IMF: The BIGGEST money lender in the world?


the International Monetary Fund is
perhaps one of the most controversial entities on earth it is undoubtedly one
of the most powerful and is one of those responsible in some cases of economic
and financial crises that have left some countries on the verge of bankruptcy but
where did this controversial organization come from and what are the
roots of its great political and economic influence in cases such as
Argentina and Greece for example that without the billion dollar disbursement
by the IMF Greece would have had to leave the eurozone and Argentina was the
current Macready it would not have cash to pay the current and national debts
the IMF is present at various meetings of international importance such as the
g20 where between the European Union and IMF are the only two entities that are
not countries attending the annual meeting of the most industrialized
nations on the planet so what are their functions and what role do they play and
why are their policies so necessary but so unpopular at the same time after the end of the Second World War
with the collapse financial system and general disorder it was established that
an organization that regulated international trade was necessary from
there the International Monetary Fund was born
at the Bretton Woods conference with a sister organization the World Bank the
IMF is the public organization that lends the most money in the world
membership is open to any of the 186 states of the United Nations the same
states that I wrecked the organization almost all nations in the world are part
of the IMF rare exceptions include Cuba and North Korea there are even non UN
member nations such as Hong Kong or Taiwan as they were expelled from the UN
and replaced by the People’s Republic of China the IMF itself is responsible for
maintaining order of the international financial system which is not a simple
task each country has its own peculiarities and the IMF tries to
recommend certain macroeconomic adjustments that sometimes do not always
please the government in question in many cases these adjustments or reforms
include liberalizing the economy and reducing the size of the states and also
increasing taxes and putting down barriers of protectionism and then being
able to opt for financing from the IMF some believe that the IMF is simply a
tool of the United States government to subdue and manipulate financially
dependent countries and that it is an arm over foreign economic policy for
America but to what extent are these claims true the truth is that the IMF
like the United Nations is an international organization and is funded
by the 186 countries that make it up each country must pay a fee based on the
size of its economy the larger its economy then obviously the greater
weight the country will have in shaping the organization and the policies it
implements the larger the country is the greater its contribution so for example
the u.s. makes up around 18% of the total quota where the Seychelles
contribu a modest 0.004% from the IMF website it states that
quotas are a key factor in the decision-making power of the IMF for
example China the world’s second largest economy does not contribute what it
should have to contribute to the IMF with six percent of the global quota
Japan provides the same amount as China with China having a much larger economy
the u.s. France Germany Japan the United Kingdom and Italy contribute to more
than 25% of the IMF quota meanwhile Russia China and India
together not even reach ten percent of the IMF quota in total
the IMF owns about three hundred billion dollars in installments and about fifty
billion for immediate loans obviously the IMF being an international
organization with control mechanisms and a strong Western presence there are
certain conditions that countries with authoritarian models or anti-american
sentiments do not agree with so much in cases of financial or economic crises
caused by poor economic management the IMF can help but it has its conditions
in exchange for the IMF aid it generally requires the given country to embark on
a reform economy program supervised by the entity this is also known as
structural adjustment policies these policies depending on the severity of
the state of the economy may include strong privatization of public companies
or state-owned companies and increased taxes to adjust fiscal deficits in the
case of much poorer countries the IMF can offer loans at a zero percent
Interest with extensions ranging from four eight and twelve years all
depending on the type of loan or the financial rescue that the country needs
so let’s take a look of some of the most iconic IMF bailouts and which had the
biggest repercussions 1997 South Korea the Asian economic crisis of the late
90s hit South Korea heavily with the collapse of the currency and the
abundance of bankruptcies South Korea went to the IMF for help and the World
Bank the eight total to around seventy five billion u.s. dollars the US Japan
and eleven other countries also contributed to these funds in exchange
the South Korean government had to endure difficult conditions including
high interest rates and many reforms to open the countries then closed the
economy they also had to suppress the relationships between banks and large
conglomerates 1997 and 1998 Indonesia shaken by the Asian financial crisis
Indonesia was the site of one of the biggest IMF bailout ever the country’s
currency the Indonesian Rupiah had been falling steadily since August
1997 with inflation rising to almost 80 percent in addition to the consequent
political turmoil and the protests the capital city Jakarta was paralyzed under
the president dictator Suharto that had been in power since 1968
the financial rescue Indonesia’s economic problems continued for several
years and resentment grew towards the IMF policies in the 90s which some
considered to be an infringement of the country’s economic sovereignty
macroeconomic conditions had finally improved helped by the resolution of the
eastern world crisis and in 2006 and 2007 USA CIA rated the country stock
market as one of the three best in the world the loan to Indonesia during the
crisis totaled between 58 and 64 billion dollars 1998 to 2002 Brazil the first
brazil bailout in 1998 came immediately after a financial crisis in Asia and
Russia and caused panic among investors in Latin America on this occasion the
IMF and a number of other lenders promised to avoid the crisis before it
hit Brazil the largest economy in South America received an aid package to
stabilize the region and in return Brazil was asked to cut spending and
increased taxes to avoid a budget deficits the Brazilian Congress rejected
the conditions but the loans continued anyway the lenders intervened again and
the name of stability in 2001 since Brazil’s currency was devalued by 20%
between January and August and public debt grew the 2002 elections raised even
more concerns as investors were not sure how the leftist candidate Lula da Silva
could handle the crisis Brazil stock market fell further when the then
secretary of the US Treasury Paul O’Neill demanded evidence that another
loan would not leave the country and into Swiss bank accounts furious Brazil
demanded an apology and shortly thereafter the US and the IMF offered
the country a 30 million dollar care package world leaders have demonized the
IMF such as former venezuelan President Hugo Chavez Bolivian President Evo
Morales and former Ecuadorian President Rafael Correa indicating that accessing
IMF loans was to renounce national sovereignty and submit to Washington DC
there are many new ways of obtaining credit at an international level which
no longer go through macroeconomic recommendations or forced adjustments by
entities such as the World Bank or the International Monetary Fund in many
cases however some countries that do not wish to accept the conditions set by the
IMF such as tax adjustments democratization
and text increases have to go to other creditors that work within their
conditions the IMF and the World Bank generally agreed to lend to countries
that are following the USA’s alignments but this is not always the case but now
there is a country that has been acting as an entity like the world bank lending
billions of dollars to multiple countries and regions all around the
world the country in question China it is now the country that lends the most
money in the world its loan conditions are peculiar even borderline enslaving
in some cases but that’s for another video we will discuss how China has
managed to exercise an instrument of control and power through debt so I
passed the question off to you do you think the IMF is a good option for
country’s going through economic difficulties what adjustments would be
difficult to implement but necessary and what about the IMF is ineffective let us
know your thoughts in the comments below and don’t forget to Like and subscribe
for more videos like this every single week

5 comments on “IMF: The BIGGEST money lender in the world?”

  1. Eagle Mexhicoault says:

    excellent video imperium👍😎👍
    greetings from Mexico🇲🇽👏👏👏

  2. Imperium says:

    Will China overtake the IMF as the largest money lender in the world? Let us know!

  3. MrSammy says:

    🙂 imf is one of the top pieces in the global power structure

  4. Sachim Karekar says:

    An episode on World Bank!

  5. JMG says:

    IMF, the biggest greedy money lender in the world!!!

Leave a Reply

Your email address will not be published. Required fields are marked *