- What does the IMF actually do? and Why is its role so Controversial.
- Compiling statistics and evaluation of its member countries economies (Nearly all in UN are members of IMF)
- Intervening in Financial crisis to provide loans and conditions for restructuring the economy to avoid future crisis. In recent months this has involved
- $2.1 billion to Iceland
- $15 billion to Hungary
- $16 billion to Ukraine
- An emerging markets fund of $200bn to stabilise financial systems.
Advantages of the IMF.
- IMF can be seen as lender of last resort. When a country is seeing an exodus of currency due to a balance of payments crisis, the IMF can provide crucial loans to stabilise the economy and prevent a collapse of confidence.e.g. Recent loans to:
- Supporters argue that the IMF can also impose necessary reforms on an economy. Reforms such as privatisation, fiscal responsibility, control of Money supply, and attacking corruption. These policies may cause short term pain, but, are essential for preventing future crisis and long term development.
- Provides an external assessment of the economy, which helps the government to implement popular ideas.
It's critics argue the IMF is dominated by the perspective of the G8 industrialised nations. They argue the IMF insists on blanket policies of structural adjustment which may actually harm the economies they are intervening. See: Criticisms of IMF
Yet, whilst it is easy to criticise the doctor which prescribes a bitter pill, there is a consensus that, now more than ever, we need an effective international organisation which can deal with the many financial crisis that are occurring around the world.