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International Monetary Fund (IMF)

International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an international organization that was created on July 22, 1944 at the Bretton Woods Conference and came into existence on December 27, 1945 when 29 countries signed the Articles of Agreement.

 

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Syed Nasir

Syed Nasir

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The IMF plays three major roles in the global monetary system. The Fund surveys and monitors economic and financial developments, lends funds to countries with balance-of-payment difficulties, and provides technical assistance and training for countries requesting it.

Article: International Monetary Fu...
Source: Investopedia ULC.

The IMF provides technical assistance and training to help member countries strengthen their capacity to design and implement effective policies. Technical assistance is offered in several areas, including tax policy and administration, expenditure management, monetary and exchange rate policies, banking and financial system supervision and regulation, legislative frameworks, and statistics.

Article: The IMF at a Glance
Source: International Monetary Fu...

But when the IMF and the WB lend money to debtor countries, the money comes with strings attached. These strings come in the form of policy prescriptions called "structural adjustment policies." These policies—or SAPs, as they are sometimes called—require debtor governments to open their economies to penetration by foreign corporations, allowing access to the country's workers and environment at bargain basement prices.

Article: The World Bank and The In...
Source: Global Exchange

There have been a number of vocal critics of the IMF over the years. In his 2002 book Globalization and Its Discontents, Nobel prize-winning economist Joseph Stiglitz denounced the Fund as a primary culprit in the failed development policies implemented in some of the world's poorest countries. He argues that many of the economic reforms the IMF required as conditions for its lending--fiscal austerity, high interest rates, trade liberalization, privatization, and open capital markets--have often been counterproductive for target economies and devastating for their local populations.

Article: The International Monetar...
Source: Council on Foreign Relati...

Critics have also raised questions with regard to the Fund's governance and transparency. For decades, a long-standing "gentlemen's agreement" between Europe and the United States has guaranteed the helm of the IMF to a European and that of the World Bank to an American--a situation leaving little recourse for ascendant emerging economies.

Article: The International Monetar...
Source: Council on Foreign Relati...

This is a technical legal term with a precise meaning, but it easily understood. Moral hazard is the term given to the increased risk of immoral behavior resulting in a negative outcome (the "hazard"), because the persons who increased the risk potential in the first place either suffer no consequences, or benefit from it.
While the IMF is riddled with specific instances of moral hazard, its very existence is a moral hazard.

Article: The IMF - The Internation...
Source: The International Monetar...

The globalist think-tank Foreign Policy in Focus published IMF Bailouts and Global Financial Flows by Dr. David Felix in 1998.



The report’s introduction makes these key points:

The IMF has been transformed into an instrument for prying open third world markets to foreign capital and for collecting foreign debts.
This transformation violates the IMF charter in spirit and substance, and has increased the costs to countries requesting IMF financial aid.
The IMF’s operational crisis stems from growing debtor resistance to its policy demands, soaring fiscal costs, and accumulating evidence of IMF policy failure.
The general public has not seen such "internal criticism" of the IMF. If an outsider were to make the very same criticism, he would be ostracized for being part of the radical fringe.

Article: The IMF - The Internation...
Source: The International Monetar...

“IMF programs” grant governments access to loans, but this access can be swiftly cut off if the governments fail to comply with specific policy conditions. IMF conditional lending impacts the lives of individuals in intimate ways. The policy conditions address government expenditures, so IMF programs help determine whether roads, schools, or debt repayment take priority. By addressing interest rates and currency valuation, IMF programs may even impact the very purchasing power of the money in people’s pockets. Unfortunately, in terms of economic development, there is scant evidence of the success of IMF conditional lending.

Article:   The International Monetar…
Source:  Offline Book/Journal

The International Monetary Fund (IMF) 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.

Article: About the IMF
Source: International Monetary Fu...

Created after World War II to help avoid Great Depression-like economic disasters, the World Bank and the IMF are the world's largest public lenders, with the Bank managing a total portfolio of $200 billion and the Fund supplying member governments with money to overcome short-term credit crunches.

Article: The World Bank and The In...
Source: Global Exchange
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