8 April 2022
The dramatic return of inflation, which has led the US Federal Reserve to raise the cost of bor- rowing18, just as the war in Ukraine drove up the cost of the dollar, is a recipe for financial tur- moil in lower-income countries who need dollars for their energy, medicine and food imports, and whose debt currency is largely in dollars. [...] The flight to the dollar driven by the war in Ukraine has also driven up the cost of the dollar. [...] Oxfam’s research showed that most of the IMF’s emergency COVID-19 loans in the first year of the pandemic encouraged countries to pursue austerity in the aftermath of the health crisis, despite the many warnings, including from the IMF itself, that austerity risks crippling the recovery.61 The IMF is now conditioning spending cuts in terms of GDP in several of its loan programs. [...] In the US, wealth concentration at the very top now surpasses the peak of the Gilded Age of the late 19th century, with little sign of abating.93 In the past year we have seen billionaires travel to space, at a time of unprecedented rising poverty and suffering on planet Earth. [...] Yet, the IMF has been encouraging or conditioning the adoption of austerity measures across most countries it is lending to “once the crisis abates” since the beginning of the pandemic.148 This was despite the many warnings, including from the IMF itself, that austerity risks crippling the recovery and despite the fact that it was years of IMF-driven austerity which in large part left governments.