Top 10 reasons to oppose the IMF

The following is a polemic from 2007 which I found here. globalexchange.org/campaigns … enIMF.html

I thought it might be useful to provide a balance to the hugely pro-IMF view on the pin. It is heavy with facts as well as opinion.

What is the IMF?

The International Monetary Fund and the World Bank were created in 1944 at a conference in Bretton Woods, New Hampshire, and are now based in Washington, DC. The IMF was originally designed to promote international economic cooperation and provide its member countries with short term loans so they could trade with other countries (achieve balance of payments). Since the debt crisis of the 1980’s, the IMF has assumed the role of bailing out countries during financial crises (caused in large part by currency speculation in the global casino economy) with emergency loan packages tied to certain conditions, often referred to as structural adjustment policies (SAPs). The IMF now acts like a global loan shark, exerting enormous leverage over the economies of more than 60 countries. These countries have to follow the IMF’s policies to get loans, international assistance, and even debt relief. Thus, the IMF decides how much debtor countries can spend on education, health care, and environmental protection. The IMF is one of the most powerful institutions on Earth – yet few know how it works.

  1.  **The IMF has created an immoral system of modern day colonialism that SAPs the poor**
    

    The IMF – along with the WTO and the World Bank – has put the global economy on a path of greater inequality and environmental destruction. The IMF’s and World Bank’s structural adjustment policies (SAPs) ensure debt repayment by requiring countries to cut spending on education and health; eliminate basic food and transportation subsidies; devalue national currencies to make exports cheaper; privatize national assets; and freeze wages. Such belt-tightening measures increase poverty, reduce countries’ ability to develop strong domestic economies and allow multinational corporations to exploit workers and the environment A recent IMF loan package for Argentina, for example, is tied to cuts in doctors’ and teachers’ salaries and decreases in social security payments… The IMF has made elites from the Global South more accountable to First World elites than their own people, thus undermining the democratic process.

  2.  **The IMF serves wealthy countries and Wall Street**
    

    Unlike a democratic system in which each member country would have an equal vote, rich countries dominate decision-making in the IMF because voting power is determined by the amount of money that each country pays into the IMF’s quota system. It’s a system of one dollar, one vote. The U.S. is the largest shareholder with a quota of 18 percent. Germany, Japan, France, Great Britain, and the US combined control about 38 percent. The disproportionate amount of power held by wealthy countries means that the interests of bankers, investors and corporations from industrialized countries are put above the needs of the world’s poor majority.

  3.  **The IMF is imposing a fundamentally flawed development model**
    

    Unlike the path historically followed by the industrialized countries, the IMF forces countries from the Global South to prioritize export production over the development of diversified domestic economies. Nearly 80 percent of all malnourished children in the developing world live in countries where farmers have been forced to shift from food production for local consumption to the production of export crops destined for wealthy countries. The IMF also requires countries to eliminate assistance to domestic industries while providing benefits for multinational corporations – such as forcibly lowering labor costs. Small businesses and farmers can’t compete. Sweatshop workers in free trade zones set up by the IMF and World Bank earn starvation wages, live in deplorable conditions, and are unable to provide for their families. The cycle of poverty is perpetuated, not eliminated, as governments’ debt to the IMF grows.

  4.  **The IMF is a secretive institution with no accountability**
    

    The IMF is funded with taxpayer money, yet it operates behind a veil of secrecy. Members of affected communities do not participate in designing loan packages. The IMF works with a select group of central bankers and finance ministers to make polices without input from other government agencies such as health, education and environment departments. The institution has resisted calls for public scrutiny and independent evaluation.

  5.  **IMF policies promote corporate welfare**
    

    To increase exports, countries are encouraged to give tax breaks and subsidies to export industries. Public assets such as forestland and government utilities (phone, water and electricity companies) are sold off to foreign investors at rock bottom prices. In Guyana, an Asian owned timber company called Barama received a logging concession that was 1.5 times the total amount of land all the indigenous communities were granted. Barama also received a five-year tax holiday. The IMF forced Haiti to open its market to imported, highly subsidized US rice at the same time it prohibited Haiti from subsidizing its own farmers. A US corporation called Early Rice now sells nearly 50 percent of the rice consumed in Haiti.

