IMF - How can it work to promote growth and stability, and does it also exacerbate inequalities and injustices Flashcards
What is the IMF?
International Monetary Fund
Monitors economic and fincancial development of a country, lends money when it need.
Stabalises economies and provides stablising loads, avoid economic crashes.
Uganda lended money to Uganda in 1989 if they underwent structural adjustment programs, this had serveal impacts.
Poverty increased and government spending was cut, Ugandas unemployment problem rose.
143 million loan in return for tanzania privatising their water servuves left many who cannot afford water without safe access.
Failures of the IMF
- Uganda
- Asian Crisis of 1997
- Tanzania
Successes of the IMF
- Singapore
- Greece
- Mexico
- Tanzania
- Jordan
Successes of the IMF - Singapore
IMF helped signapore rebuild its economy in the early 20th century through loans and investment. Soon became a asian tiger economy.
Failures of the IMF - Uganda
Uganda lended money to Uganda in 1989 on the condition that they underwent structural adjustment programs, this had serveal impacts.
Poverty increased and government spending was cut, Ugandas unemployment problem rose. Unemployment in the country had risen to 3.6% by the end of the 1990s as a result.
Failures of the IMF - Asian Crisis of 1997
During the Asian Crisis of 1997 many countries such as Indonesia, Malaysia and Thialand were required by the IMF to increase interest rates and reduce government spending. However these policies caused a minor slowdown which quickly turned into a serious recession with high levels of unemployment.
in 1996 Thailands unemployment rate was around 1% and it rose to 3.4% in 1998, over a 200% rise as a result of the IMF policy and failures to solves issues surrounding the Asian Crisis.
Successes of the IMF - Mexico and Greece
IMF loans have helped countries avoid liquidty crisis in the past, for example in Mexico in 1982 the IMF approved a 3.8bn USD laon to the mexican government to deal with the dept criss.
In 2012 a IMF bailout worth 130 billion euros was lended to the greek government.
Structural adjustment programs
When giving loans to countries the IMF make the loan conditional and implement certain policies, generally involving cuts in government spending and borrowing, higher interest rates or privatisation and deregulation.
2001 Argentina was forced in low government spending and this led to a decline in public servces and damaged the Argentian economy in the long run.
Failures of the IMF - Tanzania
In 1985 the IMF aimed to promote growth in Tanzania, they did this initially through selling state owned industry, lowering barriers to trade and cutting spending.
By 2000 the newly privatised healthcare services started charging patients and the AIDS rate in the country shot up by 8%.
Enrollment in education fell from 98% in 1981 to 66% in 2000 after education fees rose.
Illitereacy rate increased by 50%.
One-size-fits all strategy doesnt work.
Successes of the IMF - Tanzania
IMF achieved some success in Tanzania, annual inflation rate fell from 37.9% in 1994 to 4.1% in 2004 as a result of the reforms and GDP rose from 1.6% in 1994 to 7.4% in 2004.
Successes of the IMF - Jordan
Jordan had been impacted by wars in Israel and a major economic recession prior to 1989. It struggled to pay off its loans and had high unemployment. In the period from 1993 to 1999, the IMF gave Jordan three extended fund facility loans and committed to easier trade policy.
By 2000 the country signed a free trade areement with the US, it brought down dept payments and the restructure was managebale. This is a example of the IMF fostering a strong and stable country and promoting growth.
