Explain why the debt crisis and the role of the IMF in it undermined the ability of LDCs to provide merit goods such as health and education

The International Monetary Fund is (IMF) is the international organization entrusted with overseeing the global financial system by monitoring exchange rates and balance of payments, as well as offering technical and financial assistance when asked. However, the loans are given on a conditional basis. In order to receive the loan, the country has to accept certain conditions the IMF lays down. IMF lending is usually accompanied by strict and painful conditions such as structural adjustment. …

…hamper the ability of governments to spend money on merit goods. The country has to pay interest on the loan. This increases the debt burden on the country and the country is in a debt crisis where it is unable to pay back loans and is even more reliant on the IMF. In such a situation the government will spend money on the repayment of loans and not on providing merit goods to the public.