Surveillance of the global economy

The IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its member countries.^[26] This activity is known as surveillance and facilitates international co-operation.^[27] Since the demise of the Bretton Woods system of fixed exchange rates in the early 1970s, surveillance has evolved largely by way of changes in procedures rather than through the adoption of new obligations.^[26] The responsibilities changed from those of guardians to those of overseers of members' policies.

The Fund typically analyses the appropriateness of each member country's economic and financial policies for achieving orderly economic growth, and assesses the consequences of these policies for other countries and for the global economy.^[26] For instance, The IMF played a significant role in individual countries, such as Armenia and Belarus, in providing financial support to achieve stabilization financing from 2009 to 2019.^[28] The maximum sustainable debt level of a polity, which is watched closely by the IMF, was defined in 2011 by IMF economists to be 120%.^[29] Indeed, it was at this number that the Greek economy melted down in 2010.^[30]

IMF Data Dissemination Systems participants:

  IMF member using SDDS

  IMF member using GDDS

  IMF member, not using any of the DDSystems

  non-IMF entity using SDDS

  non-IMF entity using GDDS

  no interaction with the IMF

In 1995, the International Monetary Fund began to work on data dissemination standards with the view of guiding IMF member countries to disseminate their economic and financial data to the public. The International Monetary and Financial Committee (IMFC) endorsed the guidelines for the dissemination standards and they were split into two tiers: The General Data Dissemination System (GDDS) and the Special Data Dissemination Standard (SDDS).^[31]

The executive board approved the SDDS and GDDS in 1996 and 1997, respectively, and subsequent amendments were published in a revised Guide to the General Data Dissemination System. The system is aimed primarily at statisticians and aims to improve many aspects of statistical systems in a country. It is also part of the World Bank Millennium Development Goals (MDG) and Poverty Reduction Strategic Papers (PRSPs).

The primary objective of the GDDS is to encourage member countries to build a framework to improve data quality and statistical capacity building to evaluate statistical needs, set priorities in improving timeliness, transparency, reliability, and accessibility of financial and economic data. Some countries initially used the GDDS, but later upgraded to SDDS.

Some entities that are not IMF members also contribute statistical data to the systems:

• Palestinian Authority – GDDS
• Hong Kong – SDDS
• Macau – GDDS^[32]
• Institutions of the European Union:
  • The European Central Bank for the Eurozone – SDDS
  • Eurostat for the whole EU – SDDS, thus providing data from Cyprus (not using any DDSystem on its own) and Malta (using only GDDS on its own)

A 2021 study found that the IMF's surveillance activities have "a substantial impact on sovereign debt with much greater impacts in emerging than high-income economies".^[33]

World Economic Outlook

World Economic Outlook is a survey, published twice a year, by International Monetary Fund staff, which analyzes the global economy in the near and medium term.^[34]

Conditionality of loans

IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial resources.^[21] The IMF does require collateral from countries for loans but also requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform.^[35] If the conditions are not met, the funds are withheld.^[21][36] The concept of conditionality was introduced in a 1952 executive board decision and later incorporated into the Articles of Agreement.

Conditionality is associated with economic theory as well as an enforcement mechanism for repayment. Stemming primarily from the work of Jacques Polak, the theoretical underpinning of conditionality was the "monetary approach to the balance of payments".^[22]

20th century

Plaque Commemorating the Formation of the IMF in July 1944 at the Bretton Woods Conference

IMF "Headquarters 1" in Washington, D.C., designed by Moshe Safdie

The Gold Room within the Mount Washington Hotel, where the Bretton Woods Conference attendees signed the agreements creating the IMF and World Bank

First page of the Articles of Agreement of the International Monetary Fund, 1 March 1946. Finnish Ministry of Foreign Affairs archives.

The IMF was originally laid out as a part of the Bretton Woods system exchange agreement in 1944.^[39] During the Great Depression, countries sharply raised barriers to trade in an attempt to improve their failing economies. This led to the devaluation of national currencies and a decline in world trade.^[40]

This breakdown in international monetary cooperation created a need for oversight. The representatives of 45 governments met at the Bretton Woods Conference in the Mount Washington Hotel in Bretton Woods, New Hampshire, in the United States, to discuss a framework for postwar international economic cooperation and how to rebuild Europe.

