The International Monetary Fund reference article from the English Wikipedia on 24-Jul-2004
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International Monetary Fund

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The International Monetary Fund (IMF) is an international organization responsible for managing the global financial system and for providing loans to its member states to help alleviate balance of payments problems. Part of its mission is to help countries that experience serious economic difficulties. In return, the countries who are helped are obliged to launch certain "reforms," such as privatizations of government enterprises.

Table of contents
1 History and Background
2 Leaders of the IMF
3 Criticisms
5 See also
6 External link
7 References

History and Background

Agreement for its creation came at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, USA, in 1944; the organization came into existence in 1946, as part of a post-WWII reconstruction plan, and began financial operations on March 1, 1947. Accordingly, it is sometimes referred to as "a Bretton Woods institution", along with the Bank for International Settlements(BIS) and the World Bank. Together, these three institutions define the monetary policy shared by almost all countries with market economies. In order to gain access to IMF loans, BIS privilege, and strategic World Bank development loans, a country must normally agree to terms set forth by all three organizations.

The world bank has since that date made dozens of interventions. The two most notable recent ones

Leaders of the IMF

The IMF is headed by a Managing Director:


The role of the three Bretton Woods institutions has been controversial to many since the late Cold War period. Critics claim that IMF policy makers deliberately supported capitalist military dictatorships friendly to American and European corporations. Critics also claim that the IMF is generally apathetic or hostile to their views of democracy, human rights, and labor rights. These criticisms generated a controversy that helped spark the anti-globalization movement. Others claim the IMF has little power to democratize sovereign states, nor is that its stated objective: its advice is, however, intended to promote financial stability, which in turn may indirectly further democracy. Economic chaos is seldom a good starting point for a stable democracy.

One criticism from economists has been that the so called "Conditionalities", including Structural Adjustment Programmes, on which the financial aid is always bound, retard social stability and hence inhibit the IMF's targets. By discouraging the development of infrastructure and demanding austerity, the IMF Conditionalities restrict the economies of Third World nations to simply providing cheap labor and cheap raw materials to the G-7 nations, which critics claim is a disguised form of colonialism.
Adherents of supply-side economics generally find themselves in open disagreement with the IMF because typically the IMF advocates a Keynesian approach to economics. It may advocate currency devaluation so as to export more goods (which supply-siders see as inflationary). This is recommended by the IMF to the governments of poor nations with struggling economies. Supply-side economists claim these Keynesian IMF policies are destructive to economic prosperity, although many other economists disagree.

That said, the IMF sometimes advocates "austerity programmes", increasing taxes even when the economy is weak, in order to generate government revenue and balance budget deficits, which is the opposite of Keynesian policy.

Most altermondialists, like ATTAC, believe that IMF interventions aggravate the poverty and the debts of Third World and developing countries.
Opposition to the IMF can be very fragmented. For instance advocates of Supply-side economics would in general regard the policies advocated by ATTAC to be little different in form to the ideas peddled by the IMF. In other words, they would see ATTAC tax and spend policies and the IMFs austerity policies as being fundamentally similar.
Argentina, which had been considered by the IMF to be a model country, experienced a serious economic crisis in 2001. This crisis created a movement of popular hatred against this institution within Argentina, with many blaming the IMF for the country's economic problems.

That the IMF intervenes only in countries that are already in dire financial straights has certainly hurt its reputation. The financial collapses it intervenes to help are the product of decades of mismanagement, but mismanagement that is often invisible to the outside world. These collapses tend to lead to years of economic difficulty, and since this period often is often coextensive with IMF involvement in the economy it has in many cases quickly become associated with the malaise. Politicians have also long used the IMF as an easy target for blame when they themselves have erred, using nationalism and the poor public relations of the IMF to gain easy political points.

Overall the IMF success record is limited. While it was created to help stabilize the global economy, since 1980 there have been over 100 countries to experience a banking collapse that reduced GDP by four percent or more. Far more than any previous time in history. The considerable delay in IMF response to a crisis, and the fact that it tends to only respond to rather than prevent them, has led many economists to argue for reform.


See also


External link