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International Monetary Fund

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International Monetary Fund
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Founded27 December 1945
HeadquartersWashington, 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.[1] The IMF and its fellow Bretton Woods institution, the World Bank, have been led by a European and a US national since their inception, in what has been described as a "gentleman's agreement"[2] despite demands for a merit-based, transparent process to be instated.[2]

Upon membership in the IMF, member countries deposit a sum of money known as a quota subscription, denominated in special drawing rights (SDR),[3][4] which determines how much money they can draw from the IMF, with the sum also determining the voting power of the member country.[5][3] In return for financial assistance from the IMF, borrower countries must implement a set of economic reforms, typically referred to as structural adjustment programs (SAPs).[5] The reforms stipulated by the IMF typically impose austerity measures, increase privatization, and weaken social services.[6] The requirement to implement SAPs in order to receive loan installments is referred to as conditionality.[4] Historically, conditionality was enforced primarily through compliance with SAPs. However, the IMF also began requiring a "letter of intent" to be submitted by governments requesting IMF loans, with prior actions, quantitative performance criteria, and structural benchmarks to be approved for a loan.[7]

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 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"[8] and also compared the IMF's structural adjustment policies to a "terrorist attack".[9] 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"[8] and that "the ill-gotten, inadvertent power that we revel in wielding over prostrate governments and peoples - can only serve to accentuate world tensions".[10]

History[edit | edit source]

The IMF and World Bank, also known as the Bretton Woods institutions (BWIs), were set up at a meeting of 44 country delegations in Bretton Woods, New Hampshire, USA in July 1944.[11] The idea behind this conference was ostensibly to help rebuild the international economic system 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. While the establishment of these institutions was presented as a supposedly apolitical effort, they served as a method to defend and expand the reach of western capitalism in the face of a potential challenge from the Soviet Union, and to promote US interests in particular.[6] The Soviet Union was present at the conference but chose not to join the IMF.[12]:37

Economist Ismail Sabri Abdalla has summarized that the Bretton Woods conference was "essentially a conference about the monetary and financial problems of the industrialized capitalist countries" and that the IMF was not conceived to deal with the specific financial problems of Third World countries. Abdalla states that "[t]he choice made at Bretton Woods was, in the final analysis, the expression of power relations between the USA and its allies; it contributed greatly to the consolidation of US hegemony and a dominance—dependence relationship between the USA and the other countries which joined the IMF system." He explains that because the US dollar was held outside of the US as an international means of payment and reserve asset, the US was in a position to increase its money supply without giving rise to significant inflationary pressures at home, unlike other nations which could only deal with inflation for short periods before imposing deflationary measures.[12]:37-41

In its early years, the IMF established a training institute which was attended by central bank officials from the global South.[12]:41

In 1964, the Group of 77 (G77) emerged at the end of the first United Nations Conference on Trade and Development (UNCTAD).[13] The G77's aims were intended to enable global South countries to articulate and promote their collective economic interests, enhance their joint negotiating capacity, and promote South-South cooperation[14]—considerations which had been effectively unaddressed at the Bretton Woods conference twenty years prior, when many of the concerned countries were still under colonial rule.[15] In the following years, the G77 would continue advocating for policies intended to advance the development of the global South, eventually calling for the establishment of a New International Economic Order (NIEO).[16]

The IMF's scheme of Special Drawing Rights (SDRs) was established in 1969. As distribution of SDRs was based on quotas, the majority went to the industrialized countries, with Third World countries receiving about 25% of the first issue.[12]:43-45

From the Second World War until the 1970s, Keynesianism had held influence in bourgeois economic thinking and international economic regulation was enacted through the system of the gold standard. However, various events in the 1970s would come to influence significant changes in economic policy in the imperial core. Among some of the significant events were the USA's abandonment of the gold standard in 1971, marking the end of the Bretton Woods system,[17][18] as well as the significant oil price rises by the Organization of the Petroleum Exporting Countries (OPEC) which would lead to profits being deposited in dollar-denominated assets and thus a period of increased lending by the imperial core to developing countries at low interest rates,[19][20] followed by a raising of interest rates by the US Federal Reserve[21] which would cause unsustainable debt issues for the countries who had borrowed in USD, a debt crisis which the IMF would play a role in managing.[19][22] Events such as the CIA-backed overthrow of Salvador Allende's government in Chile in 1973 would also be influential in the development of neoliberalism, serving as a "test bed" for the ideas of the "Chicago school" which would eventually come to dominate imperial economic policy.[23][24]

The 1970s saw the end of the Bretton Woods system with the US abandoning the gold standard in 1971, under which the external values of foreign currencies had been fixed in relation to the US dollar, which had been convertible into gold at the price of $35 per ounce.[25] In March 1973, the G10 approved an arrangement in which six members of the European Community tied their currencies together and jointly floated against the US dollar, thus abandoning the Bretton Woods fixed exchange rate system in favor of a system of floating exchange rates. This is regarded as the end of the Bretton Woods system as conceived at its founding in 1944, although the Bretton Woods institutions remain in operation.[17][18]

A flowchart depicting the concept of petrodollar recycling, showing the flow of dollars and oil exports. It says that OPEC countries export oil; the world sends dollars to OPEC countries to pay for imported oil. The OPEC countries deposit dollars in US and European banks. European and US banks then lend these petrodollars to Third World borrowers, leading to debt expansion. The Third World deborts pay debt service, depositing dollars in US and European Banks. The dollars deposited in US and European banks also leads to the Eurodollar market.
A flowchart depicting petrodollar recycling.

