Criticisms of IMF
They are designed to bring the external payments account into balance…. This was to be achieved through the fund lending to developed countries whose currency had fluctuated and dropped below a set band that members had agreed to, in order to shore up the currency Vreeland, , pp. With the demise of the Bretton Woods system of adjustable pegged exchange rates in the early s, the IMF reverted to being an organisation of international lending in the developing world.
It is their actions and policy decisions in these countries that have attracted much criticism. One of the primary criticisms of the IMF is that some see it as being driven by a neo-liberal economic agenda.
Some authors, such as Carty cited in Latin American Bureau, , pp. Both authors also suggest that in favouring these particular policies, the IMF has favoured the capitalist class over society as a whole. Another of the main concerns often directed towards the IMF is that the organisation is controlled by the major, developed capitalist countries, and private financial institutions.
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This has led to a situation where the economically wealthiest countries can contribute more to the fund; thereby they have greater voting influence on policy. In conjunction with this, Vreeland , pp. By far the most prominent criticism of the IMF has been directed at the conditionality attached to the loans that it provides. Conditionality refers to a process where loans are provided to a country on the basis that they follow strict policy conditions that are set down by the IMF to correct their balance of payments problems. Under this system the loan recipient country must comply or risk losing the financial support of the organisation.
The criticisms of conditionality often centres on the fact that the policy programmes that the IMF prescribes for loan recipients often hit the poorest sections of society most, whilst benefiting the capitalist class, purportedly to stimulate economic activity in the country. So, are these criticisms based on ideology, voting power, and conditionality, justified?
An analysis of each argument in turn allows us to assess each on its own merits. These policies as such have been replicated in many countries that the IMF has provided loans to.
As these policies are generally seen to benefit the capitalist class, without taking account of the social harm they may create, it can be argued that the criticism that the IMF is ideologically driven is justified. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner. This page posts articles by and on former World Bank chief economist Joseph Stiglitz, who has been an outspoken and respected critic of both the IMF and the World Bank since his resignation from the Bank in This page posts articles on Ravi Kanbur who resigned from the World Bank in The International Monetary Fund.
The World Trade Organization. Multilateral Agreement on Investment. With the World Bank, there are concerns about the types of development projects funded.
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Many infrastructure projects financed by the World Bank Group have social and environmental implications for the populations in the affected areas and criticism has centred on the ethical issues of funding such projects. For example, World Bank-funded construction of hydroelectric dams in various countries has resulted in the displacement of indigenous peoples of the area.
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Civil society groups see the Bank as unfit for a role in climate finance because of the conditionalities and advisory services usually attached to its loans. There are also concerns that the World Bank working in partnership with the private sector may undermine the role of the state as the primary provider of essential goods and services, such as healthcare and education, resulting in the shortfall of such services in countries badly in need of them.