing countries which had to bear the "cross" for no fault of theirs. The very idea of providing a "safety net" for such countries, as being mooted by international agencies is a welcome initiative. "Meanwhile, the head of the IMF on Friday called for a tax on the financial sector to protect the world economy from the "systematic risk" it creates. According to the IMF the global economic crisis is hitting low-income countries harder than anticipated, increasing their need for aid. It said however that past gains from macroeconomic stabilization and debt reduction, together with some increase in aid, have created space in many countries for counter-cyclical policies, and IMF-supported programs have accommodated such policies to address the impact of the global food, fuel and financial crises".

How far such a proposal will find favor with those who have the wherewithal to raise the required resources, remains to be seen but if accepted it can be of great relief to the teeming populations in Asia, Africa and South America whose numbers seem to be increasing day by day. Even if the proposal finds broad support, the "nut and bolt" details about the program need to be worked out.


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