  6.  **The IMF hurts workers**
    

    The IMF and World Bank frequently advise countries to attract foreign investors by weakening their labor laws – eliminating collective bargaining laws and suppressing wages, for example. The IMF’s mantra of “labor flexibility” permits corporations to fire at whim and move where wages are cheapest. According to the 1995 UN Trade and Development Report, employers are using this extra “flexibility” in labor laws to shed workers rather than create jobs. In Haiti, the government was told to eliminate a statute in their labor code that mandated increases in the minimum wage when inflation exceeded 10 percent. By the end of 1997, Haiti’s minimum wage was only $2.40 a day. Workers in the U.S. are also hurt by IMF policies because they have to compete with cheap, exploited labor. The IMF’s mismanagement of the Asian financial crisis plunged South Korea, Indonesia, Thailand and other countries into deep depression that created 200 million “newly poor.” The IMF advised countries to “export their way out of the crisis.” Consequently, more than US 12,000 steelworkers were laid off when Asian steel was dumped in the US.

  7.  **The IMF's policies hurt women the most**
    

    SAPs make it much more difficult for women to meet their families’ basic needs. When education costs rise due to IMF-imposed fees for the use of public services (so-called “user fees”) girls are the first to be withdrawn from schools. User fees at public clinics and hospitals make healthcare unaffordable to those who need it most. The shift to export agriculture also makes it harder for women to feed their families. Women have become more exploited as government workplace regulations are rolled back and sweatshops abuses increase.

  8.  **IMF Policies hurt the environment**
    

    IMF loans and bailout packages are paving the way for natural resource exploitation on a staggering scale. The IMF does not consider the environmental impacts of lending policies, and environmental ministries and groups are not included in policy making. The focus on export growth to earn hard currency to pay back loans has led to an unsustainable liquidation of natural resources. For example, the Ivory Coast’s increased reliance on cocoa exports has led to a loss of two-thirds of the country’s forests.

  9. ** The IMF bails out rich bankers, creating a moral hazard and greater instability in the global economy**
    

    The IMF routinely pushes countries to deregulate financial systems. The removal of regulations that might limit speculation has greatly increased capital investment in developing country financial markets. More than $1.5 trillion crosses borders every day. Most of this capital is invested short-term, putting countries at the whim of financial speculators. The Mexican 1995 peso crisis was partly a result of these IMF policies. When the bubble popped, the IMF and US government stepped in to prop up interest and exchange rates, using taxpayer money to bail out Wall Street bankers. Such bailouts encourage investors to continue making risky, speculative bets, thereby increasing the instability of national economies. During the bailout of Asian countries, the IMF required governments to assume the bad debts of private banks, thus making the public pay the costs and draining yet more resources away from social programs.

10.** IMF bailouts deepen, rather then solve, economic crisis**

  During financial crises -- such as with Mexico in 1995 and South Korea, Indonesia, Thailand, Brazil, and Russia in 1997 -- the IMF stepped in as the lender of last resort. Yet the IMF bailouts in the Asian financial crisis did not stop the financial panic -- rather, the crisis deepened and spread to more countries. The policies imposed as conditions of these loans were bad medicine, causing layoffs in the short run and undermining development in the long run. In South Korea, the IMF sparked a recession by raising interest rates, which led to more bankruptcies and unemployment. Under the IMF imposed economic reforms after the peso bailout in 1995, the number of Mexicans living in extreme poverty increased more than 50 percent and the national average minimum wage fell 20 percent.

What part of the IMF proposals are we opposing?