Also significant in the 1970s was the oil price rises by OPEC, which resulted in large profits for oil producers, with these oil surpluses largely deposited in dollar-denominated investments, expanding the financial sector of the imperial core. These petrodollars were then lent to developing countries at low interest rates.[20] In 1979, US Federal Reserve chairman Paul Volcker raised interest rates, a period referred to as the Volcker Shock.[21] For developing countries who had borrowed loans in US dollars, the raising of interest rates created a substantial debt problem, which the IMF would come to play a major role in managing.[19][22] This debt crisis is generally considered to have begun in 1982, when Mexico declared that it would no longer be able to service its debt, followed by various other countries around the world declaring a similar inability to repay.[26]

The turn toward neoliberal policies in the 1980s may be contrasted with earlier approaches, in which state intervention in maintaining economic stability and development was a norm, employing concepts such as import substitution industrialization (ISI) and the use of state-owned enterprises (SOEs).[27] While such practices are sometimes described as having failed or are blamed for poor economic performance in the global South, it may be noted that imperialist-led institutions have been described as having instituted a financial "invisible blockade"[28] against countries which pursued socialist or resource nationalist development strategies, using such tactics to purposely foment coups d'etat against leaders like Kwame Nkrumah in Ghana (in 1966)[29] and Salvador Allende in Chile (in 1973),[28] after which right-wing, pro-West governments would be installed and IMF approvals and access to monetary aid and other benefits would open up,[30][31] while the process of privatizations of state enterprises and selling off of national resources began.[32][33] The 1973 coup in Chile and the subsequent implementation of the economic prescriptions of the "Chicago school" of Milton Friedman is often regarded as an important element in the development of what would come to be called neoliberalism, and come to dominate policy at the IMF and related institutions.[23][24]

A chart which says "transfers to developing countries" on one side and "transfers from developing countries" on the other side. The chart's title is "Reversing the flow" and it shows that by 1983, transfers were going from the developing countries to the developed countries.
A chart published by UNICEF in 1992 depicting net financial transfers between industrialized and developing nations between 1980-89.

In the 1980s and 1990s, the policies advocated by the imperialist-led international financial institutions were inspired by the so-called "Washington Consensus" and focused on promoting neoliberal policies, implemented mainly via Structural Adjustment Programs (SAPs).[6][34] According to the International Encyclopedia of Human Geography, the mid-late 1980s was the high point of SAPs, when 64 countries had one in place.[35]

In 1988, describing the internal attitude of the IMF at the time of this neoliberal shift, IMF whistleblower Davison Budhoo wrote that the IMF's aim was essentially to have the global South "'privatised' or die":

About five years ago President Reagan effectively told us to go out and make the Third World a new bastion of free wheeling capitalism, and how we responded with joy, and with a sense of mission! Of course the entire strategy for propagating Third World economic rebirth into unfettered free enterprise was finalized and explicitly stated in the Baker Plan of 1985 and in the eligibility criteria to Enhanced Structural Adjustment Facility to the 62 'poorest' countries of the world. Thus everything we did from 1983 onward was based on our new sense of mission to have the south 'privatised' or die; towards this end we ignominiously created bedlam in Latin America and Africa in 1983-88.[36]

By 1983, more money came from the indebted states to the imperial core than went out as loans and aid. Author Vijay Prashad writes of this phenomenon that, in other words, "the indebted countries subsidized and funded the wealthy nations."[37] He adds that by the late 1980s, the indebted states sent an average of $40 billion more to the G7 than the G7 sent out as loans and aid.[37] In 1992, a report by the United Nations Children's Fund (UNICEF) stated that "Each year, the repayment of capital and interest amounts to approximately $150 billion - roughly three times as much as the developing world receives in aid" and that the debt crisis "has now reached such a point of absurdity that the developing nations are having to transfer financial resources to the industrialized nations rather than the other way round. When all transactions are taken into account [...] the net effect is that the developing world is now transferring $40 to $50 billion a year to the industrialized world."[38] Prashad writes that by 1997, "the total debt owed by the formerly colonized world amounted to about $2.17 trillion, with a daily debt-service payment of $717 million." He further states that between one-third and one-fifth of most indebted states' gross national product was spent on debt service.[37]

By 1998, a Foreign Policy in Focus (FPIF) article commented that "[v]irtually all developing countries [...] have implemented or are in the process of acceding to SAPs."[39]

Structural adjustment programs[edit | edit source]

The concept of "structural adjustment" refers to programs which aim to restructure the economy of a country. Structural adjustment programs (SAPs) are characterized by liberalization and deregulation of the economy as a condition to receive IMF loans, a stipulation referred to as conditionality. The IMF began calling such programs SAPs in the 1980s.[35][40] From the standpoint of achieving their publicly stated aims, SAPs have long been observed to result in devastating impacts and to reproduce colonial relationships,[41][42] drawing criticism and opposition from a variety of segments of society.[43][44] It has been noted by the Bretton Woods Project, a civil society organization critical of the IMF and World Bank, that though the IMF and World Bank claim that their work contributes to global welfare and the fulfillment of human rights, these institutions "lack clear evidence" for their claims and have faced objections by a myriad of human rights experts.[45]

Typical SAP elements include an array of neoliberal measures, such as privatization of state-owned enterprises, devaluation of the national currency, removal of subsidies, cuts to social services, promotion of the production of exports, removal of tariff barriers, removal of restrictions on what can be owned by foreign businesses and banks, and reduction of government spending, among other measures.[40][46] Poverty Reduction Strategies (PRSs), outlined through Poverty Reduction Strategy Papers (PRSPs), a more recent form of IMF program developed in the early 2000s, have been evaluated by some to contain the same elements as SAPs in terms of liberalization, institutional reform, and cost recovery, despite rhetoric which attempts to paint them otherwise.[35]