There were two views on the role the IMF should assume as a global economic institution. American delegate Harry Dexter White foresaw an IMF that functioned more like a bank, making sure that borrowing states could repay their debts on time.^[41] Most of White's plan was incorporated into the final acts adopted at Bretton Woods. British economist John Maynard Keynes, on the other hand, imagined that the IMF would be a cooperative fund upon which member states could draw to maintain economic activity and employment through periodic crises. This view suggested an IMF that helped governments and act as the United States government had during the New Deal to the great depression of the 1930s.^[41]

The IMF formally came into existence on 27 December 1945, when the first 29 countries ratified its Articles of Agreement.^[42] By the end of 1946 the IMF had grown to 39 members.^[43] On 1 March 1947, the IMF began its financial operations,^[44] and on 8 May France became the first country to borrow from it.^[43]

The IMF was one of the key organizations of the international economic system; its design allowed the system to balance the rebuilding of international capitalism with the maximization of national economic sovereignty and human welfare, also known as embedded liberalism.^[22] The IMF's influence in the global economy steadily increased as it accumulated more members. Its membership began to expand in the late 1950s and during the 1960s as many African countries became independent and applied for membership. But the Cold War limited the Fund's membership, with most countries in the Soviet sphere of influence not joining until 1970s and 1980s.^[40][45][46]

The Bretton Woods exchange rate system prevailed until 1971 when the United States government suspended the convertibility of the US$ (and dollar reserves held by other governments) into gold. This is known as the Nixon Shock.^[40] The changes to the IMF articles of agreement reflecting these changes were ratified in 1976 by the Jamaica Accords. Later in the 1970s, large commercial banks began lending to states because they were awash in cash deposited by oil exporters. The lending of the so-called money center banks led to the IMF changing its role in the 1980s after a world recession provoked a crisis that brought the IMF back into global financial governance.^[47]

In the mid-1980s, the IMF shifted its narrow focus from currency stabilization to a broader focus of promoting market-liberalizing reforms through structural adjustment programs.^[48] This shift occurred without a formal renegotiation of the organization's charter or operational guidelines.^[48] The Ronald Reagan administration, in particular Treasury Secretary James Baker, his assistant secretary David Mulford and deputy assistant secretary Charles Dallara, pressured the IMF to attach market-liberal reforms to the organization's conditional loans.^[48]

During the 20th century, the IMF shifted its position on capital controls. Whereas the IMF permitted capital controls at its founding and throughout the 1970s, IMF staff increasingly favored free capital movement from 1980s onwards.^[49] This shift happened in the aftermath of an emerging consensus in economics on the desirability of free capital movement, retirement of IMF staff hired in the 1940s and 1950s, and the recruitment of staff exposed to new thinking in economics.^[49]

21st century

The IMF provided two major lending packages in the early 2000s to Argentina (during the 1998–2002 Argentine great depression) and Uruguay (after the 2002 Uruguay banking crisis).^[50] However, by the mid-2000s, IMF lending was at its lowest share of world GDP since the 1970s.^[51]

In May 2010, the IMF participated, in 3:11 proportion, in the first Greek bailout that totaled €110 billion, to address the great accumulation of public debt, caused by continuing large public sector deficits. As part of the bailout, the Greek government agreed to adopt austerity measures that would reduce the deficit from 11% in 2009 to "well below 3%" in 2014.^[52] The bailout did not include debt restructuring measures such as a haircut, to the chagrin of the Swiss, Brazilian, Indian, Russian, and Argentinian Directors of the IMF, with the Greek authorities themselves (at the time, PM George Papandreou and Finance Minister Giorgos Papakonstantinou) ruling out a haircut.^[53]

A second bailout package of more than €100 billion was agreed upon over the course of a few months from October 2011, during which time Papandreou was forced from office. The so-called Troika, of which the IMF is part, are joint managers of this programme, which was approved by the executive directors of the IMF on 15 March 2012 for XDR 23.8 billion^[54] and saw private bondholders take a haircut of upwards of 50%. In the interval between May 2010 and February 2012 the private banks of Holland, France, and Germany reduced exposure to Greek debt from €122 billion to €66 billion.^[53][55]

As of January 2012, the largest borrowers from the IMF in order were Greece, Portugal, Ireland, Romania, and Ukraine.^[56]

On 25 March 2013, a €10 billion international bailout of Cyprus was agreed by the Troika, at the cost to the Cypriots of its agreement: to close the country's second-largest bank; to impose a one-time bank deposit levy on Bank of Cyprus uninsured deposits.^[57][58] No insured deposit of €100k or less were to be affected under the terms of a novel bail-in scheme.^[59][60]

