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IMF Criticisms

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Awesome Kid

on 24 October 2014

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Transcript of IMF Criticisms

Thank you for listening.


Does the International Monetary Fund (IMF) serve as an effective multinational institution to stabilise world finance?
From Bhavik, Richa and Randeep
To understand what the IMF is and its functions

Learn how the IMF fails to stabilise world finances using past case studies
International Monetary Fund (IMF)
Disadvantages of the IMF
1. The IMF has created an immoral system generating inequality and poverty

path of greater inequality and environmental destruction.
structural adjustment policies (SAPs); eliminate basic food and transportation subsidies;
devalue national currencies to make exports cheaper;
privatise national assets;
freeze wages

Such measures...

increase poverty
reduce countries' ability to develop strong domestic economies
exploit workers and the environment.

Case Study: Argentina
Disadvantages of the IMF
2. The IMF serves wealthy countries and Wall Street.

rich countries dominate decision-making
system of one dollar, one vote.


The disproportionate amount of power held by wealthy countries
industrialised countries needs are put above the needs of the world's poor majority.

What is the IMF?

The International Monetary Fund (IMF) is an international organisation that was initiated in 1944 at the Bretton Woods Conference and formally created in 1945 by 29 member countries. The IMF's stated goal was to assist in the reconstruction of the world's international payment system post–World War II.

What does the IMF do?
IMF promotes...
international monetary cooperation
exchange rate stability
the balanced growth of international trade
resources to help members in balance of payments difficulties
poverty reduction
Disadvantages of the IMF
3. The IMF is imposing a fundamentally flawed development model

Global South prioritise export production over the development of diversified domestic economies.
shift from food production for local consumption to the production of export crops destined for wealthy countries.
eliminate assistance to domestic industries
providing benefits for multinational corporations
Small businesses and farmers can't compete.

Example - Sweatshop workers
4. The IMF: a secretive institution

Funded by taxpayer money
Member countries do not participate in designing loan packages.
Central bankers and finance ministers
No input from other government agencies
Public scrutiny and independent evaluation.
Disadvantages of the IMF
Disadvantages of the IMF
5. IMF policies promote corporate welfare

Tax breaks and subsidies
Public assets sold off to foreign investors

Case Study:
Guyana - Barama
Haiti prohibited from subsidising its own farmers. Early Rice now sells nearly 50 percent of the rice consumed in Haiti.
Disadvantages of the IMF
Disadvantages of the IMF
7. Exchange Rate Reforms.
Intervention in Kenya in the 1990s
The Goldman scandal
Insistance on blanket reforms.

Joseph Stiglitz
"was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community".

Disadvantages of the IMF
8. IMF bailouts deepen, rather than solve, economic crisis

During financial crises
stepped in as the lender of last resort.
IMF bailouts did not stop the financial panic

Case Study: South Korea - raising interest rates
Video: IMF & EU to sink the Ukraine into neo-feudalism?
6. Conditions of Loans

On giving loans to countries, the IMF make the loan conditional on the implementation of certain economic policies. These policies tend to involve:

• Reducing government borrowing
• Higher interest rates
• Allow failing firms to go bankrupt.
• Structural adjustment. Privatisation, deregulation, reducing corruption and bureaucracy.

Structural adjustment and macro economic intervention make the situation worse.

• For example: Asian crisis of 1997

The never-ending crisis - “The recovery continues but it is weak and uneven,” 3.3%, growth rates would be 0.4 points lower than anticipated in the spring.

To conclude IMF is ineffective in stabilising world finance:
Model of export production - benefits MNCs?
Gov. tax breaks and subsidies - local welfare?
Money lent only if agreed to certain conditions - increase poverty and inequality.
Policies made with no input from government agencies - expert advice?
Rich countries dominate decision-making in the IMF
IMF bailouts deepen, rather than solve, economic crisis

Adept Yogi. 2014. IMF & EU to sink the Ukraine into neo-feudalism?. [Online Video]. 04 April. Available from: http:// www.youtube.com/watch?v=8OG33MeWna8 [Accessed: 20 October 2014].
Brown, R, 2013. Resource Manual to Support Revisions to the UN Guidelines For Consumer Protection. Consumers International, [Online]. v, p1-35. Available at: http://www.consumersinternational.org/media/1425119/ungcp_resource_manual_eng.pdf [Accessed 20 October 2014].
Economics Help. 2014. Criticism of IMF | Economics Help. [ONLINE] Available at: http://www.economicshelp.org/blog/glossary/imf-criticism/. [Accessed 20 October 2014].
Elliott, L. 2014. Financial storm clouds cast a deep shadow over IMF summit | Business | The Observer. [ONLINE] Available at: http://www.theguardian.com/business/2014/oct/12/imf-world-bank-washington-financial-storm-clouds. [Accessed 20 October 2014].
Global Exchange. 2014. Top Ten Reasons to Oppose the IMF | Global Exchange. [ONLINE] Available at: http://www.globalexchange.org/resources/wbimf/oppose. [Accessed 20 October 2014].
IMF. 2014. About the IMF Overview. [ONLINE] Available at: https://www.imf.org/external/about/overview.htm. [Accessed 20 October 2014].
Oximity IMF. 2014. Oximity. [ONLINE] Available at: https://www.oximity.com/org/IMF-1. [Accessed 20 October 2014].
Available from: http:// www.youtube.com/watch?v=8OG33MeWna8
Full transcript