People familiar with mortgages know well that there are some that you cannot reimburse all at once when you have the required amount to do so. The benefit of paying earlier than later is to avoid the heavy interests, which normally accompany their scheduled reimbursement. Of course, IMF or WB doesn’t provide mortgages to individuals but loans at preferential rates of interest to countries for national projects. But it could be rightly stated that there are close similarities between the two types of loans, the main difference being the particular characteristics of the beneficiaries.
Alassane Ouattara, the new Ivorian leader, is an ex-executive of IMF. With such professional background can he depart from loans’ terms and conditions of this institution and similar others which do their business by putting financial burden on developing countries for pretended support of their development? Ivory Coast has experienced instability for the last decade. The situation is far away from qualm despite the forced removal of Gbagbo. The country is in a strong need of reconstruction. National infrastructures have been destroyed by both antagonistic camps. Levels of unemployment have increased and the country’s sources of hard currency have been seriously damaged. Nation rebuilding process, however, calls from political leaders a certain degree of patriotism.
Joseph Kabila, president of Democratic Republic of Congo, found himself prisoner of western institutions after his election in 2006. EU and U.S. had totally financed the cost of Congolese elections which amounted at more than half a billion of dollars. After his confirmed legitimacy, he embarked on big national projects but approached the Chinese for their funding instead of the traditional institutions – IMF or WB which are affiliated to his sponsors. The Congolese government signed with the Chinese investments for development worth several billions of dollars. But the pressure from its sponsors were such that the elected Congolese leader had to backtrack and renounce partially the agreements though they included repayment of pending arrears that the country owed to Western financial institutions. He accepted being unpatriotic and chose not ending like Laurent Kabila, his father, for his nationalism.
As the story goes, these Western financial institutions and their sponsors will do everything possible to preserve their business interests. Kishore Mahbubani, Dean of National University of Singapore’s Lee Kuan Yew School of Public Policy explains with reference to another African poor country,
‘Ethiopia’s leaders tried to take charge of their own development agenda, and yet, received no support from the IMF in doing so. In 1997, the lending program to Ethiopia w as suspended ostensibly on the grounds that the Fund was concerned about the country’s budgetary position. Ethiopia was pressured to limit expenditure on development to only money from tax revenues, instead of relying on international assistance, which was deemed less stable. Actual statistics showed the IMF assumption to be untrue. When Ethiopia repaid an American bank loan early using its reserves so as to be free from the high interest rates, the country faced strong objections from the IMF and the United States, despite the sound economic move, as prior approval had not been obtained from the IMF. It is evident that neither the sovereignty of the country nor its right to formulate its own development strategy was respected in both cases.’
Ouattara can either follow in the footsteps of many African leaders who have become great clients of Western financial institutions which care more for their selfish business interests than anything else, or choose to serve patriotically Ivorian people. History will be the only judge of his performance while leading on his country’s destinies.