The topic of sovereign debt restructuring was taken up by the IMF in April 2013, for the first time since 2005, in a report entitled "Sovereign Debt Restructuring: Recent Developments and Implications for the Fund's Legal and Policy Framework".^[61] The paper, which was discussed by the board on 20 May,^[62] summarised the recent experiences in Greece, St Kitts and Nevis, Belize, and Jamaica. An explanatory interview with deputy director Hugh Bredenkamp was published a few days later,^[63] as was a deconstruction by Matina Stevis of The Wall Street Journal.^[64]

In the October 2013, Fiscal Monitor publication, the IMF suggested that a capital levy capable of reducing Euro-area government debt ratios to "end-2007 levels" would require a very high tax rate of about 10%.^[65]

The Fiscal Affairs department of the IMF, headed at the time by Acting Director Sanjeev Gupta, produced a January 2014 report entitled "Fiscal Policy and Income Inequality" that stated that "Some taxes levied on wealth, especially on immovable property, are also an option for economies seeking more progressive taxation ... Property taxes are equitable and efficient, but underutilized in many economies ... There is considerable scope to exploit this tax more fully, both as a revenue source and as a redistributive instrument."^[66]

At the end of March 2014, the IMF secured an $18 billion bailout fund for the provisional government of Ukraine in the aftermath of the Revolution of Dignity.^[67][68]

Qualifications

Any country may apply to be a part of the IMF. Post-IMF formation, in the early postwar period, rules for IMF membership were left relatively loose. Members needed to make periodic membership payments towards their quota, to refrain from currency restrictions unless granted IMF permission, to abide by the Code of Conduct in the IMF Articles of Agreement, and to provide national economic information. However, stricter rules were imposed on governments that applied to the IMF for funding.^[22]

The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates secured at rates that could be adjusted only to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement.^[89]

Benefits

Member countries of the IMF have access to information on the economic policies of all member countries, the opportunity to influence other members' economic policies, technical assistance in banking, fiscal affairs, and exchange matters, financial support in times of payment difficulties, and increased opportunities for trade and investment.^[90]

Board of Governors

The board of governors consists of one governor and one alternate governor for each member country. Each member country appoints its two governors. The Board normally meets once a year and is responsible for electing or appointing an executive director to the executive board. While the board of governors is officially responsible for approving quota increases, special drawing right allocations, the admittance of new members, compulsory withdrawal of members, and amendments to the Articles of Agreement and By-Laws, in practice it has delegated most of its powers to the IMF's executive board.^[91]

The board of governors is advised by the International Monetary and Financial Committee and the Development Committee. The International Monetary and Financial Committee has 24 members and monitors developments in global liquidity and the transfer of resources to developing countries.^[92] The Development Committee has 25 members and advises on critical development issues and on financial resources required to promote economic development in developing countries.

The board of governors reports directly to the managing director of the IMF, Kristalina Georgieva.^[92]

Executive Board

24 Executive Directors make up the executive board. The executive directors represent all 189 member countries in a geographically based roster.^[93] Countries with large economies have their own executive director, but most countries are grouped in constituencies representing four or more countries.^[91]

Following the 2008 Amendment on Voice and Participation which came into effect in March 2011,^[94] seven countries each appoint an executive director: the United States, Japan, China, Germany, France, the United Kingdom, and Saudi Arabia.^[93] The remaining 17 Directors represent constituencies consisting of 2 to 23 countries. This Board usually meets several times each week.^[95] The board membership and constituency is scheduled for periodic review every eight years.^[96]

Managing Director

The IMF is led by a managing director, who is head of the staff and serves as chairman of the executive board. The managing director is the most powerful position at the IMF.^[97] Historically, the IMF's managing director has been a European citizen and the president of the World Bank has been an American citizen. However, this standard is increasingly being questioned and competition for these two posts may soon open up to include other qualified candidates from any part of the world.^[98][99] In August 2019, the International Monetary Fund has removed the age limit which is 65 or over for its managing director position.^[100]

In 2011, the world's largest developing countries, the BRIC states, issued a statement declaring that the tradition of appointing a European as managing director undermined the legitimacy of the IMF and called for the appointment to be merit-based.^[98][101]

