THE International Monetary Fund (IMF) issued another dire warning about the economic crisis raging throughout the world yesterday with its head, Kristalina Georgieva, saying that the global economic outlook ‘has darkened significantly’.
Georgieva’s warning came as inflation in America, the world’s biggest economy, hit 9.1% – the highest level in over 40 years.
She made her warnings on the eve of a meeting in Bali of G20 finance ministers and central governors dominated by the historic crisis of world capitalism that has created a food and energy crisis raging throughout the world.
Georgieva warned about the ‘complacency’ over the massive debts run up by nations and companies. Such debts have so far been just about affordable thanks to near zero interest rates encouraging massive amounts of borrowing by countries to finance day to day spending.
All the major central banks in the West are now desperately driving up interest rates in a vain attempt to stifle inflation. The hope is that by increasing the interest rates, companies and individuals will not spend money on goods and services, instead using their cash to repay the interest on loans and debt and this will magically reduce inflation.
In other words, forcing people to spend less on food, heating and housing is the solution to capitalism’s inflationary crisis.
The effects of this brutal policy of making workers and young people pay for capitalist crisis is not lost on the IMF, with Georgieva warning that the massive increases in the cost of living, exacerbated by the sanctions on Russia, has created a crisis for ‘hundreds of millions of people’ throughout the world.
She said: ‘The outlook remains extremely uncertain. Think of how further disruption in the natural gas supply to Europe could plunge many economies into recession and trigger a global energy crisis.’
Despite all her warnings about the catastrophic effect on the lives of hundreds of millions of people, resulting from driving up interest rates, Georgieva insisted that there was no alternative option for capitalism and that increasing the cost of borrowing was something that ‘needs to continue’ and that ‘acting now will hurt less than acting later’.
Try telling that to the workers and youth in Sri Lanka, a country that has been devastated by the worst economic crisis since independence in 1948.
22 million people faced starvation as the country went bankrupt, unable to pay off its international debt, starved of essential imports of food, fuel and medicine and an inflation rate at a record 54.6% in June and expected to hit 70% shortly.
The decisive response of the workers and masses has been a lesson for workers across the world, as they defied the might of the army and military to kick out the hated president Gotabaya Rajapaksa who fled on a military plane to seek sanctuary for himself and his wealth.
The workers in Sri Lanka have proved that they are much stronger that the capitalist state and are prepared to fight to the end to defend their families from starvation, inflicted on them by a world capitalist system in its death agony.
This terrifies the IMF and the ruling class.
They know that Sri Lanka is not unique, and as the IMF warns, hundreds of millions of people throughout the world, including in the most advanced capitalist nations of the US, UK and Europe, are being driven by the crisis into revolutionary confrontation, where the issue of power will be posed point blank.
What is happening in Sri Lanka will pale compared to the revolutionary struggles that are developing in the wealthiest countries at the heart of world capitalism.
The decisive issue that Sri Lanka holds for workers is that the issue of revolutionary leadership is vital.
The working class is strong enough to depose the political leadership of the ruling class, but to resolve the crisis of capitalism requires a leadership that is prepared to go forward to taking the power and establishing the rule of workers governments.
This means building sections of the International Committee of the Fourth International in every country prepared to lead the struggle for the world socialist revolution to victory.