International Monetary Fund - IMF


 
 
Concept Explanation
 

International Monetary Fund - IMF

International Monetary Fund:  The IMFS original mandate sets forth three main objectives:

  • To promote international monetary cooperation.
  • To facilitate the expansion of international trade.
  • To promote exchange rate stability.
  • The IMF achieves these objectives by advising member countries on their economie policies and by providing conditional assistance to member countries experiencing balance of payments problems. The IMF often escapes close scrutiny by groups who tend to focus their advocacy efforts on the World Bank. Yet, the IMF has played a very significant, if not more important, role in exacerbating the impoverishment of developing countries.

  • The IMF played a significant role during the 1980s in "bailing out the commercial banks." By providing IMF credits to developing countries, essentially to service commercial debt, the IMF took upon itself the role of "gatekeeper" for creditors, forcing highly indebted countries to adopt SAPS as a condition not only for receiving IMF credits, but as the "stamp of approval" debtor countries needed as a condition for receiving further grants and aid from all donor sources.
  • By disbursing funds to developing countries in the 1980s to service commercial debt, an most recently to Mexico, the IMF essentially postponed the debt crisis by providing short-term funds on very hard terms for what was essentially a structural problem of insolvency which required long-term solutions. It is widely believed that the IMF financed the "recovery" with the wrong resources and the wrong approach. Consequently, the IMF is now in the position of extracting large net transfers of resources, especially from those countries which can least afford it.
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