Abstract

This article examines the relationship between the International Monetary Fund (IMF) and African governance, while analysing the effects of IMF-implemented austerity measures. Since the 1960s, the IMF has implemented austerity measures across Africa in an effort to stabilise national economies and manage debt. In two separate case studies of Ghana and Liberia, the effectiveness of these measures is examined. While IMF interventions often yielded short-term improvements, such as reduced inflation, balanced budgets and brief periods of GDP growth, both countries experienced recurring financial crises, high debt burdens and increased dependency on external assistance. In particular, we find that austerity policies led to cuts in social services, rising unemployment and political unrest, undermining long-term development. This paper also explores alternative approaches to economic recovery and growth, including UN funding initiatives and China’s “Belt and Road Initiative” infrastructure project. Findings suggest that while IMF austerity measures may prevent economic collapse, they often fail to promote sustainable, independent growth. An alternative approach that emphasises market reform, diversification of the leading exports, communication between countries and social investment may offer more effective long-term solutions for African economies.

Introduction

The International Monetary Fund (IMF) is an intergovernmental financial institution that aims to promote global economic growth, high employment and international monetary cooperation. It works to secure global financial stability by facilitating trade, which in turn reduces global poverty. The IMF lends money, provides economic advice and supports nations to help them avoid and recover from financial crises (Kenton, 2024). The IMF has a long history of requiring austerity measures as conditions for lending. Austerity measures are policies implemented to lower budget deficits and public debt by either increasing revenues or cutting spending. Governments employ these measures, which can include cuts to public services, pension reforms and targeted tax hikes, to demonstrate fiscal discipline to organisations and countries, thereby restoring economic confidence during periods of hardship (Hayes, 2023). While policy intentions have been benevolent, significant debate surrounds their long-term effectiveness. This paper examines the long-term effects of IMF austerity measures in Africa. 

Africa is one of the largest exporters of natural resources, yet it is also the continent with the highest poverty rates. The continent frequently encounters difficulties in addressing its debt and debt servicing. Discussing its economic issues is highly relevant to current affairs and discussions over developing countries and their relationships with different international organisations. The primary objective of the IMF reforms was to stabilise African economies and promote growth; however, austerity measures often led to cuts in essential services, disproportionately harming vulnerable communities. Despite this, some African countries saw improved economic performance in the 1980s. However, controversies persist regarding the long-term social costs and effectiveness of these measures, casting doubt on the nature of their assistance.

Background

The economic foundations of many African countries began during their independence in the 1960s. This period marked a pivotal moment in the pursuit of political liberation, catalysed by Pan-Africanism, nationalist movements and the expectation of economic and social progress (Everett, 2020). Leaders and citizens celebrated newfound sovereignty with optimism, accompanied by urban expansion and improved access to public services. Professionals, such as school teachers in Accra and Monrovia, could support families and acquire assets through subsidised mortgage schemes, reflecting economic stability and social mobility. Nevertheless, it was built on fragile colonial legacies and emerging global pressures.

In contrast, the 1980s are known as “The Lost Decade in Africa”. They were characterised by skyrocketing fuel and food prices, states failing to pay their citizens and the collapse of infrastructure. This crisis eroded most of the previous economic achievements, forcing people to rely on varying sources of income, such as small businesses, agriculture or remittances, to survive (Simson, 2023).  

The root of this crisis lies in the shocks of the previous decade. Post-independence from European colonialism, Sub-Saharan states borrowed loans to finance their investment projects. Simultaneously, soaring oil prices drastically increased costs, jeopardising the economic state of many African countries. The hope was that, with loans being used to build infrastructure and expand the industrial base, there would be an increase in national income and exports and debts would be repaid. From a retrospective standpoint, these assumptions were overly optimistic (Green & Khan, 1990).   

Adverse global shocks alongside domestic structural weaknesses led to severe economic distress in Sub-Saharan Africa. Policy inconsistencies and conflicts in industrial countries led to external shocks spreading on an international scale. The oil shocks of the late 1970s, for instance, drastically increased the imported costs for many African countries by double, especially those heavily reliant on fuel (IMF, 2001). For example, Ethiopia witnessed intensified unrest due to its fuel dependence and surging costs (Roberts, 2024). Additionally, the surging international rates increased the burden of external debt repayment, with a global recession of commodity prices playing a simultaneous role in reducing export savings and rising debt vulnerabilities (Archibong et al., 2021). Furthermore, external pressures overlapped disastrously with domestic issues, including overvalued currencies, inefficient state-owned businesses and policy distortions. The refusal to adjust currency values to desired levels amid inflation was a significant challenge faced domestically by the economies of this period (Humphreys & Jaeger, 1989). 

