What Is The IMF, Anyway?

From NPR’s Planet Money:

So in the 1980s and 1990s, the IMF took on a new role: Lending to developing countries in that were going through major economic crises. During this era, the world’s opinion of the IMF became decidedly less warm and fuzzy.

The Fund is based in Washington, and it’s largely controlled by the U.S. and Europe, which contribute a big chunk of the fund’s loan pool. What’s more, IMF loans always come with strings attached — recipients typically have to make big spending cuts, among other things.

Not surprisingly, having an institution controlled by rich countries dictate harsh terms to poor countries during times of intense crisis created a lot of tension and resentment.

So in the past decade, developing countries that didn’t want to be beholden to the IMF started saving up their own rainy-day funds, full of dollars and euros.

“What the Asian financial crisis [of the late 1990s] did was it gave emerging market economies a very strong desire to stay out of the clutches of the IMF,” Prasad said.

The total value of foreign-exchange reserves held around the world has risen from $2 trillion in 2000 to $6 trillion now, according to Prasad — and almost the entire increase has come from countries in the developing world.

But as developing countries like China, India and Brazil were stashing aside money for a rainy day, countries at the edges of Europe were heading for fiscal disaster.

And so, over the past year, the focus of the IMF has shifted back to Europe.

The IMF has been a key player in the bailouts of Greece, Ireland and Portugal. For one thing, it has contributed a significant chunk of the money. For another, the presence of the IMF has also made it politically more palatable for the recipients to agree to the terms of the bailouts.

But, in the past few weeks, a big, new problem has arisen: It’s become clear that Greece is so far in the hole that it probably won’t be able to pay off all its debt on time.

Strauss-Kahn’s arrest means Greece’s day of reckoning — and the potentially widespread fallout — may be coming sooner, rather than later.

Strauss-Kahn has been pushing for Europe and the IMF to be lenient, and to lend Greece more money, Prasad said. German leaders, on the other hand, have been resisting lending more to Greece.

What’s more, the IMF has been accused of maintaining a double standard — of being more lenient with countries in Europe than it is with countries in the developing world.


  1. Basically when you’re country is in the Red, after your government has mishandled the financial running of your country and lost a shitload of money. The IMF is brought in and sets out a repayment plan for the average working Joe to foot the bill. Through increased taxes and workers pay cuts, cuts to social service, and the selling off of national businesses and services to private companies. They didn’t borrow it, they didn’t get anything from it, but they have to pay it off.
    They are International banking gangsters, anyone who knows anything about them, does not want them. Greece had an attempt at resisting it, but they only got so far before Police killed someone in the street. They were generally opposed by the people here in Ireland. 200,000 people marched in the capitol. But it failed to sway any decision making. A lot of people in town for one day on the weekend, realistically won’t change anything… fuck it lets all go watch X-Factor

Comments are closed.