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| Picutre Credit: wikipedia.org/victorgrigas |
The International Monetary Fund is a multilateral institution based in Washington that lends money to governments to stabilize currencies and maintain order in international financial markets. For many decades, the Fund has imposed stringent loan conditions that often lead to worsening conditions for the majority of citizens in the affected countries. Even more than its partner, the World Bank, the Fund is known for its rigid orthodoxy and its high-handed approach to poor countries. Its performance in the Asian Crisis and in Latin America has led to widespread criticism and charges that its "medicine was worse than the disease."
GPF Perspectives | Articles | Links and Resources
GPF Perspectives
The Reform of the International Monetary Fund (October 2001)
This paper, by Rainer Falk and sponsored by WEED, Global Policy Forum and the Heinrich Boell Foundation, focuses on the renewal of tasks and institutional structure. It concludes that the IMF needs to be both strengthened and weakened, depending on the Fund's future role. The paper was presented at an NGO Strategy Workshop in Washington, October 2001.
Articles
2012
Agreement on a Global Firewall, But Little Beyond That (April 22, 2012)
At the most recent summit of finance ministers, central bankers and international financial institutions (World Bank and IMF) in Washington D.C., the view that countries are divided about what to do to revert the crisis was consolidated. Despite pledges to rack up the IMF’s lending capacity, the contributors are all but in agreement about what should be done with it. Whilst European finance ministers stubbornly praise austerity yet lobby for greater pools of money, the IMF and the World Bank have made clear that “fiscal consolidation” alone will be deleterious. Additionally, several emerging economies argue that fairer representation at the IMF is long overdue, particularly considering the relative sizes of their economies and their generous contributions to the bailout fund. (New York Times)
Capital Flows: IMF Guidelines Criticized (April 5, 2012)
This Bretton Woods Project article highlights the IMF’s continued struggle with the idea of capital controls as acceptable policy instruments. Whether or not the struggle is more ideological than prudential is of little interest to countries that are experiencing large inflows of capital from investors seeking higher returns than they can get in “developed countries.” Their warranted fear is that the capital will be retrieved by investors as interest rates once again rise in Europe and the US. Countries that used controls during the financial crisis have better weathered the storm than those that did not - a statistic that suggests the IMF should reconsider more vocally. (Bretton Woods Project)
Order Has Returned to Nigeria after the Fuel Protests, but Deep Anger Remains (February 17, 2012)
In January 2012, Nigerians protested heavily against an overnight 120% rise in the price of petrol, the result of the government's oil subsidy cuts. The government had reportedly been advised to do so by the International Monetary Fund, who argued that it would not only save the government money, but would also stop government money from falling into the hands of corrupt middlemen. According to ordinary Nigerians interviewed by the Guardian, citizens no longer trust their government and note that higher oil prices have led to the price increases of many other commodities. The increases have disproportionately burdened the oil exporting country's poor, who spend most of their money on food and transportation. (Guardian)
Will Neoliberalism Make a Comeback in Africa via Tunisia? (February 2, 2012)
As late as 2008, IMF managing director Dominque Strauss-Kahn heralded Ben Ali’s Tunisia as “the best model for many emerging countries,” turning a blind eye to the country’s widespread corruption, political and economic inequality and kleptocratic rule. After the eruption of the Arab Spring, Strauss-Kahn’s successor, Chrstine Lagarde, co-opted the uprising’s ideas by disassociating the Fund’s role from the turn of events and arguing that the IMF offered “the best policy advice possible” for the future. Academics Bond and Sharife warn that the IMF’s “advice” will in fact lead to more of the same: inequality and other social ills like those that led to the popular upheavals. (allAfrica)
2011
Is the IMF Obstructing Kenya’s Devolution Process? (August 18, 2011)
A rift between the Kenyan Ministry of Finance (MF) and the Ministry of Local Government over the regulation of public resources obstructs the proper implementation of the country’s new constitution. Despite the document’s prominent inclusion of a principle of “devolution” - the division of government into the independent levels of “the national” and “the counties” - the MF has put forward a legislative proposal that centralizes power and ignores this new principle. According to Charles Abugre of the UN Millennium Campaign, the International Monetary Fund (IMF) has played a critical role in this affair: it helped draft the MF’s proposal and has made its acceptance into law a part of loan conditionalities. By seriously interfering with “the nature” of a member-state’s “political regime”, the IMF has over-stepped the boundaries of its mandate.(Pambazuka News)
Spotlight on IMF Appointment (June 5, 2011)
The parliamentary committee chaired with replacing IMF director Dominique Strauss Kahn has indicated that it might break with tradition by appointing a candidate from the developing world rather than one from Europe. This divergence may indicate an effort to “modernize” the IMF. Furthermore, officials say they will try to incorporate the G20’s wishes for reform that were voiced in the 2009 Pittsburgh Summit Agreement, by highlighting meritocracy and diversity in leadership. (Business Report)
The IMF: Violating Women since 1945 (May 19, 2011)
As the head of the IMF resigns following rape allegations, it is critical to revisit the history of the institution and its impact on women throughout the world. Historically, the relentless imposition of SAPs required cuts to government spending on health, education and social service programs that provided a safety net for the most disadvantaged. The long term impact of these programs is particularly devastating for women, leaving them extremely vulnerable. Furthermore, the IMF has long been implicated in promoting privatization of natural resources resulting in the destruction of people’s livelihoods throughout the developing world.(Foreign Policy in Focus)
Europe Holds Tight to IMF Monopoly (May 19, 2011)
The Managing Director of the IMF is a post that has always been held by a European. Leaders from developing countries have long questioned this practice. More recently calls for a leader from Africa, Asia, or Latin America have been growing. The resignation of Dominique Strauss-Kahn opens the door for a possible non-European head. James Paul, executive director of Global Policy Forum opines that the new selection process may allow for an IMF chief from somewhere outside of Europe. (IPS)
