The IMF

• The International Monetary Fund aims to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world
• International Monetary Fund

  • Regulator of financial flows
• The IMF is the International Monetary Fund.
• 𝙏𝙃𝙀 𝙄𝙈𝙁:

  • promotos global economic stability by intervening in heavily indebted countries
  • aims to reduce market crashes and recessions
  • strengthens weak currencies
  • has a poverty reduction programme
  • encourages development in return for aid
  • has $1 trillion available
  • currently working with the Haitian government to make its economy more resilient
• The IMF promotes global economic stability by intervening in heavily indebted countries.
• The IMF aims to reduce market crashes and recessions by giving out loans to countries.
• The IMF strengthens weak currencies.
• The IMF has a poverty reduction programme.
• The IMF encourages development in return for aid.

  This is instead of a previous failed attempt at 'SAPs' - Structural Adjustment Programmes that forced countries to reduce their role in the economy (which also reduced health services).
• The IMF currently has $1 trillion available.
• The IMF is currently working with the Haitian government to make its economy more resilient.
• What is the IMF?

  An international organisation established in 1944 with the goal of promoting global monetary cooperation.
• What does the IMF do?

  Provides financial assistance to member countries facing payment problems, offers policy advice, and conducts economic research.
• How many members?

  190
• Why was the IMF established?

  The IMF was founded by 44 member countries that sought to build a framework for economic cooperation. It was established in 1944 in the aftermath of the Great Depression of the 1930s.
• 𝙀𝙁𝙁𝙀𝘾𝙏𝙄𝙑𝙀𝙉𝙀𝙎𝙎:

  • currently lending close to $200 billion to 35+ countries
  • provided access to $540 billion to nearly 90 countries following the Global Financial Crisis (2007 - 2008)
  • extends zero-interest (pay-backable) loans to help low-income countries
  • has helped contain the impact of the Crisis
  • has enabled the recovery of the global economy
• 𝘾𝙊𝙉𝙎:

  • it is argued that the loans enable member countries to pursue reckless domestic economic policies knowing that the IMF will bail them out if necessary (safety net)
  • this delays needed reforms and creates long-term dependency
• 𝙄𝙈𝙁 𝙑𝙎 𝙒𝙊𝙍𝙇𝘿 𝘽𝘼𝙉𝙆:

  IMF: macroeconomic and financial stability

  WORLD BANK: long-term economic development and poverty reduction
• 𝙂𝙃𝘼𝙉𝘼:

  • 2015: Ghana's economy was in trouble due to rampant inflation and a depreciating currency. Credit dried up as interest rates rose and debt piled up due to out-of-control government spending.
  • Ghana turned to the IMF for a $918 million loan to help stabilise the economy by restoring debt sustainability, strengthening monetary policies, and cleaning up the banking system.
  • Ghana's economy is improving as the inflation rate is projected to fall from 19% to 8% and budget deficits are narrowing. Cuts to wasteful spending have made room for social services e.g. free secondary education.
• 𝙁𝘼𝙄𝙇𝙐𝙍𝙀𝙎:

  • programmes usually only last for 1-3 years
  • countries must meet policy conditions in regular reviews or else the programme is interrupted
  • roughly 500 of 800 programmes were interrupted between 1980 and 2015, 300 of which did not resume (high failure rate)
  • the result of programme failure is usually a rise in inflation and capital flight, depriving countries of much-needed capital for investment into public goods and services