IMF whistleblower Davison Budhoo described the purpose of SAPs as being to replace any remotely "people-oriented" economic policy with free market policy in every country of the global South, saying that "when we talk of 'structural adjustment' we have nothing else in mind but an irresistible motivation to implement, in every country of the South, the following political agenda: to call an immediate and complete stop to economic policies that can be interpreted as being in the slightest degree 'socialist' or 'populist' or 'people- oriented', or weighted, however slightly, in favour of the poor and economically underprivileged, or based on the collective, social consensus of the population concerned" and to replace such policies with "Reaganite free-wheeling capitalism".[36] Furthermore, Budhoo wrote that the IMF's program "is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives" that "reduces economics to a farce" and "is the recipe for comprehensive disorder and all enfolding disintegration of the fabric of national life - economic, political, social - without reason or rationale or sensitivity to the aftermath."[9]

An article in FPIF observed that SAPs "are driven more by neoliberal ideological principles than by objective evaluations of a country’s specific economic problems and potential" and, as a result, generate an array of economic, social, political, and environmental problems, noting elsewhere in the article that in their wake, SAPs have "bankrupted local industries, increased dependency on food imports, gutted social services, and fostered a widening gap between rich and poor."[39] An article published in the Journal of Comparative Economics notes that when IMF programs fail, the IMF puts most of the blame on errors in implementation and "surveillance gaps" rather than the programs themselves, and that when the IMF's own research shows that programs failed, they call for more reforms and tighter surveillance, and that in the "few cases" when the IMF "admits that the impact of its adjustment programs 'was less-growth friendly than anticipated' [...] it insists that they will be 'paying off' later".[47]

Currency devaluation[edit | edit source]

Devaluation refers to the deliberate downward adjustment of the value of a country's currency. Currency devaluation raises the cost of imports while lowering the cost of exports. Typically this is done with the stated intention of lowering the cost of a country's exports to make them more competitive.[48]

Economist Ismail Sabri Abdalla observes that the currency devaluation often implemented through SAPs has a different effect on industrialized countries than it does on developing countries. Abdalla writes that the increase of exports intended by devaluation is only realistically achievable in countries which are already industrialized and therefore do not have to significantly invest due to the size of existing production capacities and the availability of stocks. In contrast, countries which are less industrialized are not able to quickly adjust to a currency devaluation and raise their exports because they need to import equipment and intermediate products in order to expand their production; devaluation raises the cost of these essential imports, which is reflected in the final production costs, "thereby putting a brake on exports instead of stimulating them."[49]

Historian A.S. Mlambo provides an example of this dynamic in a book on Zimbabwe's adoption of ESAP:

[D]evaluation increases the cost of importing finished products and productive inputs necessary for economic development. This is because, as the prices of the country's exports continue to fall, the cost of acquiring manufactured inputs from the industrialised countries continues to rise. For instance, in 1980, Zimbabwe could buy a tractor from abroad for approximately 100 bales of cotton. By 1983, however, the same tractor cost 130 bales of cotton. Similarly, Tanzania could purchase a seven-tonne truck for 38 tonnes of sisal in 1972, yet by 1982, it took 134 tonnes of sisal to purchase the same type of truck. Primary producers are thus caught in a no-win situation, the IMF and World Bank's alleged benefits from devaluation notwithstanding.[50]:9

As currency devaluation increases the cost of imports, it can also create significant difficulties for countries which rely on substantial food imports.[51] Devaluation can also contribute to the phenomenon of brain drain.[52]

By country[edit | edit source]

Argentina[edit | edit source]

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.[53]

Indonesia[edit | edit source]

The IMF caused a banking crisis in Indonesia that decreased GDP by 14% and increased poverty by 40%.[1]

Jamaica[edit | edit source]

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.[54]

Sierra Leone[edit | edit source]

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.[1]

Ukraine[edit | edit source]

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.[55]

Yugoslavia[edit | edit source]

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.[56]

Zambia[edit | edit source]

The IMF forced Zambia's government to eliminate subsidies for pesticides and fertilizers, decreasing agricultural output and leaving seven million people short of food.[1]

COVID-19 pandemic[edit | edit source]

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.[57]

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.[58]

References[edit | edit source]

  1. ↑ Jump up to: 1.0 1.1 1.2 1.3 Arman Tendulkar (2021-10-11). "The International Monetary Fund: A Vehicle for Modern Day Imperialism" International Policy Digest. Retrieved 2022-06-19.
  2. ↑ Jump up to: 2.0 2.1
    “The under-representation of low- and middle-income countries on the BWIs’ Executive Boards is exacerbated by the historic ‘gentleman’s agreement’ between the United States and European countries, which has seen the Fund and Bank led by a European and US national, respectively, since their inception. Civil society has long called for this opaque system to be replaced with a merit-based, transparent process. However, the April 2019 appointment of World Bank President David Malpass – a US national who ran unopposed for the Bank’s top job – demonstrated that the gentleman’s agreement remains alive and well despite civil society opposition”

    "What are the main criticisms of the World Bank and the IMF?" (2019-06-04). Bretton Woods Project. Archived from the original on 2025-01-29.
  3. ↑ Jump up to: 3.0 3.1 "IMF Quotas". International Monetary Fund. Archived from the original on 2025-03-15.
  4. ↑ Jump up to: 4.0 4.1
    “SDR: Special Drawing Right. An internal account and reserve asset created by the International Monetary Fund in 1970. The value of SDR's varies proportionately with a basket of five national currencies (the US dollar, sterling, deutschmark, the french franc and the yen). [...] SDR's are distributed among the participating countries in proportion to their IMF quota. Under the SDR facility, member countries of the IMF may use their SDRs either bilaterally to buy back their own currency from another member country if that country is willing to sell, or through the Fund. Under a so-called Standby Arrangement, member governments may borrow more than their quota, provided they satisfy the Fund that they observe certain key policy indicators prescribed by the Fund. This is referred to as IMF Conditionality.”