Europe Aims to Keep IMF After Strauss-Kahn (May 18, 2011)
IMF Managing Director Dominique Strauss-Kahn stands accused of attempted rape and a string of other serious charges for allegedly sexually assaulting a maid in a Manhattan luxury hotel. Already speculation has turned to who will replace him. In the past big developing countries like Brazil, China, and India have argued for more equity in power arrangements at both the IMF and World Bank. Traditionally, the World Bank is run by an American while the IMF is headed by a European. Europe remains mired in a sovereign debt crisis, which EU leaders have used to argue for maintenance of the status quo.(Bloomberg)
To Make the IMF Relevant Will Take More than a New Leader (April 20, 2011)
Former British Prime Minister Gordon Brown is touted to become the next head of the International Monetary Fund. However, this article highlights that the IMF requires more than just new leadership if it is to regain its reputation as an industrious institution. The IMF is in drastic need of significant internal reform, having responded badly to the recession of 2008 as well as being plagued by poor management of its own finances. (Guardian)
Troika Gets it with 50-Bln-Euro Privatization Push (February 17, 2011)
The Greek government is under pressure from the so-called "troika" - the International Monetary Fund, European Commission, and European Central Bank, which have been placed in charge of the rescue of Greek government finances. The troika has called on Greece to generate 50 billion euros through state asset sales and other forms of privatization. With Greek debt-to-GDP well over 150 percent, questions remain whether these austerity measures will be effective.(Ekathimerini.com)
Egypt Youth Unemplyment Was 'Time Bomb': IMF Head (February 1, 2011)
Director of the International Monetary Fund (IMF) Dominique Strauss-Kahn claims that he had repeatedly warned policy makers about the possibility of revolution in Egypt over the past year. Strauss-Kahn spoke out last summer at a meeting in Morocco, where he raised concerns about the specter of general instability in the region due to vast inequality in income distribution and high levels of youth unemployment. Strauss-Kahn's comments clash with multiple IMF staff reports from recent years, which lauded Egypt's wide-ranging reform efforts and policies that guaranteed greater macroeconomic stability. (CNBC)
IMF Raises Spectre of Civil War as Global Inequalities Worsen (February 1, 2011)
The International Monetary Fund (IMF) identifies global inequality as a major cause of the economic crisis and urges nations to address it. A recent paper released by the IMF states that workers have steadily lost their "bargaining power" relative to owners of capital. To reverse this trend, governments should institute radical changes to their tax codes and offer debt relief to workers facing an escalating crunch from low wage growth and increasing food and energy prices.(The Telegraph)
Poor Countries with IMF Loans 'Divert Aid from Public Health' (January 17, 2011)
Poor countries that take loans from the IMF spend dramatically less on improving healthcare for their populations. IMF loan conditions restrict spending on health initiatives and allocate money to other uses. Consequently, countries that take IMF loans are less likely to achieve the Millennium Development Goals for human health. (The Guardian)
2010
Tunisia: IMF "Economic Medicine" has resulted in Mass Poverty and Unemployment (December 31, 2010)
On December 17, protests broke out in Tunisia over bleak economic and political conditions. In spite of high unemployment, high inequality and civil unrest, the IMF is pushing Tunisia's government to implement further austerity programs. Western governments consider Tunisia a "progressive North African Muslim Nation," and the present condition of the country is underreported in the western media. (Global Research)
Cash-Rich IMF Plans to Refurbish its 'Opulent' Headquarters (December 19, 2010)
Critics are unhappy at IMF plans to upgrade it's headquarter building. Management says that the program is necessary, especially to improve its central heating and air conditioning. Critics argue that the IMF spent $150 million just eight years ago to build a new headquarters and they wonder why the money is not used to help the poor. (Guardian)
Germany Proposes Ending US Veto in IMF Board (September 14, 2010)
Germany is expressing its independence from the United States and its more forceful global role. It is proposing that In exchange for the surrender of the US veto, the number of European members on the IMF board would be reduced. This is the first time an economically powerful country has dared to propose such an idea. Some call the IMF veto "the bedrock of US hegemony." Though Washington is unlikely to accept the idea, Berlin has conveyed an important message - that few are happy with today's global distribution of economic power. (Financial Times)
VIDEO: Next Stage of US Occupation - Economic Colonization of Iraq Led by IMF (May 25, 2010)
In an interview with The Real News, Amjad Ali, the international representative for the Iraq Freedom Congress, speaks about the new kind of economic occupation which will ensue in Iraq in the wake of the withdrawal of US combat forces. Earlier this year, the IMF approved a $3.6 billion loan to Iraq which comes with a stringent set of conditions, including a massive privatization campaign and a significant decrease in public spending. According to Ali, almost 80% of Iraq's production is in the public sector; public companies put up for sale will be snatched up by Iraq's elite, creating greater economic inequalities and aggravating the unemployment problem in Iraq. As public spending begins to be cut, the dwindling social safety measures in Iraq, such as a food stamps program initiated in the 1990s, have already begun to take a hard hit. (Real News Network)
Why the IMF Changed its Mind about Capital Controls (April 2, 2010)
In this short video commentary for the Guardian Kevin P. Gallagher of Tufts University explains the important shift in the International Monetary Fund's official position on the use of capital controls to mitigate financial crises. He goes on to argue that the U.S. government should follow suit, accepting the new policy consensus in economics and ending the practice of outlawing the use of controls in its trade and investment agreements. (Triple Crisis)
"Strictly Confidential" Report by IMF on Financial Transaction Taxes (April 2010)