As the crisis worsened in the 1980s, African governments turned to the International Monetary Fund and the World Bank for debt relief, as they faced mounting financial obligations. A set of ten economic policies created for developing countries by the IMF and the World Bank known as “The Washington Consensus” established financial reform requirements known as Structural Adjustment Programmes (SAPs) to achieve macroeconomic stability and efficiency (Archibong et al., 2021).  SAPs require countries to implement specific reforms to qualify for IMF or World Bank loans (Halton, 2021). As stated by Archibong et al. (2021), these policies focus on debt management, deficit reduction and export promotion, including fiscal discipline, which involves controlling government budgets to avoid large deficits. Reordering public expenditure priorities, the goal was to prioritise spending on health, education and infrastructure instead of subsidies.

KEY TERMS

• Tax reforms broaden the tax base and ensure moderate rates, along with interest rate liberalisation, allowing market forces to set interest rates and encourage investment.
• Competitive exchange rates to correct overvalued exchange rates allow for easier exports and foster internal production.
• Trade liberalisation involves reducing barriers to international trade, with liberalisation of inward foreign direct investment (FDI) attracting foreign capital through liberal policies.
• Privatisation is the process of transferring state-owned enterprises to private ownership, accompanied by deregulation and the removal of unnecessary business regulations, while ensuring the protection of safety and the environment.
• Legal security for property rights provides legal certainty for ownership, which in turn boosts investment.

Effectiveness of the Implementation of SAPs in the African Economy

Since its inception, the IMF’s austerity programme has faced severe criticism. These criticisms have led to riots, protests and suspension of negotiations with the IMF. Claude Ake, Nigerian political scientist and author, stated in his book:

“In more and more countries, the viability of the state systems established in the aftermath of decolonisation is being undermined, as governments encounter difficulties in meeting monthly payrolls, paying for critically needed oil supplies, or maintaining essential social and public services.” (Ake, 1996)

While the primary objective of these reforms was to stabilise the economy and foster growth, there have been instances of many negative impacts. Economically, IMF austerity measures have led to reductions in public spending that keeps vulnerable communities afloat. The resulting loss of essential services in health and education disproportionately affected the poor. To address the work that the state was no longer able to provide, government agencies donated a portion of their funds to non-governmental organisations (NGOs). This led to what some anthropologists call “audit cultures”, where the negative impacts of austerity on social infrastructure and public health were hidden by the increased demands for accountability triggered by the withdrawal of state services (Pfeiffer, 2019).  

However, empirical studies have consistently shown that countries committed to reforms report improved economic outcomes compared to those with lax or no reform programmes. These reformers experienced improved agricultural output, increased exports and GDP growth during the 1980s and 1990s, which was boosted by international financial assistance and debt relief from bilateral and multilateral donors (Humphreys & Jaeger, 1989). Nevertheless, the recovery remained fragile and uneven, highlighting the perennial structural problems and the debates questioning the efficacy of the IMF measures imposed in Africa, as well as their effectiveness in terms of social costs in the long run. We weigh the differing impacts of these policies through case studies of Ghana and Liberia. 

Case Study: Ghana

This case study examines Ghana’s experiences with the IMF, from the signing of its first IMF bailout to the present day. Overall, the analysis of this relationship will demonstrate the effectiveness of the IMF in Ghana, particularly in terms of growth and stability. 

The country of Ghana was viewed as one of the top economies on the continent of Africa after gaining independence. However, the leadership of Kwame Nkrumah, which lasted from 1957 until a coup in 1966, led to severe economic decline (Britannica, 2025). These issues were exacerbated by the declining market prices of gold and cocoa, two of Ghana’s primary exports. The economic crisis led to unsustainable levels of international debt, a negative GDP growth rate of -4.3% in 1966 and inflation reaching 26.4% in 1965 (Karimu, 2024). As a result, the new Ghanaian government signed the first of 16 bailouts, worth over $4 billion, on 17 May 1966, as an attempt to prevent total economic collapse (Nyarko, 2023). This period, spanning from 1966 to 1970, saw Ghana undergo consistent IMF reforms and participate in four separate bailouts (Karimu, 2024).

