Good and bad of the international monetary fund
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Published: Thu, 27 Apr 2017
As I watched Life and Debt there was so many things in which I was unaware of that happened so close to home. Out of the entire movie nothing hit me more than the International Monetary Fund and how they were so greedy, heartless, uncaring, and manipulative. I decided to learn more about the IMF and found this excerpt on their web page, “The International Monetary Fund (IMF) is an organization of 186 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” (International Monetary Funds, 2005) This explanation of the IMF seems so generous and kind, as though they are doing a service for the welfare of others not for profit. But then how is it that manipulating countries into accepting loans from the IMF with great amount of restrictions and regulations promote “â€¦.sustainable economic growth, and reduce poverty around the world.”
Jamaica is not the only victim, Poland has been pushed into intense external pressure from the IMF creating capital flow problems, as well as, Haiti, which has been wrongfully deceived and overall international aid has harmed their local economy more than “â€¦secure financial stability.” The IMF has been taking these countries on a roller coaster ride of deception, hope, escapement, and a savior in disguise.
Section 2: Analysis
Life and Debt investigates the effect of the International Monetary Fund’s or the IMF policies on developing countries such as Jamaica. IMF is a specialized agency of the United Nations that seeks to promote international monetary cooperation and the stabilization of national currencies and help nations resolve balance of payment problems. This is IMF’s mission, but one would have never known that with the example of what the IMF has done with Jamaica. The IMF wanted Jamaica to devalue there money, which would make the cost of import goods more expensive. IMF reduced trade which caused foreign goods to enter the market hurting there markets and the local goods less desirable. This led to farming becoming almost completely wiped out and is unable to produce and sell in their own country.
When Jamaica was able to gain their independence from Britain in 1962, they soon found them selves struggling as an effect of the oil restrictions the subsequent year. In order for Jamaica to receive a loan from the IMF, the country was obligated to enter into a tricky agreement with its lenders. The terms of their agreement was that Jamaica had to reduce trade barriers by diminishing its local import restrictions, which led them to enter the world market. Soon after the local economy was flooded with foreign goods, in which were much cheaper than goods that were produced locally, this resulted in loss of jobs and economic self reliance.
The method of milk production is a powerful example of how the cycle of dependence is portrayed. Production of milk is heavily subsidized for farmers in Australia, the U.S., the European Union, and New Zealand, milk is sold at an extremely low price in the Jamaican market. Powder milk has become the normal form of milk consumption, even though it is produced at a much higher cost than fresh milk, the subsidies make it less costly to purchase. In the video, many farmers were forced to dispose thousands of gallons of fresh milk because they could not sell. Many farmers resulted in slaughtering or selling their cattle to reduce the size of their operations, and the dairy industry has become incapacitated further than repair. (Black, Life and Debt)
When IMF is lending to a developing country all banks are making loans this becomes Cross Conditionality. This is another way of requesting the contributing country in this case Jamaica, to meet a condition for both organizations. The countries are then pressured into accepting these harsh conditions because otherwise their country will fall into an economic turmoil. For instance, in Elizabeth Dunn’s book, “Privatizing Poland” she exclaims that Poland is often found an in intense external pressure when the World Bank, the IMF, or the European Bank for Reconstruction and Development makes loans temporarily. Although this temporary fix may seem as if they are trying to make a quick repair the Poland Politician knows and understands that in making a loan conditionally on Poland’s establishing monetarily conformist policies and cutting back on social welfare is a pressure in which leads to political chaos. By blocking or facilitating international loans, further shape multinational capital flows. For Poland these capital flow problems shape how they enter the global economy. (Dunn, Privatizing Poland)
For almost twenty five years Jamaica has been under these policies of the IMF and it has now extended far beyond their shores. In Haiti, former President Aristide was pressured just like Poland and Jamaica, to accept loans from the IMF. Paul Farmer makes a very interesting statement on Haiti financially, he reports, that Haiti’s finance Minister, Marc Bazin, discovered that a monthly average of $15 million was being sidetracked from civic funds to gather “extra budgetary expenses” that incorporated regular deposits into the President’s private Swiss bank account. For the duration from 1970 to the 1980’s two-thirds of government investment enclosed entirely half of Haitian import expenditures. Regardless of the apparent evidence of immense fraud, the organizations, and the U.S. Aid, who was more than happy to keep providing money, displaying that the effects of international aid has been often highly harmful to the local economy of Haiti. (Aids and Accusation, p.189)
The strong point of the film falls on its broad rationalization of the role of the IMF and its interrelationship with the World Trade Organization and the World Bank. Life and Debt clarifies the impact that these economic policies have on an every day basis on the lives of thousands of people they are said to benefit. Within the IMF the voting rights are roughly balanced to the donations paid in by member nations. The Jamaican people have been removed from participating in the decisions that affect their lives due to the breakdown of the democratic process. The IMF encourages a schema of financial severity, lowering salary, and currency devaluation. A recession is what the IMF’s goal will result to, by them reducing price rises by matching a nation’s loan repayments and imports with its export wages. These policies are meant to assist Third World economies by incorporating them into the global market. In reality what happens is that the Third World people end up suffering, while commercial banks in the North collect an enormous transaction of interest. Since 1977, only about roughly 5 percent of total money borrowed has been able to stay inside of Jamaica.
Section 3: Conclusion
“Give me control over a nation’s currency and I care not who makes its laws”-Baron M.A. Rothschild. IMF runs a nation into the ground and then like a scavenger comes in to feed upon the nation’s distress. Bretton Woods Conference in 1944 created the IMF to demolish disorder in the world caused by globalization. Life and Debt is a mere snapshot of what the IMF does throughout the world. The system works as if being a spider’s web for the influential leaders in which countries become economically intertwined in, where nations are put into positions to be defaulted on their IMF loans prior to the elites to come in for the kill. The closing stages result in the ability of the IMF to direct countries into the innovative world order international government system all the way through the exploitation of the world’s economic markets.
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