By Andrew Klein and Sera Elizabeth Klein

Reader’s note: We do not need readers to agree with us. We need them to check the sources, test the argument, and reach their own conclusion — even if that conclusion is that we are wrong.

Abstract

This paper examines the International Monetary Fund and the World Bank as the administrative architecture of the extraction model applied to the Global South. It traces their origins at Bretton Woods in 1944, when the vast majority of the world’s population lived in colonies with no representation at the conference that designed their economic future. It documents the Structural Adjustment Programs of the 1980s and 1990s, the Poverty Reduction Strategy Papers that followed, and the current era of IMF surveillance and conditionality. Drawing on research from the Bretton Woods Project, ActionAid, Debt Justice, and academic analyses, the paper argues that the IMF and World Bank function as “debt enforcers” — institutions that prioritise creditor interests over human welfare, enforce austerity through conditionality, and produce documented harm to health, education, and economic development across the Global South. The paper connects this to the broader framework of the extraction model, moral disengagement, and the data point democracy, arguing that the Bretton Woods institutions are the original mechanism through which the extraction model was imposed on the developing world — a mechanism that has been refined, not abandoned.

I. Introduction: The Architecture of Extraction

The extraction model does not operate only within nations. It operates between them. And the primary mechanism through which it operates is the Bretton Woods system — the International Monetary Fund and the World Bank.

These two institutions were created at a conference in Bretton Woods, New Hampshire, in July 1944. Delegates from forty-four nations agreed to establish a framework for international economic cooperation. The IMF was to deal with macroeconomics — government bailouts — and the World Bank was to provide long-term loans for reconstruction and development.

The conference has been described as “the most famous economic summit in history“. But that description obscures a crucial fact. At the time of the Bretton Woods Conference, the vast majority of the world’s population lived in colonies. They had no representation at the conference. They had no say in the economic architecture that would govern their futures. As one analysis notes, “Developing states, the vast majority of which were colonies in 1944 when the Bretton Woods Conference took place, played little part in the creation” of the institutions that would shape their economies.

This is not incidental. It is foundational. The Bretton Woods institutions were designed by the colonial powers, for the colonial powers. Their purpose was not to develop the Global South. It was to manage it.

This paper examines how that purpose has been operationalised over eighty years. It documents the mechanisms — Structural Adjustment Programs, conditionality, surveillance, debt enforcement — and the outcomes: cuts to health and education, increased poverty and inequality, and the systematic transfer of wealth from the Global South to the Global North.

II. The Mechanisms of Enforcement

2.1 Structural Adjustment Programs (1980s–1990s)

The Structural Adjustment Programs (SAPs) of the 1980s and 1990s were the first major mechanism through which the Bretton Woods institutions imposed the extraction model on the Global South.

SAPs were loan packages conditional on the implementation of neoliberal reforms: privatisation of state-owned enterprises, liberalisation of trade and capital markets, deregulation, and cuts to public spending. The conditions were not negotiated. They were imposed. Countries facing balance-of-payments crises had no alternative but to accept them.

The evidence on their impact is documented and damning. A cross-national analysis of IMF structural adjustment programs from 1980 to 2019 found that “some [studies] show that the structural adjustments policies pushed for by IMF’s lending programmes have worsened inequality and poverty in the participating countries”.

In Jamaica, research found that IMF-mandated financial liberalisation led to “short-term jumps in both inequality and poverty,” and that the liberalisation of the exchange rate in 1991 “led to food price inflation and, consequently, a decline in children’s weight, especially among children in urban areas”.

In Pakistan, researchers “found an increase in Gini coefficient and poverty incidence in the decade after the initialisation of the World Bank/IMF structural adjustment programme in 1988″.

In Ghana, studies found “uneven impact of IMF structural adjustment programmes,” leading to “improvements in macroeconomic performance at the cost of widening socioeconomic and geospatial disparities and the suffering of the rural poor whose access to education, health, and other services was severely curtailed by cuts to public spending”.