The first period of IMF supervision (1966-1970) proved effective in promoting economic turnaround, at least in the short term. During this time, the IMF’s austerity measures focused on managing imports, foreign exchange and the privatisation of state-run industries. By the end of these measures, GDP growth had increased to 9.7% in 1970. In addition, inflation had shrunk to only 3% by 1970, a dramatic difference from the 26.4% of 1965. While it is true that IMF reforms foster GDP growth and lower inflation, these measures do not reduce debt as a percentage of GDP (Karimu, 2024). This suggests that IMF austerity measures do not address the broader issues that may lead to future economic decline. Furthermore, in Ghana, the IMF programmes did not generate employment to facilitate long-term growth.

Unfortunately, this period of economic recovery did not last after the IMF’s involvement was withdrawn. GDP growth was stunted, with an average increase of .5% each year between 1971 and 1979, including negative growth during 1972, 1975 and 1979. The Ghanaian economy fared especially poorly in 1979 when inflation surged to 54.4%, underscoring that economic conditions were significantly worse than in 1966 when the first IMF bailout was required (Karimu, 2024). This resulted in the IMF’s reinvolvement in another bailout on 10 January 1979 (IMF, 2020). This backsliding of the economy highlights that the IMF’s austerity measures created a codependent relationship with Ghana, which hindered its economic growth when it was not under IMF programmes. In summary, the IMF was effective at preventing economic collapse and facilitating short-term growth in Ghana between 1966 and 1970. Still, the IMF was unable to secure long-term stability and independence for the Ghanaian economy in the years following 1970. 

The financial issue that Ghana faced did not stop with the IMF bailout of 1979; in fact, the economy worsened significantly until the first Economic Recovery Programme (ERP) was implemented in 1983. During this time, the IMF programmes focused on balancing debt payments because the total deficit had grown to around 3 billion cedis, equivalent to $272,236,260 USD in 1981, an unfeasible amount for Ghana (Nyarko, 2023). Fortunately, the IMF restructuring was effective at decreasing the deficit by 27.4% in 1982 (Nyark, 2023). However, these improvements in debt did not correlate with growth; in fact, there was negative GDP growth in both 1981 and 1982 (Aryeetey & Kanbur, 2017). Additionally, inflation increased, reaching a high of 122.9% in 1983, and the annual income had dropped significantly to $739 USD in 1980, compared to the income of $1009 USD in 1960 (Karimu, 2024). Both high inflation and a lack of growth suggest that austerity measures, which focus on balancing the debt, do not stimulate the economy sufficiently to create long-term stability. However, they are vital to prevent economic collapse. Consequently, the IMF developed the ERP, which aimed to build long-term stability. The first phase of the ERP, from 1983 to 1986, focused on correcting external and internal market disparities while incentivising growth. This programme was highly successful in promoting growth, given the period’s average GDP growth of 5%, which peaked at 8% in 1984, a growth rate not seen in Ghana since the 1960s. Next, the second phase of the ERP, from 1987 to 1990, focused on building the institutional foundation needed to encourage economic growth. The IMF created this base by promoting the privatisation of state-owned industries. Moreover, they also focused on lowering the cost of production, especially in the agriculture sector, Ghana’s largest industry, through market adjustment. While such growth may have created stability, inflation was still relatively high and there was an imbalance in debt (Aryeetey & Kanbur, 2017). This suggests that to ensure long-term economic prosperity, the IMF’s reforms should encompass both a restructuring of debt to manage the deficit and broader market reforms to stimulate growth. 

Between 1993 and 2023, Ghana spent 21 out of 30 years under IMF programmes (Karimu, 2024). This suggests that the IMF austerity measures did not create the growth and recovery needed for Ghana to become financially independent. In 1992, the deficit grew so high that all the benefits of the ERP were washed away: debt as a percentage of GDP rose to 34.1% and inflation reached 101%. This meant Ghana again required the involvement of the IMF. Until the 2008 Financial Crisis, Ghana performed well under the IMF programmes, experiencing small but sustainable growth consistently (Aryeetey & Kanbur, 2017). However, the debt grew to unsustainable levels, reaching 76% of GDP in 1995 and 111.9% of GDP by 2000 (Karimu, 2024). This high debt led to continued IMF involvement, rather than economic independence, for Ghana. However, by 2006, the IMF programmes were able to help lower debt to only 26.5% of GDP and inflation to 11.1% while fostering GDP growth of 6% (Karimu, 2024). This is due primarily to the agricultural measures taken by the IMF, which were ultimately effective. The success of these reforms enabled Ghana to exit the IMF programme in 2007; however, it required another bailout in 2009 due to the global financial crisis of 2008 (Aryeetey & Kanbur, 2017). From 2009 onwards, a few common patterns can be seen. First, debt as a percentage of GDP and inflation remain relatively high, while GDP growth is relatively low compared to GDP (Karimu, 2024). Overall, the IMF has had mixed results in Ghana since 1993, suggesting that the austerity measures have not been sufficiently effective in creating a thriving economy that can flourish independently in Ghana (Karimu, 2024). 