    Ankie Hoogvelt (1987). The crime of conditionality: Open letter to the managing director of the International Monetary Fund (IMF). Review of African Political Economy. doi: 10.1080/03056248708703717 [HUB]
  5. ↑ Jump up to: 5.0 5.1 “How Does the IMF Operate?” Bretton Woods Project. August 23, 2005.
  6. ↑ Jump up to: 6.0 6.1 6.2 “What Are the Main Criticisms of the World Bank and the IMF?” Bretton Woods Project. June 4, 2019. Archived 2022-09-18.
  7. ↑
    “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. Despite efforts to ‘streamline’ the number of conditions in the face of severe criticism, the IMF’s 2018 Review of Program Design and Conditionality found that the number of structural conditions is on the rise.”

    "What are the main criticisms of the World Bank and the IMF?" (2019-06-04). Bretton Woods Project. Archived from the original on 2025-03-15.
  8. ↑ Jump up to: 8.0 8.1
    “Our policy package for Trinidad and Tobago - i.e. the conditionality that we are demanding for any Fund program, and the measures that we are asking the authorities to implement as a necessary precondition for a loosening of the iron grip that we now hold on the fortunes of the country in so far as its recourse to international capital markets and official bilateral donors are concerned - can be shown, even in a half-objective analysis, to be self-defeating and unworkable. That policy package can never serve, under any set of circumstances, the cause of financial balance and economic growth. Rather, what, in effect, we are asking the Government of Trinidad and Tobago to do is to self-destruct itself and unleash unstoppable economic and social chaos.”

    Davison L. Budhoo (1988). Enough is Enough: 'Part I'.
  9. ↑ Jump up to: 9.0 9.1
    “Quite frankly, our "program" is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives; it reduces economics to a farce. It is the recipe for comprehensive disorder and all enfolding disintegration of the fabric of national life - economic, political, social - without reason or rationale or sensitivity to the aftermath. More pointedly, our action in Trinidad and Tobago does not relate to any clear set of economic principles - however misguided and inappropriate such principles may be. We're just striking out wildly in every direction and at everything in our path; we strike out thus and we create maximum grief and confusion. It's like a terrorist attack, you know, splashing around rifle fire and bazookas and even nerve gas indiscriminately so as to get the highest death toll in the shortest possible time.”

    Davison L. Budhoo (1988). Enough is Enough: 'Part IV'.
  10. ↑
    “Self-defeating and unethical as it may seem, what we have done and are doing in Trinidad and Tobago is being repeated in scores of countries around the world, particularly in Latin America and the Caribbean and Africa. Sometimes we operate with greater restraint, sometimes with less, but the process and the result are always the same: a standard, pompous recital of doctrinaire Fund "advice" given uncompromisingly and often contemptuously and in utter disregard to local conditions and concerns and susceptibilities. It is the norm now rather than the exception, that when our "one-for-all and all-for-one" Fund cap doesn't fit the head for which it is intended, we cut and shave and mangle the head so as to give the semblance of a fit. Maybe we bust up the head too much in Trinidad and Tobago, but have no illusions that the way We operate throughout the world - the narrow and irrelevant epistemology underlying our work, the airs and affectations and biases and illusions of superiority of our staff vis-Á-vis government officials and politicians in the developing world, our outrageous salaries and perks and diplomatic immunities and multiple "entitlements", the ill-gotten, inadvertent power that we revel in wielding over prostrate governments and peoples - can only serve to accentuate world tensions, expand even further the already bulging ranks of the poverty-striken and destitute of the South, and stunt, worldwide, the human soul, and the human capacity for caring and upholding norms of justice and fairplay.”

    Davison L. Budhoo (1988). Enough is Enough: 'Part I'.
  11. ↑ Kurt Schuler and Mark Bernkopf (2014). Who was at Bretton Woods?. [PDF] New York: Center for Financial Stability.
  12. ↑ Jump up to: 12.0 12.1 12.2 12.3 Ismail-Sabri Abdalla (1980). The Inadequacy and Loss of Legitimacy of the IMF. [PDF] Development Dialogue.
  13. ↑ Muchkund Dubey (2014-05-16). "The Historic Importance of G-77" UN Chronicle.
  14. ↑ "About the Group of 77". The Group of 77 at the United Nations.
  15. ↑
    “The major Third World presence was that of the Latin American countries (which were all there except Argentina). Africa and Asia were represented by only seven countries apart from China, all of which were in one way or another under British or US control or influence. The remainder of Africa, Asia and the Caribbean was represented by proxy, i.e. by the colonial powers. It is easy to imagine how Third World delegates at Bretton Woods, despite some attempts to put development issues on the table, were overwhelmed by the weight of the big powers. Even more relevant in this respect is the fact that national liberation movements struggling to acquire political freedom were not yet fully conscious of the need for Third World solidarity, nor of the tough demands of development. Thus, it is by no means an exaggeration to state that the spirit of the Group of 77, born some 20 years later, was completely absent from Bretton Woods; indeed, the G.77, as such, only penetrated the IMF precincts in 1979. In the declared purposes of the IMF, no mention was made of the particular problems of Third World countries.”

