IMF is not interested in reducing the budget for education or health. It requests the reduction of the budget deficit, which means the state should try to spend not much more than it collects in taxes. Now, a state budget has lots of items and, unfortunately, in many 3rd world countries the military expenses are eating up most of the resources.Originally Posted by Squeakus Maximus
In many other instances the state doesn't collect the taxes because the corruption is so high that tax authorities, police and the judges don't bother to enforce the law. As for privatising the state-own companies, let me give you another angle to look at this: in the countries we're talking about, the politicians are corrupt, the police is corrupt, the judges are crooked and the tax collectors collect bribes instead of taxes. Now guess what happens with the state-owned companies: a lot of the money they make go into the pockets of the guys in power. I'll tell you what has happened in my country, Romania, in the early '90s, before the main companies were privatised: all politicians owned companies that were either suppliers or distributors of the state-owned companies. They were selling stuff at exorbitant prices to the state-owned companies and were buying the products of the state-owned companies at ridiculosly low prices, on several occasions even below the production costs. So the politicians were making all the money and were not paying taxes while the profits of the state-owned companies were slim or non-existant. Not to mention what was going on when the banks belonged to the state: a lot of "businessmen" were making huge loans and then forgot to pay.