Overall, IMF involvement in Ghana has yielded positive short-term results and mixed long-term outcomes. Generally, in Ghana, the IMF has been most effective at preventing debt crises, as shown by its role in reducing debt by 27.4% in 1982 (Karimu, 2024). However, as demonstrated in 1971, typically when IMF involvement comes to an end in Ghana, the debt-to-GDP ratio increases again. This cycle of debt control created a codependent relationship between the IMF and Ghana, which meant that Ghana was unable to achieve economic growth independently of the IMF’s intervention. This debt cycle demonstrates that the IMF’s austerity strategy of balancing payments is beneficial for preventing collapse; however, these measures do not encourage long-term growth in Ghana. One bailout was helpful, but the consistent bailouts fostered a cycle of economic inefficiency in the country (Karimu, 2024). However, it is essential to note that the issues in Ghana could have been worse had the IMF not intervened. This is highlighted by Ghana’s average GDP growth of 3.5% between 1965 and 2015 (Karimu, 2024). Conversely, the IMF’s ERP between 1983 and 1990 was the most effective in stimulating the economy, as it focused more on market reorientation rather than balancing payments (Nyarko, 2023). As a result of this change in tactic, Ghana’s economy performed well during this period, suggesting that, at least for Ghana, market reforms are more effective than debt restructuring in the long term (Nyarko, 2023). The IMF programmes also had some adverse social effects on the Ghanaian economy; for example, IMF programmes have been directly correlated with rising unemployment in Ghana (Nyarko, 2023).

Furthermore, IMF programmes have been shown to negatively impact the quality of education in Ghana, as evidenced by a 2019 UNICEF study that reveals ongoing gender and socio-economic disparities, as well as high teacher-to-pupil ratios (UNICEF, 2022). This suggests that the budget is not being fairly allocated in the education sector (UNICEF, 2022). In summary, IMF austerity measures were vital for Ghana’s economy in the short term. Still, they had insubstantial or even adverse long-term effects, particularly concerning social outcomes, creating a relationship where Ghana has become reliant on the IMF.

Case Study: Liberia

This case study will analyse Liberia’s relationship with the IMF and experience with austerity measures, exploring economic planning, implementation and societal consequences. 

From the 1950s to the early 1960s, Liberia had a period of economic growth, driven by the development of iron ore and rising rubber prices. However, this rapid increase in key exports led to financial strain. In the early 1960s, rubber prices declined due to the growing popularity of synthetic rubber, while iron prices faced pressure from increased foreign competition and government intervention (Grilli, 1981). As a result, government debt service expenditures increased sharply from 1960 to 1962 – from $5.5 million to $11.7 million – due to the demand to repay short-term and medium-term credits. 

Mounting debt and falling exports triggered a fiscal crisis by 1963. The government’s finances had reached crisis levels and in response, the IMF coordinated a stabilisation programme, lending the country $5.7 million, which included a debt restructuring plan and strict fiscal reforms. These actions were effectively austerity measures, even if not referred to as such at the time, as the term did not emerge until the 1980s. Liberia accepted IMF guidance and implemented spending cuts, currency reforms and wage freezes as part of the programme (Qureshi et al., 1964). 

The new budgetary system devised by the Special Commission on Government Operations (SCOGO) was designed to account for all government receipts and expenditures. Each department’s budget was reviewed and the total estimated revenue was $38.5 million. In comparison, total expenses amounted to $50.5 million, of which $17.2 million was allocated to debt service and $33.3 million to other costs, resulting in a $12 million deficit between revenue and expenses. Non-debt expenditures were reduced during the budget formulation process from $33.7 million (Qureshi et al., 1964). This indicates the government’s unstable attempt to maintain public spending through debt, as public capital spending had been supported almost entirely by borrowing for many years. Compared with spending in earlier fiscal years, the budget showed only a minor increase in ordinary expenditure. 