In Zambia, research found that “IMF macroeconomic programmes that prioritised stabilisation over public spending severely limited Zambia’s ability to control HIV/AIDS and TB by reducing government health expenditure as share of GDP”. The same research found that “IMF-initiated civil service downsizing and trade liberalisation increased unemployment and worsened the country’s poverty levels”.

A UNU-WIDER working paper concluded that “structural adjustment, as measured by the number of adjustment loans from the IMF and World Bank, reduces the growth elasticity of poverty reduction. Growth does reduce poverty, but the poor benefit less from output expansion in countries with many adjustment loans than in countries with few”.

The pattern is consistent. The SAPs imposed austerity. The austerity produced poverty. The poverty was not an accident. It was the outcome.

2.2 The Poverty Reduction Strategy Papers (1999–Present)

The SAPs were criticised so heavily that the IMF and World Bank rebranded. The Enhanced Structural Adjustment Facility (ESAF) was replaced by the Poverty Reduction and Growth Facility (PRGF), and the Poverty Reduction Strategy Papers (PRSPs) were introduced.

The rhetoric changed. The practice did not.

The PRSP process “has been criticised as donor-led, ignoring the political realities of the countries involved, and as ineffective without a mechanism of enforcing the poverty reduction plans, which could be providing only political cover for domestic elites pushing for policies that are harmful for the poor”.

The Bretton Woods Project’s analysis of 998 IMF Article IV reports covering the period 2011–2025 found that “IMF policy advice has remained remarkably consistent. 99 per cent of the reports recommended some form of fiscal austerity. In 96 per cent of these cases, fiscal constraint was primarily based on reforms to the public sector, including rationalising, freezing or cutting the wage bill of public sector workers”.

This is structural adjustment by another name. The rhetoric of poverty reduction is contradicted by the numbers in the annexes. As ActionAid notes, “the narrative sometimes suggests that the IMF has shifted… But the numbers and projections, usually in tables in the annexes, tell a different story. And this is what drives implementation and carries weight with ministries of finance”.

2.3 The Surveillance Mechanism

Even when countries are not borrowing from the IMF, they are subject to its surveillance. Every member state undergoes an annual “health check” — the Article IV consultation. The policy advice in these reports “is not mandatory, but it’s extremely influential and most countries can ill afford to ignore the IMF’s policy prescriptions given their market signalling impact”.

This is soft power as enforcement. The IMF does not need to impose conditions if countries believe they will be punished by markets for ignoring its advice. The surveillance mechanism ensures compliance without the need for formal conditionality.

2.4 The Debt Enforcement Mechanism

The most current mechanism is debt enforcement. As countries in the Global South face cascading debt crises, the IMF determines whether their debts are “sustainable” and whether they qualify for relief.

The Debt Justice analysis of eleven countries found that “over the course of IMF programmes in the eleven countries… real public spending per person has on average been cut by 10%, education spending cut by 16% and health spending by 18%”. The countries were required to cut health and education spending while repaying debts in full.

“By denying debt relief for countries that need it, the IMF is acting as a debt collector for rich and powerful creditors, while harming millions of people in debtor countries,” said Heidi Chow of Debt Justice. “Forcing countries to pay debts in full is leading to deepening crises in health, education and vital public services“.

The ActionAid report found that African countries are spending an average of 7.6% of their national budgets on public service wage bills, below the global average of 9%. The UK spends 15.9% of GDP on its public workforce and is advised to increase public spending. Lower-income nations like Nigeria and Nepal spend 1.9% and 2.5%, respectively, but “are still forced to freeze or cut spending on public services“.

“The IMF’s recipe book is completely outdated,” said Arthur Larok of ActionAid. “By forcing lower-income nations to squeeze public workers, cut social spending, and prioritise foreign creditors over education and healthcare, the IMF is functioning as a global debt enforcer rather than a global development partner”.

III. The Outcomes: Documented Harm

3.1 Health

The health outcomes of IMF conditionality are documented and severe.

The Debt Justice research found that health spending was cut by 18% in countries where the IMF was requiring large-scale austerity rather than allowing them to seek debt relief.

