Upon reading a chapter by James Vreeland, he says 49 states are being funded by economic programs. The International Monetary Fund is one of the programs specifically “helping” these States. I use the word “helping”, because in reality the IMF is doing more damage than helping a state recover. One might say, “well, if they are doing more damage instead of fixing up the state why don’t they just get rid of them?”. That would be a quick solution, however, it is not as easy or as possible as you think it to be.
The IMF can grant a state loans, the catch is there are restrictions. These restrictions basically give IMF an outside control of what is happening on the inside of a different state without actually knowing about it’s people. They have the right to take away the given loan if the State does not comply with a policy. They have the right to pick and choose where the government’s money goes for example: If money needs to be in education, they can say to spend it on roadwork instead. It can also make higher or lower intrest rates and does take into account the States national currency basically they are in control of what house you can buy and what money(if any), is going into the citizen’s pocket. It is important to note that the IMF’s money is funded by developed countries and are being loaned out to by developing countries.
Since IMF is funded by developed countries these loans can be seen as an insurance just incase something bad happens to ones State such as a depression. “The function of the Fund is to aid members in maintaining arrangements that promote the balanced expansion of international trade and investment and in this way contribute to the maintenance of high levels of employment and real income.”(Vreeland, 273) Their goal is to basically stabilize the State and in stabilization it should pave way for a State to grow. In the end as I said before the IMF has failed developing countries instead of helping except with the case of Argentina.
It was during the Argentina crisis which was from 1998–2002 that the IMF worsen the situation in the State. The IMF handle the situation similarly to the Asian Financial crisis in which they failed to act in the role of a leader that saves the State. In 2001 the currency and banking system of Argentina failed and in the start of 2002 the IMF was still nowhere to be found. Instead of going further with the IMF and World Bank in this situation, they denied their help and this time the State won. Unsure of the consequence to come in 2003 Argentina defaulted on IMF and to their surprised viewers were shocked. The default led to the IMF rolling over in its own debt. It was just three months later that Argentina began to grow rapidly and averaged a 8.6 annual GDP growth. This success showed that a developing country could go against the IMF and have a rapid growth and recovery meaning that there was no need for an outside source to help rebuild the inside of a State.
“International Monetary Fund,” Globalization Reader, 271–276