    Ismail-Sabri Abdalla (1980). The Inadequacy and Loss of Legitimacy of the IMF (p. 37). [PDF] Development Dialogue.
  16. ↑ Karl P. Sauvant (2014-05-16). "The Early Days of the Group of 77" UN Chronicle. Archived from the original on 2025-04-19.
  17. ↑ Jump up to: 17.0 17.1
    “In 1971, US debt skyrocketed, and the US dollar was in crisis. President Nixon decided to decouple the US dollar exchange rate from the price of gold. The US dollar depreciated sharply, and the Bretton Woods international financial system collapsed.”

    Ding Yifan (2024-12-17). "What Is Driving the BRICS' Debate on De-DolIarisation?" SouthViews. Archived from the original on 2025-03-31.
  18. ↑ Jump up to: 18.0 18.1
    “The US decision to suspend gold convertibility ended a key aspect of the Bretton Woods system. The remaining part of the System, the adjustable peg disappeared by March 1973. [...] The collapse of the Bretton Woods system between 1971 and 1973 led to the general adoption by advanced countries of a managed floating exchange rate system, which is still with us.”

    Michael Bordo (2017-04-23). "The operation and demise of the Bretton Woods system: 1958 to 1971" Centre for Economic Policy Research.
  19. ↑ Jump up to: 19.0 19.1 19.2
    “Internationally the oil crisis of the early 1970s generated a recession but also huge profits for oil producers. With vast amounts of money in the banks, but fewer productive outlets in the capitalist core, bankers looked for other avenues for profitable investment. These so-called petrodollars were lent to developing countries at low interest rates. In the late 1970s, as one of the earliest neoliberal attacks on inflation in the core economies, interest rates were raised. For those developing countries with loans from Northern banks, this created a massive and unsustainable debt problem with Mexico famously declaring itself bankrupt in 1982. For the banks, this was a huge (and embarrassing) issue that could threaten the legitimacy of the international financial system and the privileges of wealth it secured. Hence, a mechanism was needed to repay the debt, which ensured that these economies did not decline further so that funds were available for debt servicing. It is at this critical point that structural adjustment first appears.”

    Giles Mohan and Frangton Chiyemura (2020). International Encyclopedia of Human Geography: 'Structural adjustment'. doi: 10.1016/B978-0-08-102295-5.10712-7 [HUB]
  20. ↑ Jump up to: 20.0 20.1
    “The dollar’s future remained uncertain until the oil price rise by the Organization of Petroleum Exporting Countries (OPEC) and US success in convincing OPEC governments to deposit oil surpluses in dollar-denominated investments. The massive spurt in international capital flows these petrodollars created was the first of the many financializations – distinct phases of financialization – that would be necessary for the dollar’s world role, and the most benign. With sluggish advanced economies not demanding capital, US banks lent to developing and communist countries for productive investment, setting off a spurt of debt-led industrialization on historically low real interest rates. By the late 1970s, however, the dollar headed down again, requiring the United States to cooperate with other major industrial economies in regular G-7 meetings to stabilize exchange rates and maintain growth. However, when the second oil shock hit, this time without any significant increase in capital inflows into the United States, the dollar plunged again. The new Fed chairman, Paul Volcker, allowed interest rates to rise to double digits to shore up the dollar, causing a severe recession.”

    Radhika Desai (2013). Geopolitical Economy.
  21. ↑ Jump up to: 21.0 21.1 Catalina Espinosa (2024-02-09). "Volcker Shock: federal funds, unemployment and inflation rates 1979-1987" Statista.
  22. ↑ Jump up to: 22.0 22.1
    “The dollar remained strong despite the ‘twin deficits’ because capital flowed into the United States in three ways: in response to Volcker’s high interest rates; as debt repayments from the third world thanks to the International Monetary Fund (IMF)’s management of the resulting third world debt crisis to save US and Western banks; and from Japanese financing of US deficits in exchange for access to US markets. These capital inflows constituted a second major burst of dollar-denominated financialization.”

    Radhika Desai. Geopolitical Economy.
  23. ↑ Jump up to: 23.0 23.1
    “Although the neo-liberal agenda for Latin America was formed in the context of the 1982 debt crisis, the orthodox programme of structural adjustment was pioneered in Chile by the military regime installed in 1973 with a right-wing political project to arrest and reverse the development process under way, and to demobilise the social and political forces which, with Salvador Allende, had captured the presidency and threatened the status quo of the propertied and political classes. The economic reforms designed by a team of technocrats, the 'Chicago Boys', and implemented by the regime between 1975 and 1981 were so deep and far-reaching that Ronald McKinnon, a World Bank economist and one of the architects of the Washington Consensus on appropriate policy, observed in a Central Bank memo [Santiago 1977] that "the Chilean government has made more sweeping rationalisations... than has occurred in any economy in modern history".”

    Henry Veltmeyer (1993). Liberalisation and Structural Adjustment in Latin America: In Search of an Alternative, vol. Vol. 28, No. 39. Economic and Political Weekly.
  24. ↑ Jump up to: 24.0 24.1
    “In September 1973, a US-backed coup d’état in Chile ousted the left-leaning Salvador Allende and replaced him with General Pinochet. Pinochet and his allies in the United States put in place an economic model that removed labor regulations and brutally suppressed dissent. The intellectual support came from a group of economists based in the University of Chicago and led by Milton Friedman. These “Chicago Boys” were the architects of the neoliberal policies in Chile, which acted as a test bed for ideas that would soon come to dominate policy.”