I think the reason there is so little opposition to the IMF on hte PIN is that the members are, from across political spectrum, largely pragmatists.
It is clear what has been done, who has done it and unfortunately what needs to be done to rectify the situation.
There is little faith that FF or any of the current political parties have the ability or clout to do what is necessary.

I started to answer this but I got bored half way through… forgive me…

The best way to do that would be rebut their report on Ireland the proposals they made, ideally suggesting alternatives. Ad hominem attacks on the organisation at large is noise not balance.

Don’t mistake a hugely anti-gombeen economics view for a pro-IMF view. The IMF is the threat that exists if we don’t sort our own house out. It is up to us how we do that within the constraints we have. We will not like the IMF solution. If the IMF do come in, it is because our own government has failed. It would be better for us for them to admit failure early than to drag on failure for years and do more damage. The current government is IMF-lite, without the credibility of the bond markets. The IMF exists only to facilitate the restoration of external bond market confidence. It is the MABS of the international funding world.

Not sure MABS would thank you for that comparison ym 8)

If the IMF was doing popular it wouldn’t be doing its job. I think this might be a case of shooting the messenger, the IMF aren’t telling us anything we don’t already know i.e. we (as in Ireland as a political and financial entity) have failed miserably, are on the verge of bankrupty due to lousy government and financial planning, and need some serious leadership to get us out of the hole. Hardly news at this stage?

Okay.

Once more. The IMF cannot come into this country uninvited. While their report may have a lot of valid points in it, it does not constitute an invitation to come and run the Department of Finance.

The IMF has a miserable record on fixing economic problems. Their record is effectively worse than our own. With that in mind you don’t need 10 good reasons to tell them to get lost. If a heart surgeon killed 9 out of 10 of his patients you’d be pretty nervous about allowing him to perform open heart surgery on you. They might be able to write a few good reports but as economic advisors they suck and you do not need 10 points to tell you this. They have just one major success in the last 15 or 20 years apparently and that is Turkey and even so, I’m not sure about that one in the long term.

While it may be a choice, when the time comes when someone in the goverment is deciding whether to pick up the phone and dial 999IMF, the few remaining options might be just as bad.

Really? You think any autonomous option might be worse than calling in the butchers from the IMF? Their record is abysmal. We would need a revolution and 10 civil wars before they would be better than doing things locally. You would have to have levelled most of the centre of Dublin and Cork before it’s worth calling that kind of help in.

I’ll rephrase this. There is an element of salivation over the possibility that the IMF could be called in. It is infantile and short sighted. We do not want them. We sure as hell don’t need them with their record. Not one single person flagging the possibility on this thread, or suggesting that it is there we will wind up going has had the guts to admit that the IMF’s record is lousy. They are not the salvation for our problems and anyone thinks they are is naive in the extreme. Absolutely totally and utterly naive.

Anyone who is going to reply about how the IMF are realistic and speaking the truth might like to explain to me in simple terms why they think the IMF will be beneficial for Ireland when their record everywhere is so utterly appalling.

They have a near total failure rate. Ireland does not. We have fucking huge problems right now and those problems will not get sorted at all if you let the IMF try to fix them.

If that heart surgeon worked only with patients who were absolute lost causes and refused to exercise or improve their diet then I’d probably expect them to lose a lot of patients.

All of this is secondary to the IMF reports on Ireland. We can theorise about what the IMF might do in Ireland until the cows come home but it’s wildly improbable they’ll be running the show here under any circumstances.

The question is still would you have them do surgery on you? Regardless of the explanations for their failure rate? And bearing in mind that their prescriptions have been heavily criticised also?

It is true that IMF policies generally harm the country involved, more than turning the running of the economy over to kangaroos would have done.

This shouldn’t be confused with the IMF being incompetent: why assume that the destruction wrought by their SAP’s are unintentional?

The issue is that I’d be facing a serious heart problem likely to kill me at any time - would I choose no treatment and certain death or a surgeon who deals mainly with basket cases such as me and offers a slim chance of success? The answer is yes.