The G20 is currently discussing different ways to recuperate public funds spent on bank bailouts in the recent global crisis. This discussion has given rise to the possibility of a Financial Transaction Tax (FTT), long advocated by NGOs because it would create vast public revenues and restrain speculation. However, in this paper the IMF expresses little enthusiasm for the FTT advocating for a temporary flat tax of bank holdings instead. The publication shows the IMF's dedication to avoid game-changing reforms of the financial sector, and signifies the still powerful role of the IMF in global policy making. (IMF)
Capital Controls Back in IMF Toolkit (March 1, 2010)
IMF staff has released a position paper in which they have retracted their previous rejection of capital controls. While the Fund maintains that imposing restrictions on capital mobility forgoes benefits of otherwise free-mobility, in certain circumstance the Fund admits "controls may be justified." Kevin Gallagher argues that this paper could not have come at a better time as recovery from the recent crisis in low-income countries can be destabilized by the flow of speculative capital. Gallagher challenges the Fund to now practice what they preach. (The Guardian)
IMF Economic Policies Under Fire: Hiding the Conditionality Problem (February 15, 2010)
The IMF continues to restrict the policy space of borrowing countries, despite its claims to the contrary. This paper points out that the IMF still weighs heavily on governments to practice fiscal austerity, privatizations, and financial system reform. Interestingly, some countries have been praised by the IMF for practicing stimulus, or counter-cyclical, economic policies in the wake of the economic crisis. But ironically, their underlying disposition on what makes for macroeconomic stability has remained the same. (The Bretton Woods Project)
Fruits of the Crisis (February 5, 2010)
IMF Studies How to Pay for Financial Sector Rescue (January 11, 2010)
2009
IMF Loan Policies Worsening Crisis (October 7, 2009)
Providing money for low and middle-income nations hard hit by the global financial crisis, the IMF neglects the consequences of its conditionalities at national level. Countries such as Latvia, Hungary and Republic of Congo, obliged to increase interest rates and cut spending along with pension payments and public sector wages, are facing citizen protests that demand eased loan terms from the IMF. (Terraviva)Report on the Civil Society Consultations with the IMF (September, 2009)
This report, prepared upon the request of the Managing Director of the IMF, presents a summary of the consultations of over 200 civil society organizations (CSO) on reform of the IMF's governance. The report shows that CSOs strongly favor accountability and transparency within the institution. CSOs also propose a new quota system in the distribution of voting power. The Managing Director will receive the final report during the IMF Annual Meeting in Istanbul in October. (IMF)Which Fund Do You Want? (August 21, 2009)
The International Monetary Fund is under heavy pressure. A group of academics, union leaders and NGO activists has been convened to participate in a dialogue within the institution. They have proposed greater transparency and accountability in the Fund's governance. However, the United States and the European Union may block the path to reform. (Social Watch)Potential Development Implications of Enhancing IMF's Resources (August 4, 2009)
In April 2009, the G20 agreed to a stimulus package of US$ 750 billion to be given to the IMF to fight the economic crisis. However, donor countries have not yet met their financial commitments. The author of this article takes note of the missing funding but he doubts whether the stimulus package could have had a positive effect on developing countries. The paper examines the Fund's lending policies, the potential of SDRs and the fiscal space for low income countries. (The Bretton Woods Project)IMF Reform: Aged Wine in a New Wineskin (July 19)
The global financial downturn has greatly affected Jamaica, forcing it to return to the IMF for a loan. But the country has not forgotten the bitter memory of past relations with the fund. The author compares past and present IMF practices of nine countries, which have entered Stand-By Arrangements since September 2008. He argues that recent IMF reforms have not been substantial and that the fund remains dominated by the neoliberal "Washington Consensus". (Jamaica Observer)IMF Backs US$ 250 Billion Plan to Bolster Member’s Reserves (July 20, 2009)
Since the economic downturn, many countries mistrust the dollar-based global reserve system. The IMF will vote on a US$ 250 billion resource to increase its member states’ financial liquidity through so-called special drawing rights (SDRs). Each member receives SDRs in proportion to its quota. The SDRs can then be exchanged immediately for hard currency. However, the long-term outcome of the program for developing countries remains uncertain. The SDRs will mostly go to rich countries and worldwide interest may rise. (Reuters)The Danger of IMF Policies
The wealthiest economies are fighting the global economic crisis with dramatic public spending and immense new indebtedness. However, the International Monetary Fund (IMF) continues a restrictive lending policy that put developing countries at risk. The article argues that the G20 financial boost to the IMF failed to produce needed reforms. The authors call for a rethinking of IMF lending policies to stop further inequality and poverty. (Boston Globe)
The Quiet Coup (May 2009)
According to Simon Johnson, a former chief economist at the International Monetary Fund (IMF), the main problem the US is facing when it comes to tackling the financial and economic crisis is well-known in the IMF: as in many emerging countries in the past, the financial elite have captured the government's actions. Johnson describes how decades of triumphant finance in the US managed to convince everyone, from ordinary voters to politicians, that what is good for Wall Street, is good for the US. This cult of finance, supported by the Wall Street “Washington Corridor," not only laid the foundation for the crisis, but also hinders attempts to solve it. Johnson concludes that the government must force the banks to write down the true value of their assets or nationalize them. But solving the lending crisis is not enough. In order to "break the oligarchy", the government must systematically break up the banks and overhaul antitrust legislation. (Atlantic)
U-20: Will the Global Economy Resurface? (March 30, 2009)
Walden Bello explains that the "show" of the G20 Summit on the global economic crisis conceals the world leaders' deep lack of direction and uncertainty over economic recovery. He describes the minimalist IMF reforms, praised by the G20, as a "non-starter", and outlines how the proposed changes to the voting system do little to balance the overrepresentation of wealthier countries in decision-making. Despite talks of reform and counter-cyclical spending, IMF conditionality still requires that low income countries' deficit spending must not exceed 1% of GDP. (Foreign Policy in Focus)
The IMF's Financial Crisis Loans: No Change in Conditionalities (March 11, 2009)