In April 1963, following the decision to implement the debt restructuring plan, the government announced a new financial programme. This involved specific measures to both raise new revenues and reduce government expenditures, which were expected to decrease the $12 million deficit by $3.8 million annually. The government intensified the ongoing campaign against tax evasion. Tax filings increased sharply due to improved enforcement. Moreover, government spending was cut, hiring and salary increases were frozen, and strict controls were placed on all expenses. To keep non-debt expenditures at $31 million, $2.3 million was cut from the budget. To achieve this, all government agencies and departments had their equipment budgets reduced by 10% and their administrative budgets reduced by 15%. On the revenue side, the principal measures taken included changes to import duty valuation, increased taxes on luxury items like alcohol and a new airport departure tax. However, its effectiveness was undermined by falling export revenues, incomplete rollout of the reform and subsequent rapid increases in government spending. Liberia did not return the full projected $3.8 million in annual deficit reduction. In reality, these measures generated $1.5 million annually (Qureshi et al., 1964). 

There was a significant increase in pressure on rural communities, as well as exploitation of farmers, job losses, reduced public services and increased economic strain. Small Liberian-owned rubber farms were especially hard hit by the decline in rubber prices, resulting in decreased private incomes (Dash, 1980). That, coupled with the imposition of a flat-rate tax on all adult citizens, with hut taxes rising significantly, led to many businesses being run into the ground (Mark-Thiesen, 2018).

To vitalise agricultural production and address food shortages resulting from austerity, the government launched “Operation Production” in 1963. This campaign, created by President William Tubman, demanded the total participation of all the populace and all sectors of the economy to increase agricultural output and achieve food self-sufficiency, thereby boosting economic self-reliance; however, it primarily targeted the farming population. Forced labour became a serious issue, as the new vagrancy laws allowed officials to return those in the capital to their rural villages if they could not prove employment. There was also disregard for farmers’ needs, as the government’s focus was on re-educating rural communities and emphasising the notion that hard work superseded the need for agricultural tools that enhance productivity. There are reports of chiefs and district commissioners abusing their power, forcing farmers to work on their farms and imposing fines for non-compliance. Ultimately, the campaign failed to achieve its goal of self-sufficiency, as it did not drastically increase rice production or alleviate debt pressures; instead, it led to significant social and political unrest (Mark-Thiesen, 2018). 

Understanding Liberia’s early experience with austerity enables a more thorough examination of its economic challenges in the 2000s, many of which were also present in the 1960s. From 1999 to 2003, Liberia was enduring its second civil war. The conflict arose due to the authoritarian rule of President Charles Taylor, who took power after the first civil war. Two major rebel groups, the Liberians United for Reconciliation and Democracy (LURD) and Movement for Democracy in Liberia (MODEL), started fighting against the tyrannic government and human right abuses. These groups launched attacks that ultimately led to Taylor’s resignation and exile in August 2003, ending the war (ACCORD, 2011). 

The fighting caused thousands of deaths, massive displacement and the collapse of public services. Liberia’s economy was in ruins, with nearly all institutions non-functional, state revenue nonexistent and government debt unpayable, leaving the country bankrupt. The figure below shows negative GDP growth during the peak of the war in 2003 at a devastating -31% (IMF, 2006). As Liberia defaulted on almost all its debt obligations, it needed to restore its credibility to re-enter the global financial system. For this to happen, the country needed to receive international aid and debt relief. The IMF administered multiple economic reforms and programmes in Liberia, some pertaining to austerity (IMF, 2004).

Figure 1: GDP Growth in Liberia During the Second Civil War (2001-2006) (IMF, 2006).

The Staff-Monitored Programme (SMP) was implemented immediately after the change in government in January 2006. The programme was implemented in February and lasted until 2008, with its primary purpose being to demonstrate to the IMF, other international communities and countries dispensing foreign aid that Liberia could manage its economy responsibly after the war. It showed successful results during its enactment, as it grew the GDP from 8% in 2006 to 9.5% in 2007. The country’s revenue increased by 18% at the start of 2006 compared to the same period in 2005. By mid-2007, public revenues were 79% higher than they had been the previous year. In terms of inflation, it remained stable in the low double digits in 2007 (IMF, 2008).

The government achieved a budget surplus of approximately 3% of GDP in the 2006 fiscal year, signalling effective economic stabilisation, increased fiscal discipline and renewed international confidence. The programme was successful in achieving its goals and helped Liberians through a difficult time; nevertheless, the problem of dependency was only exacerbated by the Heavily Indebted Poor Countries (HIPC) initiative, for which the SMP was a precondition for qualifying for full IMF support and debt relief (IMF, 2021).

