The International Monetary Fund

The International Monetary Fund

What do you know about the IMF?

International Monetary Fund

The IMF is a financial institution (it
deals with money and international
economics)
Today the IMF has 188 member
countries

Origins of the IMF

The IMF was formed in 1944, at
the end of WWII

It formed to help rebuild and restabilize countries and

economies after the Wars
destruction

IMFs main goals and purposes

promoting the expansion of world trade
promoting the stability of exchange rates

helping countries correct balance of

payments problems

How does the IMF work towards those goals?

o Basically, the IMF allows developed
countries to loan money to
developing countries.
o This money is used to stabilize
economies, build roads and schools,
and invest in their people.

Why would a country borrow money?

Why would a country borrow money?

To fix Balance of Payments (B.O.P)
problems.
These problems occur when a country
has:
a loss in tax revenue or other spending
needs.

For example: Egypt!

B.O.P. Problems Example

Egypts uprisings and regime changes
decrease in tourism (GNI/GDP)
more need for defense spending
(military and police)

Solutions? Take out a loan from the

IMF

Conditionality
When developed countries
tell developing countries
what to do.

Conditionality
When developed countries
tell developing countries
what to do.
Goals: promote private
investment, promote job
creation, stabilize economy

Conditionality Problems
Sometimes unpopular

Sometimes almost
impossible to fulfill
Example: Tunisia

Criticism of the IMF: Conditionality

What if you cant pay?

obligated to default or borrow more money

Many of the poorest countries are now facing crippling debt.
Cycle of debt and repayment cant develop economy and country

Criticism of the IMF: Huge Debt Burden

Loan Forgiveness?
Example: Germany and Greece

You can apply for loan forgiveness, but it is very

difficult to get
must meet very strict targets
reforms, and proven economic
growth

Voting in the IMF

Members vote on decisions

Voting is weighted (the more

money you put in, the more
voting power you have)
Unfair to the poorer,
developing countries

The purpose of the conference

The IMF is very important and can potentially help
development
But MUST address these problems or it will lose credibility
and global support

Topics of Debate:
Conditionality:

When developed countries tell

developing countries what to do.

Loan Forgiveness:
to break the cycle of debt and poverty

Voting Reform:
to make decision-making more fair

Joatzel Fund Scenario

If Joatzel Fund is the IMF and Laguna is the
world
Who are each of the Roles?

Think. Pair. Share.

Why is the IMF important?
Why is each of these issues controversial?
Voting
Loan Forgiveness Conditionality