Assess the role of the International Monetary Fund (IMF) in international politics and in influencing development in Latin America

Résumé du document

The first clause of the Articles of Agreement which form the bond member states are attached to under the IMF asserts that 'The International Monetary Fund was established operates in accordance with the provisions of the Agreement that was originally adopted and subsequently amended'. The Internaational monetary Fund is an international organization that was created at the Bretton Woods Conference in July 1944. Originally, the Articles of Agreement of the IMF were signed by only 29 countries, and it now has 184 members. Its general role is to 'foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.' Naturally its role changed through time but the general ideal remained the same. The Fund now concentrates its resources on helping countries from the Third World instead of European countries. Latin American countries are therefore one of the IMF's concerns since a majority of them still have developing economies and often ask for credit and/or advice. However although Latin America, has a common geographical area, it consists of very different countries with very different backgrounds. Brazil for instance is a regional power and has an immense area compared to Chile.

Extraits

[...] The constitutional reforms demanded by the IMF were only passed in June 1994 at the same time as a deindexation of wages and budget cuts in education, health and regional development. This, however, had huge repercussions on the society: growing impoverishment of the population and unemployment were the result of these policies. The last of these IMF-led reforms was the 'Brady plan' in April 94, a 'restructuring formula of $44 billion. This series of reforms and plans can explain why the Brazilian society is so divided today. [...]

[...] Moreover the IMF is not just under Western control as emerging regional powers such a Brazil are gaining more power in the organisation. In a word, the IMF has an important role in the world order since the 1980s and in managing the global economy between North and South countries BIBLIOGRAPHY: Books: Amin S., Le développement inégal (Paris, Editions de minuit, 1973) Armstrong D. et al, International organisations in world politics, (New York, Palgrave, 2004) Chossudovsky, M., The Globalisation of poverty (London, Zed books Ltd, 1997) Honeywell, M., World debt crisis” in Poverty brokers: the IMF and Latin America (London, Latin America Bureau, 1983) Nowzad B., The IMF and its critics (New Jersey, Princeton University, 1982) Schweitzer, The International Monetary Fund and its role in Stamp Memorial Lecture (London, Athlone Press, 1969) Woods, N., “International political economy in an age of globalization” in The Globalization of world politics by J. [...]

[...] It happened in two phases: the first one was contrary to traditional IMF plans. The president Garcia put into place 4 the 'Economic emergency plan' that reactivating consumer demand, froze prices, interest rates were brought down and exchange rates were stabilised. Following through his Keynesianism principles, Garcia declared a moratorium on payment of debt. However this was a programme only made for the short run as it flowed in the opposite direction of all other world economies and in September 1988, a more traditional IMF package was set up. [...]

[...] The 90s were also marked as a period of intense discussion between the Fund and Latin American countries. Scarcely surmounting the world debt crisis, Brazil initiated the 'plan Collor' in 1990. It was a mix of interventionist monetary policy, privatisation and trade liberalisation that was supposed to put Brazil 'back on tracks' and eliminate public deficit. If the plan was approved by the Fund, it did not lead to further loan. The debt talks, reopened in April 91, started badly for Brazil as the government argued that 'debt must be limited to Brazil's ability to pay'. [...]

[...] The Fund is also criticised on the way it deals with its policies and actions: detractors claim that the IMF is neither concerned by environmental problems nor by social issues. As long as global inflation is controlled through monetarist policies, all is fine. The main criticism the Fund gets is that the structural adjustments imposed on developing countries create more bad than good and increase the latter's dependence on Western countries: with the IMF menu, national states lose control over fiscal and monetary policies, central banks and ministries of finance and economy are reorganised to be sure they will follow Washington. [...]