The International Monetary Fund and the World Bank face fresh criticism today as campaigners blame their privatisation policies for the devastating famine in Malawi earlier this year.

In a report, published this morning, the World Development Movement attacks the programme of market reforms imposed on Malawi by the IMF and the World Bank over the past decade. It singled out the privatisation of the government's grain stocks, for which it specifically blames the IMF.

"Structural Damage - The Causes and Consequences of Malawi's Food Crisis" says that despite years of liberalisation and deregulation policies, Malawi this year faced its worst famine since 1949.

The WDM says the decision to privatise Malawi's agricultural development and marketing corporation - which maintained a central stock of grain and regulated prices - was pressed on the government by IMF staff at several meetings since 1996, and left the country unable to meet its emergency needs.

Kwesi Owusu and Francis Ng'ambi, the report's authors, accept that the corporation was ripe for reform, but argue that "rather than ensuring that social aims are achieved through accountable government, the IMF and the World Bank and other donors have pursued an agenda of austerity, deregulation and privatisation. Not only have the outcomes been disastrous but also the agenda of good governance and accountability has been abused by donors."

In 2002, Malawi will spend $70m (£49m) servicing debt. That is 20% of the national budget and more than it will spend on health, education and agriculture combined. The authors call on foreign creditors to cancel all of its debt, so that "the money could be used to develop the country to be self-reliant in food".

Malawi's debts contributed to the recent food crisis, concludes the report.

The IMF yesterday defended its role in this year's famine, accusing the government of failing to organise a large enough grain reserve to see Malawi through the emergency, which was first declared in February.

"The causes of food shortages in Malawi are complex, including lapses in the government's early warning systems, distortions in domestic markets, and mismanagement of food reserves."