Objective
A main function of the IMF is to provide loans to countries experiencing balance-of-payments problems so that they can restore conditions for sustainable economic growth. The financial assistance provided by the IMF enables countries to rebuild their international reserves, stabilize their currencies, and continue paying for imports without having to impose trade restrictions or capital controls. Unlike development banks, the IMF does not lend for specific projects.
Budget
$ 220 million for the 2001 fiscal year.
Promotion in the Water Sector
A review of IMF loan policies in forty random countries reveals that, during 2000, IMF loan agreements in 12 countries included conditions imposing water privatisation or full cost recovery. In general, it is African countries, and the smallest, poorest and most debt-ridden countries that are being subjected to IMF conditions on water privatisation and full cost recovery.
Ironically, the majority of these loans were negotiated under the IMF's new Poverty Reduction and Growth Facility (PRGF). The reform was announced in 1999 when IMF officials claimed that the new loan facility would re-focus the IMF's structural adjustment measures on activities that borrowing government's would identify as leading to poverty reduction.
Rather than contributing to poverty reduction, water privatisation and cost recovery make water less accessible and less affordable to low income earners. The alternative is to revert to unsafe water sources or more distant sources. The most immediate impact of such policies falls on women and children.
The significance of finding such a high number of conditions relating to water privatisation and water cost recovery in IMF loans is twofold. First, in the hierarchy of international financial institutions the IMF is at the top. Compliance with IMF conditions enables governments to receive the "seal of approval" that permits access to other international creditors and investors. Thus IMF conditions weigh especially heavily upon borrowing governments. Secondly, it is quite common that World Bank loans have, as their first condition, compliance with certain IMF conditions. This is known as "cross conditionality." In the division of labour between the two institutions, it is the World Bank that has primary responsibility for "structural" issues such as the privatisation of state-owned companies. Therefore, it can be presumed that in every country where IMF loan conditions include water privatisation or full cost recovery, there are corresponding World Bank loan conditions and water projects that are implementing the financial, managerial, and engineering details required for such 'restructurings'.
IMF website