More In depth about the IMF

Todd Tucker over at the Public Citizen’s Blog, Eyes on Trade, posted a blog today about the Jubilee Act passing the House (he just returned from vacation, but we can celebrate again) and an even bigger conversation many people in the NGO community are having about the IMF’s impending death.

So, the IMF ain’t dead, but with so many middle income countries like India and China paying off their loans, the IMF isn’t making as much money as it did before when they were very much in need of loans to survive. In order to save staff jobs, the IMF is banking on shareholder authorization to sell its gold. The IMF has the third-largest gold reserve in the world (behind the U.S. and Germany).

We think the money is better used on funding debt cancellation for impoverished countries like Lesoto than funding staff salaries and posh meetings. I’m sure the bill racked up from luxury hotel rooms, cars and food could probably fund a few education, water, road and health care projects in some of the impoverished countries they’re asking to repay loans.

The IMF bills itself as an agency bent on reducing poverty, though even that's questionable. CEPR's Mark Weisbrot writes in The Los Angeles Times:

But the IMF lost credibility after presiding over a series of economic disasters. Latin America, for example, suffered its worst long-term growth failure in modern history under the IMF's tutelage since 1980. The IMF's "shock therapy" program in Russia vastly underestimated the time it would take to transition from a planned to a capitalist economy in the early '90s. The result was a lot of shock and no therapy, and tens of millions were pushed into poverty as the economy collapsed.

The Asian financial crisis in the late 1990s was a tipping point. The IMF and the U.S. Treasury helped cause the crisis by pushing for the removal of important regulations on foreign capital flows. Then they made it worse with their policy recommendations, prompting economist Jeffrey Sachs -- now head of Columbia University's Earth Institute -- to say that "the IMF has become the Typhoid Mary of emerging markets, spreading recessions in country after country."

And if loans are being repaid in full, isn't that what we all want? I mean, isn't a country that can govern its own economic policies without the influence of harmful policies that damage economies (and thus the people who must function in them) what we all want?

Makes sense to us and some people (like your Senators) still need to be informed so they can take action
Have a great weekend.