List of Managing Directors

Term	Dates	Name	Citizenship	Background
1	6 May 1946 – 5 May 1951	Camille Gutt	Belgium	Politician, Economist, Lawyer, Economics Minister, Finance Minister
2	3 August 1951 – 3 October 1956	Ivar Rooth	Sweden	Economist, Lawyer, Central Banker
3	21 November 1956 – 5 May 1963	Per Jacobsson	Sweden	Economist, Lawyer, Academic, League of Nations, BIS
4	1 September 1963 – 31 August 1973	Pierre-Paul Schweitzer	France	Lawyer, Businessman, Civil Servant, Central Banker
5	1 September 1973 – 18 June 1978	Johan Witteveen	Netherlands	Politician, Economist, Academic, Finance Minister, Deputy Prime Minister, CPB
6	18 June 1978 – 15 January 1987	Jacques de Larosière	France	Businessman, Civil Servant, Central Banker
7	16 January 1987 – 14 February 2000	Michel Camdessus	France	Economist, Civil Servant, Central Banker
8	1 May 2000 – 4 March 2004	Horst Köhler	Germany	Politician, Economist, Civil Servant, EBRD, President
9	7 June 2004 – 31 October 2007	Rodrigo Rato	Spain	Politician, Businessman, Economics Minister, Finance Minister, Deputy Prime Minister
10	1 November 2007 – 18 May 2011	Dominique Strauss-Kahn	France	Politician, Economist, Lawyer, Businessman, Economics Minister, Finance Minister
11	5 July 2011 – 12 September 2019	Christine Lagarde	France	Politician, Lawyer, Finance Minister
12	1 October 2019 – present	Kristalina Georgieva	Bulgaria	Politician, Economist

On 28 June 2011, Christine Lagarde was named managing director of the IMF, replacing Dominique Strauss-Kahn.

Former managing director Dominique Strauss-Kahn was arrested in connection with charges of sexually assaulting a New York hotel room attendant and resigned on 18 May. The charges were later dropped.^[102] On 28 June 2011 Christine Lagarde was confirmed as managing director of the IMF for a five-year term starting on 5 July 2011.^[103][104] She was re-elected by consensus for a second five-year term, starting 5 July 2016, being the only candidate nominated for the post of managing director.^[105]

First Deputy Managing Director

The managing director is assisted by a First Deputy managing director (FDMD) who, by convention, has always been a citizen of the United States.^[106] Together, the managing director and their First Deputy lead the senior management of the IMF. Like the managing director, the First Deputy traditionally serves a five-year term.

List of First Deputy Managing Directors

No.	Dates	Name	Citizenship	Background
1	9 February 1949 – 24 January 1952	Andrew Overby	United States	Banker, Senior U.S. Treasury Official
2	16 March 1953 – 31 October 1962	Merle Cochran	United States	U.S. Foreign Service Officer
3	1 November 1962 – 28 February 1974	Frank Southard	United States	Economist, Civil Servant
4	1 March 1974 – 31 May 1984	William Dale	United States	Civil Servant
5	1 June 1984 – 31 August 1994	Richard Erb	United States	Economist, White House Official
6	1 September 1994 – 31 August 2001	Stanley Fischer	Israel  United States	Economist, Central Banker, Banker
7	1 September 2001 – 31 August 2006	Anne Kreuger	United States	Economist
8	17 July 2006 – 11 November 2011	John Lipsky	United States	Economist
9	1 September 2011 – 28 February 2020	David Lipton	United States	Economist, Senior U.S. Treasury Official
10	20 March 2020 – 20 January 2022	Geoffrey Okamoto	United States	Senior U.S. Treasury Official, Bank Consultant
11	21 January 2022 – present	Gita Gopinath	United States	Professor at Harvard University's Economics department Chief Economist of IMF

Chief Economist

The chief economist leads the research division of the IMF and is a "senior official" of the IMF.^[107]

List of Chief Economists

Term	Dates	Name	Citizenship
1	1946–1958	Edward Bernstein[108]	United States
2	1958–1980	Jacques Polak	Netherlands
3	1980–1987	William Hood[109][110]	Canada
4	1987–1991	Jacob Frenkel[111]	Israel
5	August 1991 – 29 June 2001	Michael Mussa[112]	United States
6	August 2001 – September 2003	Kenneth Rogoff[113]	United States
7	September 2003 – January 2007	Raghuram Rajan[114]	India
8	March 2007 – 31 August 2008	Simon Johnson[115]	United Kingdom  United States
9	1 September 2008 – 8 September 2015	Olivier Blanchard[116]	France
10	8 September 2015 – 31 December 2018	Maurice Obstfeld[117]	United States
11	1 January 2019 – 21 January 2022	Gita Gopinath[118]	United States
12	24 January 2022 – present	Pierre-Olivier Gourinchas[119]	France