Based on their study of International Monetary Fund (IMF) financial crisis loans, Third World Network (TWN) argue that the conditions attached to the IMF loans remain restrictive and worsen the crisis for many poor countries. Based on tight monetary and fiscal policy, the IMF loans are in stark contrast with the countercyclical spending undertaken by developed country governments to speed up economic recovery. TWN warns that the IMF should not prescribe these austerity policies, which proved counterproductive in the Asian Crisis. TWN recommends that the IMF should not be the primary vehicle to disperse financial assistance. Instead policymakers should direct greater attention to regional and national arrangements such as the Chiang Mai Initiative, as well as sovereign debt restructuring. (Third World Network)
Financial Bailout: Government Criticized for Opting for IMF Loan (November 12, 2008)
While Western governments have played an active role in the financial crisis, paying billions in bailouts to banks and financial companies, the IMF still insists that poor countries cut back on government spending in return for loans. Civil society organizations recommend that governments in poor countries look for local alternatives to IMF loans so they can respond to the financial crisis by increasing spending on health, education and agriculture. (Dailytimes)
Latin America's New Consensus (October 29, 2008)
Latin America countries have strengthened their relationship trough regional initiatives. "Bancosur", a regional banking system allowing the countries to lend money from each other instead of the International Monetary Fund. Further, the regional cooperation in Mercosur increases regional integration and makes countries such as Brazil, Argentina and Venezuela less dependent on unfavorable cooperation with the US. (Foreign Policy in Focus)
As Global Wealth Spreads, the IMF Recedes (May 24, 2008)
The unprecedented economic growth of several poor countries raises questions about the relevance of the International Monetary Fund. Countries such as Ghana, previously dependent on IMF loans and subject to strict conditions, are rejecting IMF loans. In addition, new Chinese and Indian investors offer attractive low- or no-interest loans with no strings attached. Between 2003 and 2007, IMF lending fell from $116.9 billion to $16 billion. The IMF's director, Dominique Strauss-Kahn, states that the Fund ought to focus less on structural issues but continue to focus on helping low-income countries secure and maintain macroeconomic stability. (Washington Post)
Critical Conditions: The IMF Maintains Its Grip on Low Income Governments (April 2008)
This Eurodad report finds that the International Monetary Fund (IMF) imposes on average 13 conditions per loan to low-income countries. A quarter of these include privatization or liberalization reforms. By increasing the number of conditions on developing countries, the IMF disregards the 2002 conditionality streamlining initiative, in which it agreed to reduce the number of conditions on development loans.
Watchdog Faults IMF Loan Conditions (January 6, 2008)
In 2000, the IMF launched a "streamlining initiative" to reduce the amount and scope of conditions attached to loans. The Fund aimed to cut back on any conditions that overstepped the organization's primary concern for macroeconomic stability. Disappointingly, in 2008, the IMF's Independent Evaluation Office found that the Fund continued to burden its borrowers with unnecessary and intrusive conditionality. (Inter Press Service)
Why South America Wants a New Bank (December 10, 2007)
Argentina, Brazil, Bolivia, Ecuador, Paraguay, Uruguay and Venezuela are all backing the initiative to establish the Bank of the South. The bank is an alternative to the World Bank and the IMF, whose unpopularity is growing in the South American continent. The founding countries say the bank will reduce their dependence on rich countries and international financial institutions while providing necessary alternative funds. Although experts approach the initiative with caution, some welcome the competition in the developing lending market. (BBC)
Role Reversal at IMF as the Rich Come Under Fire (October 21, 2007)
During the 2007 meeting of the world's finance officials at he IMF, Western countries faced criticism over the US subprime mortage crisis. In the past, rich governments and the IMF have lectured poor countries on their economic and monetary policies. The same poor countries are now requesting that the IMF require rich countries to regulate their spending and increase their transparency. In particular, the countries are targeting their criticism at the US, whose financial policies are threatening the stability of the international financial system. Despite the vulnerability of advanced economies, the US and the IMF defend their present practices. (International Herald Tribune)
What the IMF Doesn't See (October 18, 2007)
In its 2007 World Investment Report, the IMF focuses on rising inequality in poor countries and the need to reverse this trend. This article argues that the Fund fails to mention how its own policies of privatization and trade deregulation caused a slowdown in economic growth, subsequently obstructing progress on many social indicators such as education and life expectancy. After decades of promoting economic growth as the solution to poverty, the IMF now seems to avoid discussing the issue altogether. But, without growth, governments have nothing to distribute and inequality becomes a flawed measure of economic and social well-being, claims the author. (International Herald Tribune)
IMF Issues a Warning, But Are the US and China Listening? (October 13, 2007)
The IMF warns that possible unsustainable financial flows could cause a global financial crisis. The warnings are particularly directed towards the US and China and the Fund urges them to take care of their respective trade deficit and undervalued exchange rate. Over the last decade, world economic growth has been diverse and seemingly robust. But the Fund says that a slowdown in growth or a financial crisis could still occur unless the US and China stabilize their financial flows. (The Age)
The IMF Wants to Change. Honest. Just Not Yet. (September 11, 2007)
The author of this Globe and Mail article sees the process of electing a new IMF managing director as an example of all that is wrong with the Fund. The IMF has become infamous for it shady, behind-closed-doors decision making processes. The most likely candidate for the job, French politician Dominique Strauss-Kahn, claims to be the "candidate of reform", who will bring more power to the developing world and create a more transparent Fund. Powerful European governments, however, do not share these views and would not hire the Frenchman if they believed he would act against their wishes. Strauss-Kahn thus stands as a symbol of the continuing undemocratic nature of the institution.
