Over-dependency on international financial institutions

Since the debt crisis struck in the early 1980s, one developing country after another has succumbed to the combination of global falling interest rates and falling commodity prices. The International Monetary Fund (IMF) stepped in with short-term loans to shore up the burgeoning trade and budget deficits. Along with the loans came conditions governing money supply targets, interest rate levels and public spending, which transferred budget management to the lenders in Washington. It has meant that the IMF and the World Bank have virtually taken over the role of economic policy making for many countries, particularly those of sub-Saharan Africa. The World Bank, hitherto involved mainly in financing infrastructure projects, also entered the policy arena. Loans for long-term structural adjustment programmes (SAPs) designed to promote export-led growth, were made available to governments willing to liberalize trade. But these have served instead of recovery, a self-perpetuating cycle of deflation, disinvestment and low growth in which even "model countries", like Ghana and Nigeria, are trapped.