IMF staff

IMF staff have considerable autonomy and are known to shape IMF policy. According to Jeffrey Chwieroth, "It is the staff members who conduct the bulk of the IMF's tasks; they formulate policy proposals for consideration by member states, exercise surveillance, carry out loan negotiations and design the programs, and collect and systematize detailed information."^[120] Most IMF staff are economists.^[121] According to a 1968 study, nearly 60% of staff were from English-speaking developed countries.^[122] By 2004, between 40 and 50% of staff were from English-speaking developed countries.^[122]

A 1996 study found that 90% of new staff with a PhD obtained them from universities in the United States or Canada.^[122] A 1999 study found that none of the new staff with a PhD obtained their PhD in the Global South.^[122]

Effects of the quota system

The IMF's quota system was created to raise funds for loans.^[22] Each IMF member country is assigned a quota, or contribution, that reflects the country's relative size in the global economy. Each member's quota also determines its relative voting power. Thus, financial contributions from member governments are linked to voting power in the organization.^[124]

This system follows the logic of a shareholder-controlled organization: wealthy countries have more say in the making and revision of rules.^[22] Since decision making at the IMF reflects each member's relative economic position in the world, wealthier countries that provide more money to the IMF have more influence than poorer members that contribute less; nonetheless, the IMF focuses on redistribution.^[124]

Inflexibility of voting power

Quotas are normally reviewed every five years and can be increased when deemed necessary by the board of governors. IMF voting shares are relatively inflexible: countries that grow economically have tended to become under-represented as their voting power lags behind.^[11] Currently, reforming the representation of developing countries within the IMF has been suggested.^[124] These countries' economies represent a large portion of the global economic system but this is not reflected in the IMF's decision-making process through the nature of the quota system. Joseph Stiglitz argues, "There is a need to provide more effective voice and representation for developing countries, which now represent a much larger portion of world economic activity since 1944, when the IMF was created."^[126] In 2008, a number of quota reforms were passed including shifting 6% of quota shares to dynamic emerging markets and developing countries.^[127]

Overcoming borrower/creditor divide

The IMF's membership is divided along income lines: certain countries provide financial resources while others use these resources. Both developed country "creditors" and developing country "borrowers" are members of the IMF. The developed countries provide the financial resources but rarely enter into IMF loan agreements; they are the creditors. Conversely, the developing countries use the lending services but contribute little to the pool of money available to lend because their quotas are smaller; they are the borrowers. Thus, tension is created around governance issues because these two groups, creditors and borrowers, have fundamentally different interests.^[124]

The criticism is that the system of voting power distribution through a quota system institutionalizes borrower subordination and creditor dominance. The resulting division of the IMF's membership into borrowers and non-borrowers has increased the controversy around conditionality because the borrowers are interested in increasing loan access while creditors want to maintain reassurance that the loans will be repaid.^[128]

Exceptional Access Framework – sovereign debt

The Exceptional Access Framework was created in 2003 when John B. Taylor was Under Secretary of the US Treasury for International Affairs. The new Framework became fully operational in February 2003 and it was applied in the subsequent decisions on Argentina and Brazil.^[130] Its purpose was to place some sensible rules and limits on the way the IMF makes loans to support governments with debt problem—especially in emerging markets—and thereby move away from the bailout mentality of the 1990s. Such a reform was essential for ending the crisis atmosphere that then existed in emerging markets. The reform was closely related to and put in place nearly simultaneously with the actions of several emerging market countries to place collective action clauses in their bond contracts.

