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The International Monetary Fund (IMF) was set up in 1944 at a conference convened in the town of Bretton Woods, New Hampshire, at the end of the Second World War with the original intention of providing short term loans to countries facing shortfalls in foreign currency. Over the past 59 years, the agency has become the global economic master of Third World countries and the former Soviet bloc where it dictates economic as well as social policy in return for loans. The most infamous of these policies is called the Structural Adjustment Program under which countries are forced to slash education and health programs and privatize state enterprises in order to qualify for loans.

The IMF's policies are dictated by the member countries who run the institution. Although almost every country in the world is a member, the agency is ruled on the principal "one dollar, one vote" and so it is controlled by the US, the UK, Japan, Germany, France, Canada, and Italy -- the "Group of 7," which holds over 40% of the votes on their boards. In fiscal 1999, the IMF provided US$43 billion in short and medium-term loans to countries.

In South Korea, local people joke that the letters IMF stand for I'm Fired after a US$58 billion Structural Adjustment Program in 1998 caused an average of 8,000 people a day to lose their jobs. As many as 25 of those committed suicide each day as a result. Meanwhile, the IMF makes a huge profit out of these countries. The World Bank's own figures indicate that the IMF extracted a net US$1 billion from Sub-Saharan Africa in 1997 and 1998 more than they loaned to the continent. The agency made US$589 million in net profits that year and the average salary of an IMF staffer (including secretaries and temporary labor) amounted to US$123,000.

The IMF routinely bullies countries into adapting policies that governments do not favor. For example in March 2000, the IMF threatened to cancel promised loans and to sever relations with Moldova if the former Soviet Republic failed to privatize key agricultural industries. In Kenya in 1998 the IMF told the government that it would not approve a promised loan if the government gave into demands from striking teachers to raise salaries from the average basic salary of US$150 per month. Kenya is already heavily indebted, and pays 25% of government revenue on debt service, compared to 6.8% on education. The IMF even forces countries to reveal local budget to the agency before letting their own elected officials know. A transcript of a telephone conversation between two top Brazilian finance officials in May 1999 showed that the current acting director of the IMF told the finance finance minister to read a planned speech to be given by the Brazilian president Fernando Henrique Cardoso, before it was delivered to the public.

The IMF has even evicted homeless people in Washington DC in order to expand its operations. In 1994 the agency ripped down the Western Presbyterian church to build new offices house some 600 additional staff where homeless people would gather to get free breakfasts on weekdays. Worse still, the agency's staff, who are paid so well, have been found guilty of abusing their own domestic servants. In May 1998, Davit Makonen, an IMF staffer, was found guilty of paying Yeshiharege Tefera an average salary of three cents an hour for working for him for eight years in the US!

For more information on the IMF, see our Debt and Structural Adjustment pages. For information on the environmental impact of the IMF's policies check out http://www.foei.org/ifi/

 

 

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