In 2008, Liberia qualified for the HIPC initiative, promising to reduce its total debt by over 90%. Liberia’s external debt stock was an estimated  $4.7 billion, but the assistance reduced the country’s debt-to-GDP ratio to a sustainable 15% (IMF, 2010). The alleviation of debt pressure freed up significant government resources. These funds were redirected to the country’s poverty reduction strategy, with a focus on areas such as health and education. The debt relief helped normalise Liberia’s financial relations with the international community, which in turn encouraged new investment and development assistance. The Liberian government continued to maintain tight fiscal discipline and transparency, implementing economic reforms such as the Poverty Reduction Strategy (IMF, 2021).

Ultimately, examining both periods of IMF austerity implementation reveals a pattern of short-term results and adverse long-term effects. The GDP growth and budget surplus following the second civil war, along with the substantial debt reduction under the HIPC initiative, are evidence that the IMF prioritises debt reduction over permanent measures that prevent debt accumulation. However, the IMF’s focus on stabilisation increased Liberia’s dependency on external institutions. During times of crisis, the measures were socially insensitive, causing tension and struggle. Despite improvements, 83.8% of the population lives on less than $1.25 a day, with poverty and hunger especially severe in rural areas (BTI, 2024). Under the HICP programme, Liberia remains one of the poorest countries in the world, plagued by severe structural issues within its government. While the IMF helped Liberia avoid collapse, its continued reliance on debt relief means the country will likely incur debt again after the IMF’s intervention ends. Diversifying Liberia’s main exports away from volatile commodities like gold, iron ore and rubber would be a way to ensure some economic stability and future growth (BTI, 2024). The relationship between the IMF and Liberia has created a cycle of external reliance. If, in the future, new measures are implemented that focus on market reforms and social investment, they could be more effective than austerity in ensuring lasting development.

Alternative Approaches

Since the mid-1980s, there has been considerable research on alternative approaches to increase GDP growth without significantly compromising the quality of life for the populations of African countries. Finding an alternative approach to the IMF’s austerity measures means finding a solution that provides funds with more feasible measures. A successful and long-term alternative approach should maintain an African country’s political sovereignty over its own economy while also fostering its development. This process involves addressing several significant issues, including new forms of colonialism, debt traps and the need for political acceptance. 

Many Sub-Saharan African countries, including Liberia, are unable to utilise their own resources because multinational corporations exploit a significant portion of them. As a consequence, the country’s economic control is primarily held by these corporations. Nearly half of African countries are at risk of debt distress. This so-called “debt trap” induces governments to cut spending on crucial sectors, such as health and education, to repay the loans. Major creditors include unofficial European institutions, such as the Paris Club, as well as some major developing countries, including China. Many African countries have a significant problem of dependency on foreign aid and funding from major organisations that focus on short-term solutions (Abu Hatab et al., 2024). Africa should address its dependency issues and diversify its economy’s main exports, as many are subject to the volatility of the world market.   

A long-term solution should be compatible with the self-interest of every political party. This issue is unavoidably the most difficult to solve, as it is nearly impossible to achieve a standard solution in a country with diverse ideologies. The perfect approach should be able to solve all three of these problems (Girvan, 1985).

There are several alternative approaches to the IMF austerity measures that have been adopted since the 1980s. One example is the approach adopted by the UN, which aims to stabilise African economies by funding them through the UN Emergency Response Fund (CERF) or repairing economic damages caused by climate change through the UN Development Programme (UNDP). This solution provides funds without high conditions, although it has a few problems. It does not always offer funds; the funds by CERF are provided only if the country is in urgent need, while the funds of UNDP are provided only as a “prize” to the countries that have achieved their objectives. 

Another alternative is represented by the Chinese project, known as the “Belt and Road Initiative” (BRI). The BRI funds and constructs major infrastructure projects all over the world, but with a particular focus on Africa. Many participating countries are heavily indebted globally, and the BRI has further increased their debt. Repayment delays have caused China to extend deadlines and offer loan repayment assistance (Wong, 2023). Despite these advantages, it might also present some disadvantages in the short term. Deepening indebtedness leads these countries to cut public spending on crucial sectors such as healthcare and education, the same policies seen in response to IMF austerity measures. Some BRI projects have also created local problems such as enabling local corruption, environmental degradation and worker exploitation (Wong, 2023).