In 2010, the framework was abandoned so the IMF could make loans to Greece in an unsustainable and political situation.^[131][132]

The topic of sovereign debt restructuring was taken up by IMF staff in April 2013 for the first time since 2005, in a report entitled "Sovereign Debt Restructuring: Recent Developments and Implications for the Fund's Legal and Policy Framework".^[61] The paper, which was discussed by the board on 20 May,^[62] summarised the recent experiences in Greece, St Kitts and Nevis, Belize, and Jamaica. An explanatory interview with deputy director Hugh Bredenkamp was published a few days later,^[63] as was a deconstruction by Matina Stevis of The Wall Street Journal.^[64]

The staff was directed to formulate an updated policy, which was accomplished on 22 May 2014 with a report entitled "The Fund's Lending Framework and Sovereign Debt: Preliminary Considerations", and taken up by the executive board on 13 June.^[133] The staff proposed that "in circumstances where a (Sovereign) member has lost market access and debt is considered sustainable ... the IMF would be able to provide Exceptional Access on the basis of a debt operation that involves an extension of maturities", which was labeled a "reprofiling operation". These reprofiling operations would "generally be less costly to the debtor and creditors—and thus to the system overall—relative to either an upfront debt reduction operation or a bail-out that is followed by debt reduction ... (and) would be envisaged only when both (a) a member has lost market access and (b) debt is assessed to be sustainable, but not with high probability ... Creditors will only agree if they understand that such an amendment is necessary to avoid a worse outcome: namely, a default and/or an operation involving debt reduction ... Collective action clauses, which now exist in most—but not all—bonds would be relied upon to address collective action problems."^[133]

Conditionality

The IMF has been criticised for being "out of touch" with local economic conditions, cultures, and environments in the countries they are requiring policy reform.^[21] The economic advice the IMF gives might not always take into consideration the difference between what spending means on paper and how it is felt by citizens.^[154] Countries charge that with excessive conditionality, they do not "own" the programmes and the links are broken between a recipient country's people, its government, and the goals being pursued by the IMF.^[155]

Jeffrey Sachs argues that the IMF's "usual prescription is 'budgetary belt tightening to countries who are much too poor to own belts'".^[154] Sachs wrote that the IMF's role as a generalist institution specialising in macroeconomic issues needs reform. Conditionality has also been criticised because a country can pledge collateral of "acceptable assets" to obtain waivers—if one assumes that all countries are able to provide "acceptable collateral".^[38]

One view is that conditionality undermines domestic political institutions.^[156] The recipient governments are sacrificing policy autonomy in exchange for funds, which can lead to public resentment of the local leadership for accepting and enforcing the IMF conditions. Political instability can result from more leadership turnover as political leaders are replaced in electoral backlashes.^[21] IMF conditions are often criticised for reducing government services, thus increasing unemployment.^[22]

Another criticism is that IMF policies are only designed to address poor governance, excessive government spending, excessive government intervention in markets, and too much state ownership.^[154] This assumes that this narrow range of issues represents the only possible problems; everything is standardised and differing contexts are ignored.^[154] A country may also be compelled to accept conditions it would not normally accept had they not been in a financial crisis in need of assistance.^[36]

On top of that, regardless of what methodologies and data sets used, it comes to same the conclusion of exacerbating income inequality. With Gini coefficient, it became clear that countries with IMF policies face increased income inequality.^[157]

It is claimed that conditionalities retard social stability and hence inhibit the stated goals of the IMF, while Structural Adjustment Programmes lead to an increase in poverty in recipient countries.^[158] The IMF sometimes advocates "austerity programmes", cutting public spending and increasing taxes even when the economy is weak, to bring budgets closer to a balance, thus reducing budget deficits. Countries are often advised to lower their corporate tax rate. In Globalization and Its Discontents, Joseph E. Stiglitz, former chief economist and senior vice-president at the World Bank, criticises these policies.^[159] He argues that by converting to a more monetarist approach, the purpose of the fund is no longer valid, as it was designed to provide funds for countries to carry out Keynesian reflations, and that the IMF "was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community."^[160]

Stiglitz concludes, "Modern high-tech warfare is designed to remove physical contact: dropping bombs from 50,000 feet ensures that one does not 'feel' what one does. Modern economic management is similar: from one's luxury hotel, one can callously impose policies about which one would think twice if one knew the people whose lives one was destroying."^[159]

The researchers Eric Toussaint and Damien Millet argue that the IMF's policies amount to a new form of colonisation that does not need a military presence:

Following the exigencies of the governments of the richest companies, the IMF, permitted countries in crisis to borrow in order to avoid default on their repayments. Caught in the debt's downward spiral, developing countries soon had no other recourse than to take on new debt in order to repay the old debt. Before providing them with new loans, at higher interest rates, future leaders asked the IMF, to intervene with the guarantee of ulterior reimbursement, asking for a signed agreement with the said countries. The IMF thus agreed to restart the flow of the 'finance pump' on condition that the concerned countries first use this money to reimburse banks and other private lenders, while restructuring their economy at the IMF's discretion: these were the famous conditionalities, detailed in the Structural Adjustment Programmes. The IMF and its ultra-liberal experts took control of the borrowing countries' economic policies. A new form of colonisation was thus instituted. It was not even necessary to establish an administrative or military presence; the debt alone maintained this new form of submission.^[161]