The ActionAid survey of over 600 healthcare workers and teachers in Ethiopia, Ghana, Kenya, Liberia, Malawi, and Nigeria found that “97% of healthcare workers say their wages no longer cover their basic needs”. Teachers reported “being overwhelmed by overcrowded classrooms, with some forced to manage over 200 students without books or supplies”.

A healthcare worker from Kenya described the consequences: “In the past month, I have witnessed four women giving birth at home due to unaffordable hospital fees. The community is forced to seek vaccines and immunisation in private hospitals since they are not available in public hospitals”.

“Over three-quarters of all low-income countries in the world are spending more on debt servicing than they spend on health”. In Nigeria, “only 4% of its national revenue to health, while a staggering 20.1% went toward repaying foreign debt”.

3.2 Education

The education outcomes are equally stark.

The Debt Justice research found that education spending was cut by 16% in countries under IMF programmes.

ActionAid and Education International found “shortages of teachers, overcrowded classrooms, and declining quality of education. In fact, global shortages already exceed 50 million teachers, driven in part by underinvestment and wage bill constraints”.

Dennis Sinyolo of Education International’s Africa Region described the impact: “In Senegal, teachers are not trained because the IMF told [the government] not to recruit”. The report notes that “when education funding is cut due to IMF-imposed austerity, the burden falls disproportionately on women. Layoffs in education affect an overwhelmingly feminised workforce”.

3.3 Poverty and Inequality

The poverty and inequality outcomes are the ultimate measure of the model’s failure.

The cross-national analysis of structural adjustment found that the programmes “have worsened inequality and poverty in the participating countries”. The UNU-WIDER paper found that “the poor benefit less from output expansion in countries with many adjustment loans”.

The global debt crisis is not a side effect of the model. It is the model. Countries are trapped in a cycle: they borrow to service existing debt, they impose austerity to qualify for new loans, the austerity reduces their capacity to grow, and the cycle repeats.

IV. The Ideological Commitment: Neoliberalism as Doctrine

The IMF and World Bank are not neutral technical institutions. They are ideological actors with a specific commitment to neoliberalism.

The Bretton Woods Project’s analysis of 998 Article IV reports found that “99 per cent of the reports recommended some form of fiscal austerity” and that “78 per cent of reports focused on creating a ‘business friendly environment’ and encouraged deregulation to attract private and external sector funding”.

“This policy direction is identical to that described as ‘structural adjustment’ — which, despite the IMF’s pronouncements that the era of structural adjustment is over and its stated concern for rising social inequality, has been dominant in the institution since the 1980s”.

The policies “consist of rolling back the state, particularly in the area of welfare, cutting public services, and empowering the private and external sector“. They have been “heavily criticised as counter-productive to IMF’s stated objectives, and for trapping countries in a cycle of harmful austerity measures”.

The IMF is “ideologically committed to neoliberalism despite its pronouncements on social inequality”.

This is the same ideology that has been imposed on the populations of the US, UK, and Australia since the Reagan-Thatcher period. The difference is that in the Global South, the IMF and World Bank have the power to enforce it. There is no domestic political process that can reject conditionality. The conditions are imposed, or the loans are refused, and the country faces default.

V. The Colonial Genealogy

The Bretton Woods institutions were not designed to develop the Global South. They were designed to manage it.

At the time of the Bretton Woods Conference in 1944, the vast majority of Africa and Asia was under colonial rule. India, Pakistan, Nigeria, Kenya, Ghana, Malaya, Indochina — these were not independent nations with seats at the table. They were colonies. Their economies were structured to serve the metropole. Their resources were extracted. Their populations were governed by foreign administrations.

The Bretton Woods institutions were created by the colonial powers. They were designed to stabilise the international economic order for the benefit of those powers. The Global South was not consulted. It was administered.

The APWLD briefer on the IMF-WB Annual Meetings 2026 describes the institutions as having been “key architects and enforcers of the neoliberalisation of local economies with colonial patterns”. Their policies are “driven by powerful states that hold disproportionate voting power within these institutions, including the United States and G7 countries, allowing their economic and geopolitical agenda to prevail over human rights and genuine development priorities”.

