International Monetary Fund
The International Monetary Fund (IMF), "an organization of 184 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty," dates from the 1944 Bretton Woods Agreement[1] when representatives of 45 governments agreed on a framework for economic cooperation designed to avoid a repetition of the disastrous economic policies that had contributed to the Great Depression of the 1930s.[2]
At the same time as the IMF was created, the International Bank for Reconstruction and Development (IBRD), more commonly known as the World Bank, was set up to promote long-term economic development, including through the financing of infrastructure projects, such as road-building and improving water supply.[ibid]
When the IMF and World Bank were established, an organization to promote world trade liberalization was also contemplated, but it was not until 1995 that the World Trade Organization was set up. In the intervening years, trade issues were tackled through the General Agreement on Tariffs and Trade (GATT). [ibid]
Article I of the Articles of Agreement sets out the IMF's main responsibilities:[3]
- promoting international monetary cooperation;
- facilitating the expansion and balanced growth of international trade;
- promoting exchange stability;
- assisting in the establishment of a multilateral system of payments; and
- making its resources available (under adequate safeguards) to members experiencing balance of payments difficulties.
More generally, the IMF is responsible for ensuring the stability of the international monetary and financial system--the system of international payments and exchange rates among national currencies that enables trade to take place between countries. The Fund seeks to promote economic stability and prevent crises; to help resolve crises when they do occur; and to promote growth and alleviate poverty. It employs three main functions--surveillance, technical assistance, and lending--to meet these objectives.[ibid]
Contents
Structural Adjustment Policies and Growing Debt
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. But the Bank and the Fund are also the world's biggest loan sharks. When the Bank and the Fund lend money to debtor countries, the money comes with strings attached. 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
Structural adjustment policies mean across-the-board privatization of public utilities and publicly owned industries. They mean the slashing of government budgets, leading to cutbacks in spending on health care and education. They mean focusing resources on growing export crops for industrial countries rather than supporting family farms and growing food for local communities. And, as their imposition in country after country in Latin America, Africa, and Asia has shown, they lead to deeper inequality and environmental destruction. For decades people in the Third World have protested the way the IMF and World Bank. [4]
In 1996, a new debt relief initiative for the heavily-indebted poor countries—the HIPC Initiative—was launched by the IMF and the World Bank.1 The HIPC Initiative was intended to resolve the debt problems of the most heavily-indebted poor countries (originally 41 countries, mostly in Africa) with total debt nearing $200 billion.Worldwide events in the 1970s and 1980s—particularly the oil price shocks, high interest rates and recessions in industrial countries, and then weak commodity prices—were major contributors to the debt build-up in the HIPC countries. [5][6]
"Research shows clearly that the policies prescribed by the IMF have, among other things, not produced strong or sustainable growth; opened countries, communities and families to new vulnerabilities; exacerbated inequalities, which puts a brake on growth, stresses political systems to the breaking point, and engenders new and powerful forms of criminality and social tension.
Bolivia has been a model student of such "reforms", and is now also a showcase for the contradictions and crisis these policies engender." [7] The IMF "supports the rapid conclusion of obscure deals made by un-transparent multinationals and unaccountable politicians, deals in which it is impossible for people to evaluate or have a choice." observes researcher Tom Kruse in LaPaz.[8]
It appears some of the debt restructuring for IMF happens through Paris club and London Club. Paris Club is the name given to the arrangements through which countries reschedule their official DEBT; that is, money borrowed from other governments rather than BANKS or private FIRMS. The club is based on Avenue Kléber in Paris. Its members are the 19 founders of the OECD as well as Russia. Other institutions such as the WORLD BANK attend in an informal role. Rescheduling requires the consensus agreement of members and must not favour one CREDITOR nation over another. Private debt rescheduling takes place through the London Club. [9]
Personnel
- Nancy P. Jacklin, U.S. Executive Director, International Monetary Fund
SourceWatch Resources
- banking
- Federal Reserve System
- globalization
- Timeline to Global Governance 1800 to 1969
- U.S. Department of the Treasury
