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IMF Bailouts — Roads To Stability Or Recipes For Disaster?

The International Monetary Fund (IMF) has been described as the lender of last resort for countries in financial distress. But the stiff medicine doled out by the fund is still subject to huge controversy.


Following the ravages caused by World War II, the International Monetary Fund (IMF) was originally established to allow countries with payment deficits to borrow money temporarily and repay their debt to others. The hope was that this would create financial stability, foster global cooperation, facilitate trade and growth, as well as reduce poverty.

Now, more than 74 years later, the debate about the methods used by the IMF to achieve its goals continues to thrive. Proponents of IMF bailout programs claim that the liquidity provided and the reforms demanded are preventing more extreme financial hardship.  

But the opponents argue that their ingredients make troubled countries more dependent on IMF aid and their populations poorer.


Originally set out by British economist John Williamson in 1989, the principles included lower government borrowing to discourage high fiscal deficits, cuts in government subsidies and lower corporate taxes.


Other "structural adjustments" recommended were freely-floating currency exchange rates, free trade policies, relaxing rules that hamper foreign direct investment and competition, as well as the privatization of public assets.

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British IMF International Monetary Fund John Williamson World War II

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