International Monetary Fund

International Monetary Fund
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Founded	27 December 1945
Headquarters	Washington, D.C., United Sttaes

The International Monetary Fund (IMF) is a neoliberal financial organization. Although it is a global organization, 38% of it is controlled by France, Germany, Japan, the United Kingdom, and United States.

The under-representation of low- and middle-income countries on the IMF and World Bank's Executive Boards is exacerbated by the historic "gentleman’s agreement" between the United States and European countries, which has seen the IMF and World Bank led by a European and US national, respectively, since their inception, despite demands for a merit-based, transparent process to be instated.

The IMF lends money to member countries faced with balance of payments problems. In return for financial assistance from the IMF, borrower countries must implement a set of economic reforms. The reforms stipulated by the IMF typically impose austerity measures, increase privatization, and weaken social services.

In his 100-page resignation letter from the IMF, former IMF senior economist Davison Budhoo described the extensive and systematic statistical fraud used by the IMF to impose its policies on developing countries, and explained that the consequences of these policies led to massive poverty and starvation. In the letter, Budhoo wrote "We manipulated, blatantly and systematically, certain key statistical indices so as to put ourselves in a position where we could make very false pronouncements about economic and financial performance". He added that the IMF's policies are made in "utter disregard to local conditions" and lead countries to "self destruct" and "unleash unstoppable economic and social chaos". He also stated that the routine policy packages of the IMF "can never serve, under any set of circumstances, the cause of financial balance and economic growth" and that "the ill-gotten, inadvertent power that we revel in wielding over prostrate governments and peoples - can only serve to accentuate world tensions".

The IMF and World Bank's ability to position their policy prescriptions as "best practice" supported by "robust" theoretical and empirical work oftentimes results in the internalization of Bank and Fund positions by scholars, development practitioners and finance ministers. While maintaining they have no obligations under international human rights law, despite objections of myriad human rights experts and the opinion of one of the Bank’s former General Counsels, both the IMF and World Bank claim their work to eradicate poverty and increase economic growth and stability ultimately contributes to global welfare and the fulfilment of human rights, without clear evidence.

History

The Bretton Woods Institutions (BWIs) are the World Bank and the International Monetary Fund (IMF). They were set up at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944. The idea behind them was ostensibly to help rebuild the economy after the Second World War and to promote international economic cooperation. They were based on the ideas of US Treasury Secretary Henry Morganthau, his chief economic advisor Harry Dexter White, and British economist John Maynard Keynes. The key decisions leading to the establishment of both institutions were largely steered by the US, and to a lesser extent the UK, and during the post-war period the BWIs were significantly influenced by the US’s geopolitical strength.

While the establishment of the Bank and Fund was presented as an apolitical effort to rebuild the world economy in the aftermath of the Second World War, they served as a method to defend or expand the reach of western capitalism in the face of a potential challenge from the Soviet Union, and to promote US interests in particular. In the 1980s and 1990s, the policies championed by the BWIs were inspired in principle by the so-called "Washington Consensus", which focused ideologically on promoting free-market economic policies such as deregulation, privatisation and trade liberalisation, as well as targeting unlimited economic growth, and were implemented primarily through Structural Adjustment Programmes (SAPs). The devastating impacts of SAPs have been enduring and persist to this day.

While historically the IMF and Bank enforced conditionality primarily through SAPs, today, the IMF requires a "letter of intent" from governments requesting a loan. To be approved by the IMF for a loan, the letter requires prior actions, quantitative performance criteria and structural benchmarks – the latter of which continues to contain structural macroeconomic policy reforms.

By country

Argentina

In 2018, the IMF granted Argentina a $56.3 billion loan, causing austerity and privatization. The loan was given the year before an election to favor right-wing candidate Mauricio Macri, an ally of Donald Trump.

Indonesia

The IMF caused a banking crisis in Indonesia that decreased GDP by 14% and increased poverty by 40%.

Jamaica

By 1976, Jamaica had a deficit of $231.2 in Jamaican dollars. The IMF made Jamaica devalue its currency and increase exports. It also forced the government to cut wages, end subsidies and price controls, and privatize industry. The IMF austerity increased the prices of various food items by 71% to 285%. Real wages dropped by 35% in 1978 alone, and the unemployment rate was 30% in 1980.

Sierra Leone

The IMF made Sierra Leone devalue its currency, which also decreased the cost of its minerals, including diamonds. Increased diamond extraction led to a conflict that killed 70,000 people and displaced 2.6 million.

Ukraine

Ukrainian President Viktor Yanukovych negotiated with the IMF before being overthrown in the 2014 Euromaidan coup. Because the IMF was demanding a decrease in wages and health and education spending, Yanukovych decided not to take the loan and began negotiating with Russia instead.

After the coup, the new government took a $26 billion loan from the IMF after cutting its gas subsidy for citizens by 50%. The IMF has offered Ukraine another loan after the beginning of the 2022 Russo-Ukrainian conflict.

Yugoslavia

In the late 1960s and early 1970s, Yugoslavia tried to borrow from the West to expand its economy. When a recession began in the West, the West banned Yugoslavia from exporting goods in order to put the country in debt. The IMF and World Bank forced Yugoslavia to restructure its economy by cutting social spending, freezing wages, eliminating worker-controlled enterprises, and increasing unemployment. Economic growth dropped from 7% per year in the late 1960s to under 3% by the 1980s and was negative by 1990.

Zambia

The IMF forced Zambia's government to eliminate subsidies for pesticides and fertilizers, decreasing agricultural output and leaving seven million people short of food.

COVID-19 pandemic

From January to October 2020, the IMF gave COVID-19-related loans to 81 countries, including 41 in Africa. The majority of these loans required countries to cut government spending or wages. 14 African countries were required to implement austerity measures in 2021 and 19 more had to by 2023.

A 2023 report by Human Rights Watch, analyzing 39 loan programmes from 2020 to 2023 and affecting a combined total of over 1 billion people, found that the austerity imposed by the IMF on recipient countries has led to an erosion of human rights, disproportionally affecting people with low incomes. This is despite the presence of social spending floors - a minimum that a country must spend on social services - which the IMF falsely claims helps protect the most vulnerable in societies from cuts in public spending. In reality, these social spending floors are improperly and vaguely calculated and many people face increased hardship regardless.