My Vision for the IMF (September 6, 2007)
In this commentary to the Wall Street Journal, newly-elected managing director of the International Monetary Fund, Dominique Strauss-Kahn, presents his suggestions for reform of the Fund. Strauss-Kahn suggests a double majority of quotas and countries in order to increase poor country representation in the Fund's decision-making process. Developing countries and the NGO community should welcome Strauss-Kahn's reform plans, but it is far from certain that he will be able to implement them once he assumes his position in conservative Washington.
IMF candidate Strauss-Kahn urges swift IMF reform (September 6, 2007)
The French candidate for IMF chief, Dominique Strauss-Khan, calls for a reform of the IMF to enhance the bargaining power of all developing countries. Strauss-Khan says that in order for the IMF to maintain its legitimacy, it must seriously revise its decision making process and make the voices of the developing world heard. This reform process must go beyond existing suggestions to expand decision making quotas for the new great economies "India, China and Brazil" and instead increase the participation of all developing countries. The main priority of the IMF is to support developing countries' integration with the world economy, says the candidate. (Reuters)
IMF's Role Questioned (August 27, 2007)
Founding governments set up the IMF at a time when the world economy depended on fixed exchange rates and the gold standard. But with floating exchange rates and greater macroeconomic stability the operation of the IMF is no longer justified. The IMF promotes a situation in which lenders are less careful with their money and default on their loans more often. The author argues that the IMF creates imbalances and instability in the global financial market and is therefore causing more harm than good. He concludes that the fund should be shut down. (Korea Times)
Look Who Needs Austerity Now (July 16, 2007)
This Wall Street Journal piece states that the International Monetary Fund's deficit of US$106 million could triple by 2010. The article argues that although the IMF promotes "global exchange stability", its own functions are financed and dependent on the existence of instability, economic crises and exchange turbulence. During the 1990s the IMF lent to numerous countries but nowadays the demand for its services is not keeping up with its own expansion.
EU Backs Strauss-Kahn to Head IMF (July 10, 2007)
The European Union decided to back Dominique Strauss-Kahn to head the International Monetary Fund following the premature departure of Rodrigo de Rato who will leave in October 2007. But British Finance Minister Alistair Darling said that the job should be open to candidates from other parts of the world besides Europe. Traditionally, the EU always selects the head of the IMF and the US decides who should lead the World Bank. (Associated Press)
IMF Adopts New Currency Rules (June 18, 2007)
The International Monetary Fund has adopted new rules for how countries should carry out their foreign currency policy. IMF Managing Director Rodrigo de Rato stated that this measure will ensure that member states avoid exchange rate policies that result in external instability. This development goes a long way towards satisfying US demands for the IMF to play a more aggressive role on exchange rates. The US has tried for many years to get China to allow its currency to rise in value against the dollar in order to reduce the US-China trade gap. (Associated Press)
US and EU 'Need to Cede Power' in World Bank and IMF (April 21, 2007)
This MercoPress article argues that the US and EU must recognize the shift of economic power toward Asia and Latin America or risk forfeiting world economic leadership. The author warns that emerging economies will become increasingly frustrated with the US and European dominance over the World Bank and IMF and may create regional rivals. However, the article does not fully address the need for greater inclusion of poor countries into the power structures of the two institutions, a key issue for reform.
Evaluation Finds That IMF Misleads the Public about its Role in Africa (April 2, 2007)
This Bretton Woods Project article finds that the IMF's Independent Evaluation Office (IEO) report fails to address fundamental questions about the Fund's role in Sub-Saharan Africa. The report criticized the IMF's African aid program as having a "mismatch" between its reported goals and its actual capabilities. However, the IEO blames this strictly on a lack of "policy clarity", arguing that the IMF's public relations department has given the impression that the Fund committed to do more on aid mobilization and poverty-reduction than it had intended. The article calls for a thorough external review of the Fund's policies in developing countries.
The IMF and Aid to Sub-Saharan Africa (March 12, 2007)
This IMF Independent Evaluation Office (IEO) report dismisses criticism of the IMF's anti-poverty programs as due to "confusion" and a "lack of clarity" rather than any actual wrongdoing on the Fund's part. The IEO congratulates the IMF on its success in "improving performance" in Sub-Saharan African countries, and blames any perceived shortcomings on '"ambiguous" IMF communications that gave the external impression that the Fund committed to do more to reduce poverty than it had actually intended.
