The International Monetary Fund (IMF) is originally designed to foster global monetary corporation. It is said to provide countries with policies that will aid their financial growth and development. It attempts to provide financial stability, facilitate international trade and establish financial growth. Ironically speaking, IMF is designed to aid in sustaining the world economy, however according to Sigilitz, it has resulted into a negative implication in the East Asia region. IMF policies have unconsciously created modern day colonialism that impacts the poor. It has generated a greater inequality and result to environmental destruction. The existence of the structural adjustment policies (SAPs) forces countries to ensure the payment of their debts thru the cut down of budgets for necessary social services such as education and health services. The policies instead of making things better for the country aggravate poverty even more because it makes social services expensive.
In addition, the IMF policies favor only a selected few, mainly the powerful nations. Rich countries dominate the voting procedures in the IMF because the voting privilege is dependent on the amount each country pay into the quota system of the IMF. Third world countries such as the Philippines is not capable of competing in terms of monetary contribution, therefore, their voting power is not the same with powerful nations such as the United States. IMF policies are elitists in a sense because it makes the rich even richer while depriving the poor countries the same privilege enjoyed by financially capable nations. The policies provided by the IMF are chocking for the poor countries because it does not provide them with financial stability but rather corner them with debts. More importantly the IMF bailouts worsen the economic crisis rather than actual resolve it. Sigilitz shared countries such as Thailand and Korea as examples of countries that experienced crisis, where the IMF appeared as the lender of last resort. The lending of the IMF did not cure the Asian crisis but it even helped in its spread and deepening. In the case of South Korea, the IMF resulted to a recession by raising the interest rates that led to high rates of unemployment and bankruptcies. The policies offered by IMF serve as band aid solutions that cause more dangerous economic problems in the future. It has led to the tightening of budgets of countries that led to a domino effect of worsening the social situations of affected nations. it resulted to mass layoffs, recessions and economic meltdown across the Asian region.
As observed in different countries across the globe, although the main desire of IMF is to promote stability and growth, it creates a rather deadly cycle of economic problems. It consequently makes countries deregulate their existing economic systems. The deregulations of economic systems make small countries susceptible to the man-handling of power nations, because bigger nations can demand their own terms when it comes to the trade. The IMF policies, during the hype of the bailout for Asian nations, the IMF insisted the governments to carry the bad debts of private bank. This stand of the IMF resulted to the public paying the taxes because the payment came from the people’s taxes. The move drained nations from their monetary resources that are better off used in the uplifting their public service.
The policies of IMF are also not pro-workers. It attracts foreign investors into countries, thus, affecting the standard labor laws in one country. The IMF, for example, promotes the concept of ‘flexible labor’ that allows corporations to move to places where they feel labor is cheaper. This power vested into corporations resulted to many people losing their jobs especially when a plantation close in one area in favor a cheaper labor market. The contribution of the IMF to the Asian financial crisis prompted Asian countries such as South Korea, Thailand, Indonesia and much others into a problematic economic depression that worsened their poverty rates. The IMF mentioned that the countries can survive the crisis by exporting their way out of the deep hole, the advice led to many workers being laid off. Even the US was not spared from the harmful advice of the IMF, in the history of the US economy; an estimated 12,000 steelworkers lost their work due to corporation shifting to exportation rather than locally produce products. To encourage exportation, the countries are forced to re-think their export policies by providing tax breaks and subsidies to the industry of export. It affected poor countries because it directs their subsidies towards the exportation of products from other countries, rather than using the money to support their own local industries. The procedures lay out by the IMF makes labor workers easy target for unjust practices. It provides corporations with too much power that it also damage the environment. It promotes the exploitation of the natural resourced of countries.
The IMF’s Other Agenda
The East Asia Crisis: How IMF Policies Brought the world to the verge of a Global Meltdown