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Question:


What is the IMF and what does it do?
-Drew


Answer:


The IMF is the International Monetary Fund, an arm of the World Bank that was created after World War II to help promote stable foreign-exchange rates but that has the fuzzier goal these days of “working to foster global monetary cooperation.” To live up to that goal, the IMF tries to help countries embroiled in financial and economic turmoil to get back to some level of stability. It does that by using its ample resources – just about every country is a member, and the organization has assets of roughly $450 billion – to make loans to struggling countries to give them time to repair financial imbalances and shore up their credit markets.
 
As you can imagine, the IMF typically lends out more during global recessions or during crises such as those arising from the Latin American debt defaults of the 1980s and the Asian financial meltdown of 1997-98, and it has been working overtime the last few years. It’s hard to question the organization’s motives, but its policies often come in for criticism. One frequent complaint is that the IMF attaches austerity conditions for debtor nations that are so stringent as to impede the economic growth needed to restore their financial systems and create lasting stability. What’s worse, some critics say, is that the austerity measures typically cause disproportionate hardship for the poor. That said, whatever policies these countries had must not have worked or they wouldn’t need to be bailed out, and they’re always free to turn down the money.
-Conrad de Aenlle



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