The Decline (& Fall?) of the IMF (March 2007)
Although the International Monetary Fund (IMF) once seemed "œimmune to criticism", its culpability in the East Asian financial crisis of 1997 and the Argentine crisis of 2001 led to widespread protest. This timeline of the "rapid succession of blows" suffered by the IMF from June 2005 to March 2007 suggests that "recuperation of the institution"'s reputation [is] permanently out of reach. (Focus on Trade)
Shifting the Debate: A Double Majority System for the IMF (March 2007)
Representatives of the Bretton Woods Project and One World Trust call for a reform in governance and voting systems within the IMF in order to increase the Fund's legitimacy. They suggest that a double majority vote would balance out competing interests of rich and poor countries. At the same time, powerful countries would prefer a double majority system to a substantial change in the quota system traditionally practiced at the Fund. (World Economy and Development)
Bridging the Democratic Deficit: Double Majority Decision Making and the IMF (February 2, 2007)
This Bretton Woods Project and One World Trust report argues that the voting system at the IMF, which allots votes to governments based on economic weighting, puts developing countries at a severe disadvantage and undermines the IMF's "legitimacy and effectiveness". The report proposes a "state-weight double majority" system, in which decisions would require approval by a majority of states in addition to the current economically-weighted voting process.
IMF Nods to China, Mexico, S. Korea and Turkey (September 18, 2006)
At the September 2006 annual meeting of the International Monetary Fund (IMF) and World Bank, member states formally approved the IMF director's proposal to increase the voting shares of China and three other large developing countries. The Fund has proposed a second stage of reforms to slightly increase the voting shares of poorer countries. However, even if the member states approve these reforms, the IMF will only have made "cosmetic changes", critics say. This "minor tinkering" really only masks the fact that both the IMF and World Bank face a "serious crisis" of legitimacy. (Inter Press Service)
IMF, World Bank Face Growing Pressure for Reforms (September 13, 2006)
The IMF director's long-term reform agenda goes beyond the increase in four countries' voting shares proposed for agreement on the September 2006 annual meetings of the Bretton Woods Institutions. Still, two economists from the Brookings Institution find that countries must strike a much more ambitious "grand bargain" that can break "the logjam in global governance reform which has been building for decades. If this does not happen, it will likely mean a progressive weakening of the current global institutions, including the IMF, the World Bank and WTO (World Trade Organisation). (Inter Press Service)
Don't Be Fooled by this Reform: The IMF Is Still the Rich World's Viceroy (September 5, 2006)
The International Monetary Fund did not design its ongoing governance reform to "catalyse further change, but to prevent it", George Monbiot argues in this Guardian article. Four large rapidly-developing countries will have their voting shares increased. Having built up their own capital reserves, these countries no longer risk dependence on the Fund's resources and hence its economic policy decisions. This scenario highlights how those least influenced by IMF policies continue to govern the organization. Ironically, while the Fund demands "good governance" and "transparency" from its "clients" its internal political process could hardly be more hazy and undemocratic.
Africa Calls on Brown to Block IMF Reforms (August 31, 2006)
Managing Director of the International Monetary Fund Rodrigo de Rato has drafted a proposal to increase China, Mexico, South Korea and Turkey's voting shares at the Fund, while delaying steps to increase the influence of the world's poorest countries. With no guarantee that the IMF will implement the proposal's second phase of giving "greater voice to poor countries", African countries fear the reform will weaken their position. British Chancellor of the Treasury, Gordon Brown "has publicly backed calls for a greater voice for African countries at the Fund", and with a special appeal to Britain, African IMF representatives strongly call on other countries to block Rato's proposal. (Guardian)
US Urges the IMF to Reflect New Order (August 28, 2006)
The New York Times reports that the US supports reforming the International Monetary Fund's (IMF) voting structure to give greater weight to China, South Korea, Turkey and Mexico. Some European countries resist such a change as it would lessen their voting power, while poor African nations feel that they would be further marginalized. While the IMF voting system needs reform, the article does not address the IMF's widely questioned role as an enforcer of global financial orthodoxy.
Can We Reform the International Finance Institutions? (August 18, 2006)
Ahead of the September 2006 meetings of the Bretton Woods Institutions (BWIs), this piece from CIVICUS encourages people to join the global mobilization for demanding profound reform of the International Monetary Fund (IMF) and the World Bank. With the IMF suffering from a legitimacy and budget crisis "unparalleled in its 62 years of existence", few question that its current operation must change. The author calls for the BWIs to stop imposing policy conditions that work against the Millennium Development Goals, to start prioritizing labor rights over "investor's rights" and to make the governing structures of the institutions more equitable and open.
