The Project of Austerity in the global South
Examining key political economic dynamics and mechanisms
Keywords:
austerity, IMF, South-North, financial dependency, right to development, credit rating agenciesAbstract
The multifaceted political and economic dimensions of austerity measures had been implemented since a longing period as illuminated by the literature from inter-war interregnum. The international financial institutions like (International Monetary Fund (IMF) were originally developed to promote international monetary cooperation and fiscal stability by dealing with the balance of payment issues of the countries but not at the cost of national and international prosperity. The IMF Articles of Agreement and surveillance had played a pivotal role in the global financial architecture since 1944. The ideological history of austerity can be seen through this structure of global governance linking it to the broader neoliberal agenda that prioritizes fiscal discipline and market stability over social welfare and human rights. Thus, the structural power of finance, particularly through the influence of the IMF, has entrenched austerity as a dominant response to sovereign debt crises, often at the expense of essential public services such as health, education, and social protection. Financial dependency had been at the epicenter of the global monetary system that has a hegemonic control over international reserve currency. It alludes to how austerity measures had been exacerbating the existing structural inequalities permeating through monetary, fiscal, and industrial policies created by the technocrats while stripping off the resources from the masses to the concentrated. By examining the interplay between austerity, financial dependency, and the role of international financial institutions, there is a dire call for a re-evaluation of economic policies that have historically favored creditor interests over the needs of vulnerable populations. Financial-political mechanisms, like sovereign ratings issued by Credit Rating Agencies (CRAs), discipline developing nations by encouraging fiscal restraint. These ratings influence a country’s access to credit and determine borrowing terms such as interest rates and risk premiums. These mechanisms catalyze the necessity for transformative approaches that align with the principles of Right to Development (RTD) specifically highlighting the feminist lens, promotes inclusive development that addresses the root causes of inequality and fosters resilience in the face of economic challenges. The article contributes to the ongoing discourse on the implications of austerity and the urgent need for policies that support equitable growth in the global South.
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