The Global South “has long been facing decades of economic neoliberalisation engineered by the structural adjustment programmes, loan conditionalities, and privatisation policies pushed by the IMF-WB”.

This is not a description of a development institution. It is a description of a colonial administration, operating through financial mechanisms rather than direct political rule. The forms have changed. The structure remains.

VI. Connection to the Broader Extraction Model

The Bretton Woods institutions are the original mechanism through which the extraction model was imposed on the Global South. But they are not the only mechanism, and they have not been abandoned.

The same pattern we have documented in Australia — the NDIS cuts, the JobSeeker poverty, the veterans’ healthcare caps, the AI control point — is the domestic expression of the same model. The same pattern we have documented in the US and UK — the shrinking middle class, the rising deaths of despair, the widening inequality — is the domestic expression of the same model. The same pattern we have documented in the data point democracy — the processing of citizens as data, the centralisation of power, the erosion of scrutiny — is the domestic expression of the same model.

The Bretton Woods institutions are the international expression. They are the mechanism through which the extraction model is imposed on countries that have no domestic political power to resist. They are the enforcement arm of the global extraction system.

And they are not subject to democratic oversight. The IMF and World Bank are governed by voting shares that give disproportionate power to the United States and the G7 countries. The people of the Global South who bear the consequences of the institutions’ decisions have no say in those decisions.

VII. Conclusion: The Debt Enforcers

The evidence is documented. The pattern is consistent. The harm is measured in health outcomes, education outcomes, poverty rates, and deaths.

The IMF and World Bank function as debt enforcers. They prioritise creditor interests over human welfare. They enforce austerity through conditionality and surveillance. They produce documented harm to the most vulnerable populations in the world. And they are not accountable to the people they govern.

This is not a failure of the institutions. It is their design. They were created by the colonial powers to manage the Global South. They have been refined, rebranded, and adapted. But the purpose remains.

The question is not whether the IMF and World Bank can be reformed. They can be — marginally, at the edges, with enough pressure. The question is whether the extraction model they represent can be abandoned. And that question is not for the institutions to answer. It is for the people who are governed by them.

The desert is real. It has boundaries. And the debt enforcers are the ones who built the walls.

References

1. IMF. (2001). Money Matters, an IMF Exhibit — The Importance of Global Cooperation. https://www.imf.org

2. Federal Reserve History. (n.d.). Creation of the Bretton Woods System. https://www.federalreservehistory.org

3. Debt Justice. (2025). IMF denials of debt relief triggering drastic health and education spending cuts in lower-income countries. https://debtjustice.org.uk/press-release/imf-denials-of-debt-relief-triggering-drastic-health-and-education-spending-cuts-in-lower-income-countries

4. ActionAid. (2026). The IMF still functions as a colonial ‘debt enforcer’ despite transformation rhetoric. https://actionaid.org/news/2026/imf-still-functions-colonial-debt-enforcer-despite-transformation-rhetoric-new-report

5. Bond. (2025). The IMF is ideologically committed to neoliberalism despite its pronouncements on social inequality. https://www.bond.org.uk/news/2025/10/the-imf-is-ideologically-committed-to-neoliberalism

6. APWLD. (2026). Resist and Fight Back! Exposing over 80 years of economic colonialism by the IMF and World Bank. https://apwld.org

7. Taylor & Francis. (2026). The IMF, Structural Adjustment, and Poverty: A Cross-National Difference-in-Differences Analysis, 1980-2019. Journal of Development Studies.

8. UNU-WIDER. (n.d.). The Effect of IMF and World Bank Programmes on Poverty. https://www.wider.unu.edu

9. ReliefWeb. (2025). The Human Cost of Public Sector Cuts in Africa. https://reliefweb.int

10. Education International. (2026). Still cooking with a failed recipe: New report reveals the IMF’s staggering double standards and harmful policies. https://www.ei-ie.org

The paper traces the Bretton Woods institutions from their colonial origins through the Structural Adjustment Programs, the Poverty Reduction Strategy Papers, and the current era of debt enforcement. The core argument is that the IMF and World Bank are the international expression of the extraction model — the mechanism through which it is imposed on countries with no domestic political power to resist.