Renewing the IMF's Commitment to Low-Income Countries (July 31, 2006)
The Director of the International Monetary Fund (IMF), Rodrigo de Rato, talked about "refocusing" policies for poor countries during his speech at the Center for Global Development. However, he suggested the same methods that drove IMF loan recipients into the ground in the past few decades. Although the Fund claims to understand the needs of poor borrowing countries, its unwavering emphasis on stable macroeconomic conditions overshadows the challenges specific to each country. (International Monetary Fund)
European CSO Open Statement on Governance Reform of the IMF (July 17, 2006)
In anticipation of the September 2006 Annual Meetings of the International Monetary Fund and the World Bank Group, more than 35 European NGOs strongly urge their governments to join forces in demanding fundamental reform of IMF governance. The NGOs call for a combination of the present weighted-voting with a one-country one-vote system. They further demand a more open leadership selection that allows for greater geographical diversity in top positions and publication of IMF board meeting transcripts. (Bretton Woods Project)
Globalisation: The Role of the IMF (July 13, 2006)
The United Kingdom's House of Commons Treasury Committee assesses the changing role of the International Monetary Fund (IMF). It suggests that the IMF could better establish its position as an unbiased, neutral body by increasing both openness in decision making and representation of stakeholders. The report addresses issues of governance, surveillance and analysis, lending, financing, and the UK's relationship with the IMF.
Preserving Disorder: IMF Policies and Kenya's Health Care Crisis (June 1, 2006)
This Pambazuka article explains that the International Monetary Fund (IMF) intended Kenyan public sector spending cuts to keep inflation low, but did so at an unacceptable cost. The author condemns the IMF for demanding fewer personnel such as health staff on the government payroll while witnessing the deterioration of the health care system. Furthermore, many economists question IMF reliance on low inflation since they find that moderate inflation encourages growth.
World Bank and IMF Conditionality: A Development Injustice (June 2006)
This Eurodad report critiques International Monetary Fund (IMF) and World Bank lending policies. The conditions that these institutions impose on already impoverished borrowers further the administrative and economic burdens of these governments. Eurodad suggests that the IMF and the World Bank reconsider the conditionality requirements for loan approval.
IMF Director Makes Uninspiring Choice for Deputy (May 19, 2006)
Rodrigo de Rato, managing director of the International Monetary Fund (IMF), nominated John Lipsky as first deputy managing director. IMF's new #2 has a similar approach to IMF policies as his predecessor Anne Krueger, who continuously pushed poor countries to liberalize their capital markets. Lipsky, vice chairman of JP Morgan investment bank, also earned many critiques for blaming the Asian financial crisis of the 1990s on Asian countries instead of international investors. The Bretton Woods Project regrets that poor countries missed their chance to challenge the tradition that a US citizen holds IMF's second highest rank.
Afterthoughts: Critics Plan Offensive as IMF-World Bank Crisis Deepens (April 27, 2006)
The International Monetary Fund (IMF) faces "a huge squeeze on the budget", and the World Bank approaches an even bigger crisis, INQ7 argues. Rich countries continue to dictate some of the Bank's most important decisions and poor countries increasingly turn elsewhere to obtain loans. After years of trying to reform the Bretton Woods institutions, some NGOs have changed their strategies and are now seeking to disempower the two institutions.
IMF World Bank: Donor Nations to Focus on Growing States (April 24, 2006)
At the annual Spring Meeting of the International Monetary Fund (IMF) and the World Bank, the IMF's 184 member countries authorized proposals that will increase the influence of a few emerging economies, such as China and Turkey. However, the US will probably oppose any significant decrease of its 17% share in votes, since it benefits from being the Fund's only veto power. The World Bank discussed how poor countries could cope with the effects of climate change, produced by rich countries' industries. To cut their own greenhouse emissions, poor countries request financial support from the "polluters". (New York Times)
Booming Economy Leaves the IMF Groping for Mission (April 21, 2006)
With increased reserves and better access to private lending, many poor countries have paid off their debt to the IMF in advance, gaining independence from the IMF's strict conditions on national public policies. The Fund not only faces serious income losses, but also struggles in search of a new mission. The Wall Street Journal looks at the different approaches to restructure the IMF, illustrating the Fund's general shift from a lender of last resort to an institution offering policy advice on governments' request.
European Parliament Amends IMF Stragegic Review (March 23, 2006)
The resolution on necessary changes to IMF's structure and politics approved by the European Parliament on March 14, 2006, misses some of the key elements mentioned in its original version. The EU Parliament deleted important paragraphs, which originally criticized the IMF for imposing neoliberal conditions on poor countries and called for a reform of its governing body. (Eurodad)
Latin America Unchained (March 16, 2006)
After decades of promoting privatization and market liberalization throughout Latin America, the International Monetary Fund (IMF) and its biggest shareholder, the US, are loosing influence over national politics in the region. An increasing number of poor countries repay their debts to the IMF earlier than initially scheduled to regain economic and financial sovereignty. Nevertheless, the IMF's evaluation of a country's economic performance remains a guideline to many other public or private investors seeking profits in the region. (TomPaine)
Unable to Vote with One's Feet? Developing Countries and the IMF (March 2, 2006)
Poor countries highly depend on the IMF's evaluation of their macroeconomic policies, not only to get affordable loans from the fund but also to receive development assistance from rich countries. However, many development experts agree that the "one-size-fits-all approach" and the strict macroeconomic conditions requested by the IMF can undermine a country's ability to grow. This article calls on the IMF to provide countries with a range of political options they can choose from. In addition, Pambazuka asks the IMF to reform its governing body, enabling poor countries to better participate in the fund's decision making.
