Abstract
Examines the role of the IMF, Third World criticisms of the institution, and the relationship between American interests and IMF policy.
Description
The International Monetary Fund was established in 1944 as a lender of last resort to countries facing balance of payment difficulties, a lifeline for countries on the verge of insolvency. By the 1980s a number of Third World countries turned to this lifeline, unable to pay back the massive loans they had received from western commercial banks in the 1970s. Yet as financial crises in countries such as Mexico and Brazil threatened to undermine global solvency, the IMF came under fire in the very countries where it was working to stave off disaster. As a condition for financial assistance, the IMF requires governments to make harsh economic adjustments, such as restricting imports, cutting spending on socials services, and ending price subsidies on such essential items as food and fuel. The IMF claims that such austerity measures, although painful to administer, are necessary to correct floundering economies. For local populations, however, such policies created severe economic hardships, and the implementation of austerity measures resulted in public outcry that was forceful and at times violent. In this episode of American Interests, host Peter Krogh sits down to examine the criticisms of the IMF with C. Fred Bergsten, Director of the Institute for International Economics, and Lewis Lehrman, Chairman of the Citizens for America, a group formed to support the policies of Ronald Reagan. Together they discuss the functions and role of the IMF in the world economy, the impact of austerity policies in developing nations, and the relationship between American interests and IMF policy.
