The International Monetary Fund (IMF) is basically the world’s big piggy bank. 189 countries pay into it, and if they find themselves in need of quick cash, the money can be used to try and avert economic catastrophe. As of September 2016, the IMF had $668 billion to lend out in emergencies - that’s about a quarter of the whole of the UK economy.¹
The IMF’s main function is to lend money to countries in financial trouble, particularly those that have a balance of payment problem.
But the IMF doesn’t just lend money out for nothing. In return for the loans, the borrowing country has to implement a set of policies and economic reforms which are supposed to make their countries run more efficiently. These are known as structural adjustment programs, and they are incredibly controversial.³
Structural adjustment programs are all based on the same assumption that the ‘free market’ is a good thing. To get loans, countries have to commit to deregulating their markets, privatising public assets, reducing the size of government, cutting social spending, and getting rid of any barriers that prevent trade or capital from flowing into and out of the country. According to the IMF, these policies are necessary to transform a failing economy into one with high growth, increased employment and social investment.⁴
However, critics of structural adjustment argue that these policies have actually done the opposite of what they claimed to do: they have decreased growth, increased poverty and mainly served the interests of international creditors and businesses.⁵ They argue that structural adjustment is actually about restructuring the debtors economy to the single goal of repaying foreign debts. This reduces the power for people to govern their own economies, as they must implement a standard set of policies that they have no choice over.
Yet despite the criticisms of structural adjustment (from even within the IMF itself)⁸, the IMF continues to enforce the same set of policies in return for bailing out countries that are facing economic crisis.