    Giles Mohan and Frangton Chiyemura (2020). International Encyclopedia of Human Geography: 'Structural Adjustment'. doi: 10.1016/B978-0-08-102295-5.10712-7 [HUB]
  25. ↑ "Nixon and the End of the Bretton Woods System, 1971–1973". Office of the Historian, United States Department of State.
  26. ↑ Department of Economic and Social Affairs of the United Nations Secretariat (2017). World Economic and Social Survey 2017 (p. 50). United Nations.
  27. ↑ Henry Veltmeyer (1993). Liberalisation and Structural Adjustment in Latin America: In Search of an Alternative, vol. Vol. 28, No. 39. Economic and Political Weekly.
  28. ↑ Jump up to: 28.0 28.1
    “The third leg of U.S. policy has come to be known as the "invisible blockade" of loans and credits to Chile. For years historians have debated if such a blockade existed, or whether Allende's socialist economic policies led to a loss of economic credit. Recently declassified NSC records on Chile show conclusively that the Nixon Administration moved quickly to shut down multilateral and bilateral foreign aid to Chile—before Allende had completed a month in office. At the Inter-American Development Bank (IDB), the NSC simply informed the U.S. representative that he did not have authority to vote for loans to Chile. According to a SECRET/NODIS "Status Report on U.S. Stance on IDB Lending to Chile"—prepared for Dr. Kissinger several weeks after Allende's inauguration—"the U.S. Executive Director of the Inter-American Development Bank understands that he will remain uninstructed until further notice on pending loans to Chile. As ... an affirmative vote by the U.S. is required for loan approval, this will effectively bar approval of the loans." At the World Bank, U.S. officials worked behind the scenes to assure that Chile would be disqualified for a pending $21 million livestock-improvement credit and future loans.”

    Peter Kornbluh (2007-09-25). Declassifying U.S. Intervention in Chile The North American Congress on Latin America.
  29. ↑
    “FYI, we may have a pro-Western coup in Ghana soon. Certain key military and police figures have been planning one for some time, and Ghana’s deteriorating economic condition may provide the spark. The plotters are keeping us briefed, and State thinks we’re more on the inside than the British. While we’re not directly involved (I’m told), we and other Western countries (including France) have been helping to set up the situation by ignoring Nkrumah’s pleas for economic aid. The new OCAM (Francophone) group’s refusal to attend any OAU meeting in Accra (because of Nkrumah’s plotting) will further isolate him. All in all, looks good.”

    Robert W. Komer (1965-05-27). Memorandum From Robert W. Komer of the National Security Council Staff to the President’s Special Assistant for National Security Affairs (Bundy) Office of the Historian, United States Department of State. Archived from the original on 2025-03-15.
  30. ↑
    “The U.S.A. and Britain could, if they had wanted, have fixed a reasonable price for cocoa and so have eased the economic situation in Ghana. They had no wish to do so. On the contrary, the forcing down of the price of cocoa was part of their policy of preparing the economic ground for political action in the form of a "coup" and a change of government.

    Throughout 1965, and before then, the U.S. government exerted various other forms of economic pressure on Ghana.

    It withheld investment and credit guarantees from potential investors, put pressure on existing providers of credit to the Ghanaian economy, and negated applications for loans made by Ghana to American-dominated financial institutions such as the l.M.F.

    This pressure ended smartly after 24th February 1966 when the U.S. State Department's political objective had been achieved. The price of cocoa suddenly rose on the world market, and the I.M.F. rushed to the aid of the "N.L.C."

    [...] it brought results in the shape of the usual handouts granted by imperialists and neo-colonialists to well-behaved puppets. Within two weeks of the ending of legal government in Ghana, the army and police traitors received an invitation to send a mission to Washington for talks with the International Monetary Fund and World Bank officials. The upshot was a £13 million stand-by credit received from the l.M.F. and eventually new loans from the U.S.A., Canada and West Germany. In addition, supplies of various foodstuffs and other consumer goods were promised to provide the necessary window dressing for the new regime.”

    Kwame Nkrumah (1968). Dark Days in Ghana.
  31. ↑
    “The coup in Ghana is another example of a fortuitous windfall. Nkrumah was doing more to undermine our interests than any other black African. In reaction to his strongly pro-Communist leanings, the new military regime is almost pathetically pro-Western.

    The point of this memo is that we ought to follow through skillfully and consolidate such successes. A few thousand tons of surplus wheat or rice, given now when the new regimes are quite uncertain as to their future relations with us, could have a psychological significance out of all proportion to the cost of the gesture. I am not arguing for lavish gifts to these regimes—indeed, giving them a little only whets their appetites, and enables us to use the prospect of more as leverage.”

    Robert W. Komer (1966-03-12). "260. Memorandum From the President’s Acting Special Assistant for National Security Affairs (Komer) to President Johnson" Office of the Historian, United Stated Department of State. Archived from the original on 2025-02-07.
  32. ↑
    “The World Bank and the InterAmerican Bank, among others, refused to grant Chile credit during Allende’s experiments, and his social reform agenda had provoked the elite’s anger. For this reason, the Christian Democrats who spoke for that elite welcomed Pinochet’s coup. [...] That Allende had nationalized the U.S.-owned firms of American Anaconda Copper, ITT, and Kennecott led Nixon to authorize $10 million to “make the economy scream.” When Pinochet came to power, the United States did its utmost to repair all frayed relations between the transnational firms and the Chilean bureaucracy. The telecommunications giant ITT had demanded $95 million as compensation from Allende. The Pinochet junta gave them $235 million. In 1975, Chile welcomed the economist Milton Friedman, who advocated “shock treatment” and austerity to increase growth rates. The general’s coup of Pinochet restored the rule of the oligarchy and the transnational corporations, much to the satisfaction of the U.S. government.”