International politics play an important role in IMF decision making. The clout of member states is roughly proportional to its contribution to IMF finances. The United States has the greatest number of votes and therefore wields the most influence. Domestic politics often come into play, with politicians in developing countries using conditionality to gain leverage over the opposition to influence policy.^[162][163]

In 2016, the IMF's research department published a report titled "Neoliberalism: Oversold?" which, while praising some aspects of the "neoliberal agenda", claims that the organisation has been "overselling" fiscal austerity policies and financial deregulation, which they claim has exacerbated both financial crises and economic inequality around the world.^{[164][165][166]}

In 2020 and 2021, Oxfam criticized the IMF for forcing tough austerity measures on many low income countries during the COVID-19 pandemic, despite forcing cuts to healthcare spending, would hamper the recipient's response to the pandemic.^[167][168]

Support of dictatorships

The role of the Bretton Woods institutions has been controversial since the late Cold War, because of claims that the IMF policy makers supported military dictatorships friendly to American and European corporations, but also other anti-communist and Communist regimes (such as Mobutu's Zaire and Ceaușescu's Romania, respectively). Critics also claim that the IMF is generally apathetic or hostile to human rights, and labour rights. The controversy has helped spark the anti-globalization movement.

An example of IMF's support for a dictatorship was its ongoing support for Mobutu's rule in Zaire, although its own envoy, Erwin Blumenthal, provided a sobering report about the entrenched corruption and embezzlement and the inability of the country to pay back any loans.^[169]

Arguments in favour of the IMF say that economic stability is a precursor to democracy; however, critics highlight various examples in which democratised countries fell after receiving IMF loans.^[170]

A 2017 study found no evidence of IMF lending programs undermining democracy in borrowing countries.^[171] To the contrary, it found "evidence for modest but definitively positive conditional differences in the democracy scores of participating and non-participating countries".^[171]

On 28 June 2021, the IMF approved a US$1 billion loan to the Ugandan government despite protests from Ugandans in Washington, London and South Africa.^[172][173]

Impact on access to food

A number of civil society organisations^[174] have criticised the IMF's policies for their impact on access to food, particularly in developing countries. In October 2008, former United States president Bill Clinton delivered a speech to the United Nations on World Food Day, criticising the World Bank and IMF for their policies on food and agriculture:

We need the World Bank, the IMF, all the big foundations, and all the governments to admit that, for 30 years, we all blew it, including me when I was president. We were wrong to believe that food was like some other product in international trade, and we all have to go back to a more responsible and sustainable form of agriculture.

— Former U.S. president Bill Clinton, Speech at United Nations World Food Day, October 16, 2008^[175]

The FPIF remarked that there is a recurring pattern: "the destabilization of peasant producers by a one-two punch of IMF-World Bank structural adjustment programs that gutted government investment in the countryside followed by the massive influx of subsidized U.S. and European Union agricultural imports after the WTO's Agreement on Agriculture pried open markets."^[176]

Impact on public health

A 2009 study concluded that the strict conditions resulted in thousands of deaths in Eastern Europe by tuberculosis as public health care had to be weakened. In the 21 countries to which the IMF had given loans, tuberculosis deaths rose by 16.6%.^[177] A 2017 systematic review on studies conducted on the impact that Structural adjustment programs have on child and maternal health found that these programs have a detrimental effect on maternal and child health among other adverse effects.^[178]

Reform

International central bank digital currency

In April 2023, the IMF launched their international central bank digital currency through their Digital Currency Monetary Authority, it will be called the Universal Monetary Unit, or Units for shorthand. The ANSI character will be Ü and will be used to facilitate international banking and international trade between countries and currencies. It will help facilitate SWIFT transactions on cross border transactions at wholesale FX rates instantaneously with real-time settlements.^[194][195] In June, it announced it was working on a platform for central bank digital currencies (CBDCs) that would enable transctions between nations. IMF Managing Director Kristalina Georgieva said that if central banks did not agree on a common platform, cryptocurrencies would fill the resulting vacuum.^[196]

Footnotes

Bibliography