Case study Congo

Case study Congo - way you are going to get hurt If they...

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Bus 187 10:30 10/12/08 Case Study: “The tragedy of the Congo” 1) The goals of the policies that the IMF adopted in Zaire are to maintain order in the international monetary system. The goals of the policies adopted by the World Bank in Zaire are to promote general economic development. These policies included tax hikes, cuts in government subsidies, and periodic currency devaluations. These policies are not realistic for an impoverished nation that cannot afford to buy food let alone pay high taxes. These policies pushed work into the underground market where no taxes were being charged causing government tax revenues to wane leading to deficits. These policies also caused more corruption in the government as subsidies were cut causing a lack of capital for economic growth. 2) I do believe that the IMF and the World Bank should give aid to countries such as Zaire regardless of corruption. The situation is a double-edged sword – either
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Unformatted text preview: way you are going to get hurt. If they don’t give aid and the country’s economy continues to spiral downward then the IMF and World Bank are looked down upon because they didn’t act. If they do act and the country’s economy goes down instead of up they are shunned because they acted. 3) A few possible policies the IMF and World Bank could have instated to help ensure the aid capital was used to promote economic growth include: strong financial reporting policies and mandatory outside audits as well as relaxed tax policies. These policies would keep government officials honest because they would have to prove where the money went to in the country. Also by sending in outside auditors you reduce the risk of false entries in the books and achieve a fair analysis of how money is being spent. The policy of relaxing taxes would lead to more jobs....
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