Amongst the several alternative approaches proposed, the solutions provided by the UN are the most reliable and practical. The UN approach provides the fewest disadvantages, although it does not offer a permanent solution to Africa’s economic problems. The provision of funds does not necessarily solve structural economic issues. We also argue that the BRI is a valid alternative as it achieves long-term economic stability by building infrastructure in strategically located areas.

Conclusion

The IMF austerity measures have significantly influenced economic policy in Africa since the 1960s, aiming to promote long-term stability and growth. However, they have also sparked debate over their effectiveness and potential detrimental impacts on recovery. Many countries under IMF programmes seem to recover directly from economic collapse but fare poorly in the long term. This suggests that while IMF programmes are beneficial in the short term, they do not create the sustained growth and stability necessary for long-term recovery in African countries. In this article, case studies of Liberia and Ghana have found that the programmes the IMF implements are often debt relief-focused but frequently hurt the country socially. Moreover, this created a cycle of reliance on IMF programmes, meaning countries in Africa, such as Ghana and Liberia, could not function independently of the IMF. 

While this research paper only covers two countries in the continent of Africa, many other countries, such as Ethiopia and Zimbabwe, share similar issues, including saturated key exports and debt accumulation. While dependency is a significant issue and an ongoing conversation between Africa and the IMF, exploring alternative approaches, such as low-condition funding or the BRI project, could help these countries better prepare themselves for economic difficulties and establish a governmental structure that enables them to support their country with minimal external aid. While this paper focuses on Liberia and Ghana, which experienced austerity measures directly after civil wars or military coups, it is also important to recognize that IMF austerity measures have harmed even stable countries. Zambia, for example, has never had a civil war but still faced major setbacks under IMF programmes. Austerity measures, such as subsidy cuts and spending reductions, worsened poverty and triggered social unrest. With 30 out of 55 African countries experiencing some form of conflict, the broader trend suggests that IMF policies can exacerbate inequality and instability, regardless of a country’s conflict history. Future research should encompass both conflict and non-conflict states to gain a comprehensive understanding of the IMF’s long-term impact across Africa.

Abu Hatab, A., Riaz, T. & Orkoh, E. (2024) The debt trap dilemma of African governments, The Nordic Africa Institute: Policy Note [online]. Available at: https://nai.uu.se/stories-and-events/news/2024-06-28-the-debt-trap-dilemma-of-african-governments.html (Accessed: 27 August 2025).

Accord (n.d.) Post-conflict development in Liberia, Accord [online]. Available at: https://www.accord.org.za/ajcr-issues/post-conflict-development-in-liberia/ (Accessed: 19 August 2025).

Ake, C. (1996) Democracy and development in Africa, Washington, DC: Brookings Institution.

Archibong, B., Coulibaly, B. & Okonjo-Iweala, N. (2020) Washington Consensus Reforms and Economic Performance in Sub-Saharan Africa: Lessons From the Past Four Decades, SSRN Electronic Journal. Available at: https://doi.org/10.2139/ssrn.3780433 (Accessed: 18 August 2025).

Aryeetey, E. & Kanbur, R. (2017) The Economy of Ghana Sixty Years After Independence, Oxford, UK: Oxford University Press.

Boughton, J. (2001) Silent Revolution: The International Monetary Fund, 1979-1989, International Monetary Fund, pp. 319–358.

BTI (2024) Liberia Country Report 2024, BTI [online]. Available at: https://bti-project.org/en/reports/country-report/LBR (Accessed: 16 August 2025).

Dash, L. (1980) Liberia Struggles to Avoid Economic Collapse, The Washington Post [online]. Available at: https://www.washingtonpost.com/archive/politics/1980/12/16/liberia-struggles-to-avoid-economic-collapse/e5fb07e1-2ddd-42d3-a799-75abb0f30685/ (Accessed: 24 August 2025).

Encyclopedia Britannica (2025) Kwame Nkrumah, Encyclopedia Britannica [online]. Available at: https://www.britannica.com/biography/Kwame-Nkrumah (Accessed: 24 August 2025).

Everett, K. (2020) The Year of Africa, Origins [online]. Available at: https://origins.osu.edu/article/year-of-africa-1960-rumba-pan-africanism-Kariba (Accessed: 15 August 2025).

Girvan, N.P. (1985) Adjustment via Austerity: Is there an Alternative?, Economic Review, pp. 29-33.

Green, J.E. & Khan, M.S. (1990) The African debt crisis, African Economic Research Consortium Special Paper [online]. Available at: https://idl-bnc-idrc.dspacedirect.org/server/api/core/bitstreams/399c96bf-fa7f-4966-af59-c6194d65f731/content (Accessed: 21 August 2025).