Deficit Forces IMF to Rethink Role (February 6, 2006)
The International Monetary Fund (IMF) lost some of its biggest borrowers in early 2006. This leaves the institution with a widening budget shortfall. Many countries repay their debt to the fund to free themselves from interest payments as well as from the Fund's neoliberal pressure on foreign and domestic politics. But with US$ 195 billion of reserves backing up the operating budget of US$ 2.3 billion, financed by debtors' interest payments, the Fund is far from going broke. (Bloomberg News)
European Parliament Report on the Strategic Review of the International Monetary Fund (February 1, 2006)
On March 14, 2006, the European Parliament votes on this report compiled by its Economic and Monetary Affairs Committee. The committee proposes changes to the IMF's voting system, and criticizes the increasing number of conditions imposed on poor countries and the negative effects of IMF stabilization policies on social sectors. The report also asks the IMF to use the Millennium Development Goals instead of export indicators to classify the tolerable level of debt of poor countries.
US Upbeat on IMF Quota Deal, Europe Holds Out (January 28, 2006)
As Asian countries like India and China gain more economic power, they demand a higher representation within the International Monetory Fund (IMF). The United States and the European Union struggle against giving up parts of their unrestricted power or even changing the widely criticized voting structure. However, poor countries will continue to suffer from IMF's decisions as long as the organization pushes for its neoliberal agenda, opposing any protection of weakly developed markets. (Reuters)
IMF Occupies Iraq, Riots Follow (January 3, 2006)
The International Monetary Fund is joining the US in occupying Iraq, argues this article. The Fund is "extorting" money by tying a debt-forgiveness deal to the privatization of the domestic market (particularly petroleum products). These measures, raising prices of public transportation and cooking gas, worsen social and political conditions in Iraq. The Fund, far from reviewing its strategies and promoting solutions linked to "political realities", still reflects the neoliberal orthodoxy and the interests of the US administration. (Progressive)
IMF Identity Crisis (December 12, 2006)
When the International Monetary Fund (IMF) evolved from a specialized monetary organization into a macro-economically oriented development financing institution in the 1970s, it failed to adapt its governance structures to changing operations. Interfering with any issue that could affect a country's trade balance and monetary situation, the IMF assumed important policy responsibilities, but without becoming accountable to those affected by the policies. As the current geopolitical climate is not conducive to creating any alternative to the IMF, the response to the Fund's present legitimacy and relevancy crisis must be a comprehensive reform of the IMF's governance, including the appointment of an IMF ombudsman, says the author of this Foreign Policy In Focus article.
IMF Debt Relief Welcomed as "First Step" (December 21, 2005)
The International Monetary Fund (IMF), following the promises of the Group of Eight in July 2005, offered a 100 percent debt cancellation for 18 "heavily indebted" countries. More countries might eventually qualify for debt relief, the Fund also announced, but only if they demonstrate "satisfactory progress in a few policy areas". Fearing that the IMF could tie debt relief to economic benchmarks, anti-debt campaigners urge further actions to eliminate all forms of debt for poor countries. (Inter Press Service)
Reforming the IMF: Back to the Drawing Board (November 2005)
This Third World Network paper prescribes changes in International Monetary Fund (IMF) policy and operational procedures. This lengthy report critiques the IMF for its deference to rich countries and its tendency to become involved in long-term development- properly the responsibility of other institutions. The IMF could serve poor countries by focusing on short-term issues such as countering fluctuations in the trade balance, policy surveillance, and management of unstable financial flows in emerging markets.
IMF Policies Thwart Poverty Goals (September 19, 2005)
Two reports from ActionAid International warn that International Monetary Fund (IMF) policies threaten poor countries both politically and economically. To achieve the Millennium Development Goals, governments need to increase their expenditures on social and health programs, but the IMF imposes strict constraints on their public spending. Once again, as in the past, "government decisions are subordinate to the IMF rules and directions". (Inter Press Service)
Niger: The IMF and World Bank's Invisible War on Africans (September 1, 2005)
The author of this article charges that the "western powers" are responsible for the famine crisis in Niger. In recent years, neoliberal policies of the International Monetary Fund have contributed to famine in several areas of Africa, most recently in Niger. Surprisingly (or not), one IMF-imposed condition required that countries receiving aid sell off their grain reserves. (Kilombo)
Operation Corporate Freedom: The IMF and the World Bank in Iraq (September, 2005)
The Paris Club of Creditors, which includes the G8 industrialized countries, is using the promise of debt cancellation as leverage for controlling Iraq's new economic structure. In exchange for forgiveness of its national debt, Iraq must accept IMF and World Bank economic liberalization policies. Though the agreement appears to benefit Iraq, its provisions would open up Iraq's economy to foreign corporations by privatizing state-owned industries and curtailing public services. (50 Years Is Enough)
IMF and EU Are Blamed for Starvation in Niger (August 1, 2005)
Rich country governments could have acted to prevent the hunger crisis in Niger but donor nations ignored the World Food Programme's first call for funds for Niger in fall 2004, says the Independent. Instead, the International Monetary Fund and the European Union pressed Niger to introduce a 19 percent tax on foodstuffs, making food more expensive and contributing to the hunger crisis.
Can Debtors Be Choosers? (February 2005)
In the middle of its financial crisis, Argentina faced a difficult choice: it could default on its payments to the International Monetary Fund (IMF), or divert domestic income from its recovering economy for debt service. A decision to balance between these two options allowed the country to control its debt more effectively than most other governments facing the same situation. According to this Foreign Policy In Focus article, Argentina's policies could serve as an example for other heavily indebted countries.
Who's Richer, Who's Poorer? (2005)
This Panos toolkit explains what the World Bank's and International Monetary Fund's Poverty Reduction Strategy Papers (PRSPs) are, why they matter and how they work. The toolkit is mainly intended for journalists, but it gives good background information on the PRSP system to anyone interested in international financial institutions' development policies.
