What is IMF?
The International Monetary Fund and the World Bank were created in 1944 at a conference in Bretton Woods, New Hampshire, and are now based in Washington, DC. Now it is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Nearly all members of the United Nations are members of the IMF with a few exceptions such as Cuba, Lichtenstein and Andorra. (About the IMF:IMF Website) The IMF was originally designed to promote international economic cooperation and provide its member countries with short term loans so they could trade with other countries (achieve balance of payments). The IMF is one of the most powerful institutions on Earth -- yet few know how it works. Functions of IMF:
1. International Monetary Cooperation
2. Promote exchange Rate stability
3. To help deal with Balance of Payments adjustment
4. Help Deal With Economic Crisis by providing international coordination Since the debt crisis of the 1980's, the IMF has assumed the role of bailing out countries during financial crises (caused in large part by currency speculation in the global casino economy) with emergency loan packages tied to certain conditions, often referred to as structural adjustment policies (SAPs). The IMF now acts like a global loan shark, exerting enormous leverage over the economies of more than 60 countries. These countries have to follow the IMF's policies to get loans, international assistance, and even debt relief. Thus, the IMF decides how much debtor countries can spend on education, health care, and environmental protection. Although intended to benefit the global economy and contribute to world peace, the IMF has become primary targets of the anti-globalization movement. (Dictionary:Ecomnomics Help) In many countries, it is resented and is viewed as imposing Western-style capitalism on developing countries without regard to the social effects. The following Issue Brief is designed to help someone understand that how the history, purpose, structure, and activities of the IMF have been failed to curve corruption, reduce public spending and develop macroeconomic policies. (Globalization101)
How IMF Failed to Curve Corruption:
✓ Lack of Transparency and involvement:
The IMF has been criticized for imposing policy with little or no consultation with affected countries. Jeffrey Sachs, the head of the Harvard Institute for International Development said: "In Korea the IMF insisted that all presidential candidates immediately "endorse" an agreement which they had no part in drafting or negotiating, and no time to understand. The situation is out of hand...It defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people." (Economics Help Website)
✓ Supporting Military dictatorships:
The IMF has been criticized for supporting military dictatorships in Brazil and Argentina, such as Castello Branco in 1960s received IMF funds denied to other countries. (Economics Help Website)
✓ Income Related Issues:
As one author points out: "It is often assumed that there is a simple congruence between who funds the IMF and who has the largest say in the organization. This is misleading. The largest shareholders in the IMF enjoy the lion's share of the votes but the actual expenses of running the institution are paid for out of income. The IMF's income is mainly made up of the charges it levies on borrowers. A very small income is generated from other accounts. It bears noting that these charges have been increased substantially since the 1970s, putting a high...