    Vijay Prashad (2007). The Darker Nations.
  33. ↑
    “Businessmen from the U.S.A., from Britain, West Germany, Israel and elsewhere, flew into Ghana like vultures to grab the richest pickings. Virtually all the state-owned industries developed by my government were allowed to pass into private ownership. These included such enterprises as The Timber Products Corporation, The Cocoa Products Corporation, the Diamond Mining Corporation, the National Steel Works, the Black Star Shipping Line, Ghana Airways, and all the stateowned hotels.”

    Kwame Nkrumah (1968). Dark Days in Ghana.
  34. ↑
    “Gradually the IMF created procedures for accountability and punishment, generally as a poor report against the country that might lead to a dearth of commercial finance. States outside the G-7 that took IMF money had to submit to a total makeover of their political and economic relations. In March 1980, the World Bank would give these sorts of policies a name, “Structural Adjustment loan,” which would soon be called the Structural Adjustment Policy (SAP).”

    Vijay Prashad (2007). The Darker Nations.
  35. ↑ Jump up to: 35.0 35.1 35.2 Giles Mohan and Frangton Chiyemura (2020). International Encyclopedia of Human Geography: 'Structural Adjustment'. doi: 10.1016/B978-0-08-102295-5.10712-7 [HUB]
  36. ↑ Jump up to: 36.0 36.1 Davison L. Budhoo (1988). Enough is Enough.
  37. ↑ Jump up to: 37.0 37.1 37.2 Vijay Prashad. The Darker Nations.
  38. ↑ UNICEF (1992). The State of the World's Children (p. 43). [PDF]
  39. ↑ Jump up to: 39.0 39.1 Jason Oringer and Carol Welch (1998-04-01). "Structural Adjustment Programs" Foreign Policy in Focus. Archived from the original on 2025-03-24.
  40. ↑ Jump up to: 40.0 40.1
    “The IMF/World Bank reform package requires the borrowing country to restructure its economy through demand management, currency devaluation, trade liberalisation, elimination of price controls, reduction of budget deficit, removal of government subsidies on goods and services and increasing interest rates to their natural market levels to discourage capital flight. Other requirements are that the borrowing country should reduce state investment in the economy, privatise public such as parastatals and open up the local economy to foreign investment.”

    A.S. Mlambo (1997). The Economic Structural Adjustment Programme: The Case of Zimbabwe, 1990-1995: 'The IMF/World Bank Reform Package: An Analysis' (p. 2). Harare: University of Zimbabwe Publications. ISBN 908307-72-1
  41. ↑
    “The IMF has proved to be a basically political institution. It tends to reproduce colonial relationships by constraining national efforts which promote basic structural transformations in favour of the majorities. Its orientation is fundamentally incompatible with an equitable conception of structural change, self-reliance and endogenous development. The IMF medicine systematically favours the more conservative sectors of society and traditional centres of power. Worse still, when these sectors constitute real national power alternatives, the Fund prescriptions and its manner of dispensing them become an unabashed form of external political intervention in their favour. The Fund's policies, conceived to achieve 'stabilization', have in fact contributed to destabilization and to the limitation of democratic processes.”

    The South-North Conference on The International Monetary System and the New International Order (1980). The Arusha Initiative (p. 14). [PDF] Development Dialogue.
  42. ↑
    “SAPs have been successful in ensuring debts are repaid. This net transfer of finance from the poor to rich countries can be viewed as a form of tribute, not dissimilar to the actions of colonial governments in the 19th and 20th centuries.”

    Giles Mohan and Frangton Chiyemura (2020). International Encyclopedia of Human Geography: 'Structural adjustment' (p. 65). doi: 10.1016/B978-0-08-102295-5.10712-7 [HUB]
  43. ↑
    “At one level, the response of popular sector to SAPs is clear enough. There is no dearth of evidence of opposition and resistance. In case after case, implementation of austerity and structural adjustment measures in the region have brought about an immediate or eventual response in the form of social unrest, political protest, and the organised strike activity.”

    Henry Veltmeyer (1993). Liberalisation and Structural Adjustment in Latin America: In Search of an Alternative, vol. vol. 28, no. 39. Economic and Political Weekly.
  44. ↑
    “IMF/WorId Bank structural adjustment programmes have been widely criticised for their role in worsening the economies of the borrowing countries and deepening poverty among the borrowing country populations.”

    A.S. Mlambo (1997). The Economic Structural Adjustment Programme: The Case of Zimbabwe, 1990-1995: 'The IMF/World Bank Reform Package: An Analysis' (p. 1). Harare: University of Zimbabwe Publications.
  45. ↑
    “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 Bank and Fund 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. First, this ‘win-win’ scenario has been the subject of countless critiques pointing to obvious trade-offs and conflicts between ‘pro-growth’ and ‘pro-equity’ policies, including in a paper by the IMF’s own research department in 2014.

