The International Monetary Fund (IMF) is an international organization which oversees the global financial system by watching over foreign exchange rates, rebalancing of currencies. It also offers technical and financial assistance. The IMF is an organization of 184 countries and it works to secure financial stability, international trade, and promote employment, growth, and reduce poverty to its member countries.

The IMF came together in 1944 with 44 governments agreeing on an economic plan to avoid policies that had contributed to the depression of the 1930s. The IMF provides assistance to countries that have serious economic problems. Members may request loans or management of their national economies. For providing this service, these countries adapt certain reforms to their economy. The IMF intervenes with members who are in deep financial troubles, sometimes because of decades of mismanagement, there are financial collapses, and this sometimes leads to years of economic difficulty. Politicians sometimes use the IMF as a target for blame with poor relationships because of economic problems.

The IMF offers enhanced structural adjustment facilities (ESAF) loans to developing countries with high inflation, poor trade policies, and high debt. These loans are low interest, medium term loans, their usually 5 to 10 years. The loans are meant to help a country meet its short term financial obligations. The economic policies with these loans are made to help a developing country have long term economic growth. Sometimes because of the strict agreements of these loans, countries are desperate for money; it increases poverty instead of economic growth. I think it depends on how the financial situation is in a country as to whether these loans should be repaid. It should probably be looked at as an investment for the members of the IMF, as they could benefit by trade after a country has build up its economic structure.

Wall Street investment bankers loan governments money to increase interest rates and pay investors who buy up foreign government notes and bonds. The IMF encourages this type of investments by Wall Street because it increases the money supply to these countries. Almost every country has some source of natural resource that another country to use, normally you would trade. So, by loaning these countries money, they could pay back the loaning country by contributing their natural resources as payment. For Example, the U.S. government is a strong supporter of the IMF’s work in Haiti. Haiti is the largest market for U.S. rice in the Caribbean.

The IMF program forced Haiti to open up its economy to rice imports from the United States and abolished tariff protections. It’s been criticized that IMF policies prevent the Haitian government from protecting domestic producers. An importer of rice was able to capture market share in Haiti which displaced local growers. For this reason, I feel that the IMF may be abusing its powers. On the other hand, since World War II, the IMF has seen increases in prosperity in some countries; it has helped the growth of international trade. The world is growing so fast now due to technology and communications, the IMF has contributed to the partnerships of international markets. As a result of this sometimes, if there is an economic problem, it can spread from one country to another.