Unfortunately when the choice is between the IMF and Dr Nick Riviera, then yes you do.

As poster boy for the IMF…Argentina.

washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A22623-2001Dec24

thepropertypin.com/viewtopic.php?p=108093#p108093
The thread is almost a year old. Watch the videos and try to work out whether the IMF or the government and associated elites was the bad guy; maybe both at different times :question:

I see the IMF in some ways similar to rock3r and Calina but I do believe that some of the points in the article linked to are plain disingenuous and simply wrong. The IMF recommendations can be correct regardless of motive or ideology. Call me a pragmatist. :slight_smile:

It means public sector wages, not private sector wages over which it exerts no control. This is hardly controversial. Here, the introduction of a pension levy was the least the government could do; it results in no reduction in future pension entitlements. A pay cut would reduce the current expenditure and future liabilities both, and would have been a better financial decision.

Currency control is a well known tool for both developing and developed nations, for example China or Japan. This is advocating policies no different to those now adopted by the UK and USA. This isn’t exactly colonialism. Also it is in contradiction to what was done in Russia and Brazil in '98 and is at the root, according to the Washington Post, of the then Argentinian crisis.

Would you care to suggest which other areas a government can raise the required funds. It can either default, raise taxes or cut spending. The IMF is hardly advocating a punitive policy. Stimulus measures are impossible, the reason the IMF are there is that no one else will lend to the country in question.

If the countries in question had elected governments capable of developing strong domestic economies, they wouldn’t now be attempting to borrow from the last source possible, the IMF. Maybe default is a better option, but the government in question still has to choose it.

economist.com/displayStory.cfm?story_id=2088974
That’s just point 1 of the 10, but like needle, it’s too tiring to answer so many absolutes.

Well they certainly are not MABS. MABS provides advice to individuals which actually works. The IMF provides advice which generally wrecks the economy of the nations involved while enriching their elites and selected foreign investors.

Describing it as some sort of benevolent organisation is akin to calling the Iranian authorities facilitators of democratic elections. It’s certainly how they describe themselves, but its relation to reality is further.

I don’t see any of the Asian nations that the IMF ‘helped’ in the 97-98 crisis falling over in the current, er, global crisis. Russia seems to be in reasonable shape too…

We are currently in a situation where we have a deficit of close to 50% of spend. We have a bill of probably 70 bn from the banks to be paid in short order. We need to borrow, or at least issue, government debt to the tune of 100 bn euro this year. And probably more next year as commercial, business and residential defaults rocket.

The point is, what do you expect to happen when you bankrupt a country? This is the point at which the IMF are called in; when a country is no longer able to raise debt on the international markets and when they can no longer afford to run themselves and when there isn’t the willpower within them to fix that. Of course the IMF have a prescription of what they do. It is the same prescription that any money doctor uses - sell some assets, cut your costs, get the unemployed working, reduce your existing debt.

As far as I can see, where the cuts fall depends on you (as in you the government that calls them in). If you want to continue to pay your hospital consultants 250k a year plus, then cut three nurses for each of them to do that. If you want to run a loss-making private health insurer, go ahead. If you want public water companies that spew 60% of their treated water into the ground, fine. Cut single mother’s payments instead. If you want to sell lots of stuff to your cronies, that’s up to you. It’s your country.

You’re right, the IMF is not like MABS, it is a sock puppet for people to hiss at when governments want to make unpopular decisions, but are too chicken-shit to do it on their own account.

Excellent post yoganmahew.

There are times I think he should be running the country!

:nin

Much easier to argue from the comfort of your own home, when you aren’t looking people in the face as you hand them their cards or cut their pay/benefits/whatever. No, Mrs. O’Kelly, you can’t have that hip replacement this year, we need to give cervical cancer immunisation to the girls. Thanks for your understanding. What’s that, your muscles are atrophying and you’ll soon lose all mobility? Oh, I see… do you think wheelchairs will be a growth business then? Should we fund a company?