THE INTERNATIONAL Monetary Fund (IMF) this week issued a grim warning of worldwide recession with global debt reaching a staggering record of £64 trillion.
In its latest World Economic Outlook the IMF predicted this devastating crisis would ‘leave financial scars’ for years to come and that any recovery would be ‘long, uneven and uncertain’.
The IMF also forecast that the total loss in global output will hit £21 trillion, more than the size of the US economy, in the next five years. Despite these dire figures the IMF was desperate to try and strike a note of optimism for the more advanced capitalist nations.
This included the development of vaccines to hasten the end of the coronavirus health crisis but above all the financial support handed out to the banks and industry which the IMF is urging the wealthiest countries to carry on with and even increase.
The IMF’s Financial Counsellor Tobias Adrian said: ‘Near-term financial stability risks have been contained, for the moment. Unprecedented monetary easing, fiscal measures like transfers and credit guarantees, and financial policies have helped maintain the flow of credit to the real economy.’
This unprecedented bail-out by governments has been possible because of the abundance of cheap borrowing courtesy of the policies adopted in the US, UK and Europe of pumping trillions of paper money through Quantitative Easing, while keeping interest rates at near-zero level.
Adrian said: ‘These extraordinary measures have helped prevent what might have been destructive macro-financial feedback loops between financial markets and the economy.’ But he did add the warning: ‘Financial vulnerabilities are rising.’
So the main message coming from the IMF was that the wealthier capitalist nations should not rush to use austerity to balance the books and pay off the eye-watering amount of debt they have run up saying that austerity is ‘not inevitable’ and that nations can ‘stabilise debt without fiscal adjustment.’
Ten years ago, when the capitalist banking system was crashing, the IMF was in the forefront of the international banking system demanding austerity cuts across the board to bail-out the bankers.
Today, it is urging governments in the West not to turn off financial support too soon. This is not how the IMF is treating the poorer countries of the world.
Oxfam reports this month that 76 out of 91 IMF loans to 81 of the world’s poorest countries since March 2020, the start of the pandemic, have been accompanied by austerity demands that ‘result in deep cuts to public healthcare systems and pension schemes, wage freezes and cuts for public sector workers such as doctors, nurses and teachers, and unemployment benefits, like sick pay’.
The difference can only be accounted for by the fact that the IMF along with the world capitalist class is terrified that the powerful working class across Europe and in the US will not tolerate super-austerity to bail out not just the banks but the entire collapsing capitalist system.
Urging caution reflects the fear by the ruling class of a revolutionary uprising by workers to rid themselves of this decaying system. In fact all the warnings from the IMF against rushing into austerity will go unheeded by governments.
In Britain, a group in the Tory government around Chancellor Sunak are pushing for an immediate reopening of the economy; no more increase in the public debt to keep workers from starving while laid off and to hell with the risk to their lives from Covid-19.
Sunak has made no secret that he plans to ‘rebalance the books’ as soon as possible and the only way that is possible is by inflicting super-austerity on the working class through mass unemployment, cutting government spending on everything from pensions to services and driving workers back to conditions last seen in the 19th century.
The same conditions being inflicted on the people of the world by the IMF, the Tories intend to inflict on the working class at home.
The time has come for working people across the world to rise up and put an end to a capitalist system that holds no future except poverty and misery and go forward to the victory of the world socialist revolution.