    Second, according to data on poverty rates, the vast majority of the poverty eradication achieved during the last 40 years is actually largely attributed to China, which has certainly not followed the policy prescriptions of the BWIs (see Observer Winter 2017-2018), while the IMF’s 2018 conditionality review found several IMF programmes where “debt overshot projections by significant margins, reflecting disappointing growth and higher fiscal deficits”, with lower programme completion rates. Additionally, the pace of poverty reduction is reportedly slowing, while the number of people living in extreme poverty in Africa is increasing, and even the way the Bank measures poverty levels remains highly disputed. These and other critiques call into question the efficacy of the BWIs’ policy prescriptions more generally and their theoretical ability to effectively contribute to the fulfilment of human rights in the first place.”

    "What are the main criticisms of the World Bank and the IMF?" (2019-06-04). Bretton Woods Project. Archived from the original on 2025-03-15.
  46. ↑
    “At the heart of SAPs is liberalization of the economy. [...] For the neoliberals, the main target was the state, which they believed impeded national and international markets and created dependency among the poor on state welfare. [...] A typical SAP contains the following elements: • Tariff barriers, which had been set high to protect local production, are removed to promote competition from imports with a view to kick-starting local producers into efficient production. • Export promotion is also encouraged by pushing for key commodities, especially agricultural goods, to be produced, which diverts efforts away from production for local consumption. • Devaluation of the national currency, which is often overvalued, to make exports cheaper on the global market and imports more expensive, which encourages exports over imports to correct the balance of payments deficit. • Financial liberalization to allow freer inward and outward flows of international capital, as well as a removal of restrictions on what foreign businesses and banks can own or operate. • Subsidies are removed in order to remove market distortions and overcome the dependency of the poor on state welfare. • User fees are levied on key services as a way of “recovering” the costs and reducing the burden on tax revenue. On the other side of the fiscal equation, services are cut back to reduce government spending. • Bureaucracies are trimmed down and other state workers laid off to reduce the government’s wage bill. Bureaucracies are also to be made more efficient and less corrupt under the “good governance” initiatives that followed SAPs. • Rationalization and privatization are introduced as a way of enhancing competitiveness and efficiency and reducing the burden on the state of sapping and corrupt SOIs. With liberalization and deregulation, heavily defended national economies are now open to possible inward investment to buy up these SOIs.”

    Giles Mohan and Frangton Chiyemura (2020). International Encyclopedia of Human Geography: 'Structural adjustment' (pp. 62-63). doi: 10.1016/B978-0-08-102295-5.10712-7 [HUB]
  47. ↑ Firat Demir (2022). IMF conditionality, export structure and economic complexity:The ineffectiveness of structural adjustment programs, vol. Volume 50, Issue 3. Journal of Comparative Economics.
  48. ↑ Christina Majaski (2023-08-13). "Devaluation" Investopedia.
  49. ↑
    “Devaluation makes imports more expensive and exports more competitive. Given the already high standard of living [in industrialized countries], a decrease in imports would hardly hurt the population seriously. [...] The increase in exports would take place without any new investment, because of the size of installed production capacities and the availability of stocks. Returns from this growth of exports and output would, in turn, ease the modest damage incurred by people with low incomes. [...] The effects expected from devaluation in the industrialized countries are rarely in evidence in Third World economies, where most exports and imports lack flexibility in the medium-term. In the case of imports, devaluation raises the prices of equipment and intermediate products; this in turn is reflected in final production costs, thereby putting a brake on exports instead of stimulating them. In cases where a country imports a substantial proportion of its foodstuffs, devaluation raises the prices of these items.”

    Ismail-Sabri Abdalla (1980). The Inadequacy and Loss of Legitimacy of the IMF (pp. 39-40). Development Dialogue.
  50. ↑ A.S. Mlambo (1997). The Economic Structural Adjustment Programme: The Case of Zimbabwe, 1990-1995: 'The IMF/World Bank Reform Package: An Analysis'. Harare: University of Zimbabwe Publications. ISBN 908307-72-1
  51. ↑ "High food prices and strong US dollar are ‘double burden’ for developing countries, UNCTAD says" (2022-12-21). UNCTAD.
  52. ↑
    “Equally, the drastic devaluation of our currency led to the “brain drain” phenomenon where tens of thousands of the best educated Nigerians migrated to foreign countries to earn foreign currency. These included our doctors, nurses, engineers, pharmacists, dentists, university professors among others.”

    Ubah Chukwudi Nelson (2025). Structural Adjustment Progeamme (SAP) and Nigeria’s Development: Lessons for the Government. [PDF] Journal of African Innovation & Advanced Studies. doi: 10.70382/ajaias.v7i2.010 [HUB]
  53. ↑ Fernanda Vallejos (2022-03-10). "Argentina Demands Justice From the IMF" The Intercept. Archived from the original on 2022-06-16. Retrieved 2022-06-19.
  54. ↑ Vijay Prashad (2008). The Darker Nations: A People's History of the Third World: 'Kingston' (pp. 229–34). [PDF] The New Press. ISBN 9781595583420 [LG]
  55. ↑ Prabhat Patnaik (2022-03-06). "The IMF Connection with the Ukraine Crisis" Peoples Democracy. Retrieved 2022-06-19.
  56. ↑ Michael Parenti (2000). To Kill a Nation: 'Third Worldization' (pp. 19–21). [PDF] Verso.
  57. ↑ Dian Maria Blandina (2022-06-29). "IMF Loans Continue to Undermine Health in Africa" Black Agenda Report. Archived from the original on 2022-06-30. Retrieved 2022-07-06.
  58. ↑ Brian Stauffer (2023-09-25). "Bandage on a Bullet Wound" Human Rights Watch. Archived from the original on 2023-10-06. Retrieved 2023-10-06.
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