The International Monetary Fund

Taken from: Global Classrooms Tirso de Molina November 12, 2014 Presentation by Laurel Way

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 re-stabilize countries and economies after the War´s destruction

IMF´s 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? Basically, the IMF allows developed

countries to loan money to developing countries.

This money is used to stabilize

economies, build roads and schools, and invest in their people.

Why would a country borrow money?

B.O.P. Problems Example Egypt´s 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 can´t pay?

obligated to default or borrow more money Many of the poorest countries are now facing crippling debt.

Cycle of debt and repayment → can´t 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: Loan Forgiveness: Voting Reform:

When developed countries tell developing countries what to do. to break the cycle of debt and poverty 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