Grilli, E. (1981) Natural rubber: a better future? – After the rise of oil prices, the economics of natural production have changed for the better vis-à-vis petroleum-based synthetics, Finance & Development, 18(002). Available at: https://doi.org/10.5089/9781616353452.022 (Accessed: 26 August 2025).

Halton, C. (2021) What Are Structural Adjustment Programs (SAPs)?, Investopedia [online]. Available at: https://www.investopedia.com/terms/s/structural-adjustment.asp (Accessed: 25 August 2025).

Hayes, A. (2023) Understanding Austerity, Types of Austerity Measures, and Examples, Investopedia [online]. Available at: https://www.investopedia.com/terms/a/austerity.asp (Accessed: 22 August 2025).

Humphreys, C. & Jaeger, W. (1989) Africa’s Adjustment and Growth, Washington, DC: International Monetary Fund.

International Monetary Fund (2004) Public Information Notice: IMF Discusses Liberia’s Post-Conflict Conditions and Economic Program for 2004/05, International Monetary Fund [online] Available at: https://www.imf.org/en/News/Articles/2015/09/28/04/53/pn04135 (Accessed: 25 August 2025).

International Monetary Fund (2006) Liberia: Staff Report for the 2006 Article IV Consultation and Staff-Monitored Program, International Monetary Fund [online]. Available at: https://www.imf.org/en/News/Articles/2015/09/28/04/53/pn04135 (Accessed: 26 August 2025).

International Monetary Fund (2008) Liberia: Poverty Reduction Strategy Paper, IMF Staff Country Reports, 2008(219).

International Monetary Fund (2010) Press Release: IMF and World Bank Announce US$4.6 Billion Debt Relief for Liberia, International Monetary Fund [online]. Available at: https://www.imf.org/en/News/Articles/2015/09/14/01/49/pr10267 (Accessed: 25 August 2025).

International Monetary Fund (2021) Liberia: Poverty Reduction and Growth Strategy. IMF Staff Country Reports, 2021(010). 

International Monetary Fund (2020) History of Lending Commitments: Ghana, International Monetary Fund [online]. Available at: https://www.imf.org/external/np/fin/tad/extarr2.aspx?memberKey1=350&date1key=2020-04-30 (Accessed: 24 August 2025).

Karimu, S. (2024) Ghana and the IMF: Policy shifts, economic bailouts and macroeconomic outcomes, Journal of Policy Modelling, 46(6), pp. 1146-1164.

Kenton, W. (2024) International Monetary Fund (IMF), Investopedia [online]. Available at: https://www.investopedia.com/terms/i/imf.asp (Accessed: 18 August 2025).

Mark-Thiesen, C. (2018) Of Vagrants and Volunteers During Liberia’s Operation Production, 1963–1969, African Economic History, 46(2), pp.147–172.

Nyarko, J.A. (2023) Ghana’s Journey with the IMF: A Critical Review of Foreign Aid, Social Sciences & Humanities Open, preprint [online]. Available at: https://doi.org/10.2139/ssrn.4593449 (Accessed: 26 August 2025).

Pfeiffer, J. (2019) Austerity in Africa, Focaal, 2019(83).

Qureshi, M.A., Mizoe, Y. & Collings, F. D.A. (1964) The Liberian Economy, International Monetary Fund Research Department, 1964(002). 

Roberts, G. (2024) The First Oil Shock: February 1974 and the making of our times, African Arguments [online]. Available at: https://africanarguments.org/2024/02/the-first-oil-shock-february-1974-and-the-making-of-our-times/. (Accessed: 19 August 2025).

Simson, R. (2023) Africa’s Lost Decades, 1974-1994, The History of African Development [online]. Available at: https://www.aehnetwork.org/wp-content/uploads/2025/03/19_Textbook_Lost-decades_RSimson_V5_Final.pdf (Accessed: 23 August 2025).

United Nations Development Programme. (n.d.) Home, UNDP [online]. Available at: https://www.undp.org/home (Accessed: 15 August 2025).

UNICEF (2022) UNICEF Ghana Budget Briefs, UNICEF [online]. Available at: https://www.unicef.org/ghana/reports/unicef-ghana-budget-briefs (Accessed: 24 August 2025).

Wong, T. (2023) Belt and Road Initiative: Is China’s trillion-dollar gamble worth it?, BBC [online]. Available at: https://www.bbc.co.uk/news/world-asia-china-67120726 (Accessed: 28 August 2025).