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Saturday, October 18, 2008

IMF Conquer Plan

The International Monetary Fund’s advice was to increase interest rates and reduce government spending to achieve a surplus budget. Increasing interest rates would undermine business, reduce their profits and reduce government revenue. To achieve a surplus budget when government revenues was greatly reduced meant cutting out on government salaries and development expenditure. This would kill businesses which were dependent on the government. And government revenue would decrease further. Clearly, a vicious cycle would be created which would end up in bankruptcy for the government and country. To overcome this, the government would have to borrow from the IMF. Once this happen, the country would be in the clutches of the IMF for a very long period, if not forever.

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