Posted by Lorelei (188.8.131.52) on January 29, 2002 at 11:37:37:
In Reply to: The IMF and Argentina posted by pancho on January 29, 2002 at 11:14:03:
The IMF, like any other institution that lends
money for a price, is not unique in its role of
providing liquidity for people who need it. People
in this forum have taken money that wasn't theirs
and paid a price for it, as I'm sure people have
used credit cards, gotten mortgages or taken out loans.
And the bank IS concerned with what you do with their money. You don't know how many times people have to default on loans, a cost that is absorbed by the lender if there are no insurers to cover the cost of the loan. Moreover,
the IMF does loan aid packages with conditions
attached: you must first privatize companies,
develop this sector of the economy, increase the
cost of timber and decrease the cost of aluminum.
YET, there is a problem of oversight: who gets to see if these conditions are met by the receiving
regime? Can a banking institution send its representatives to a recipient country and do all
the work for them? And even if the institution
demands reviews of what is being done to the money, how do they know it's not just all lies and forged information?
You would oversimplify the case to say that the IMF does everything wrong and only sends countries to massive debt. The IMF has HELPED
"save" some domestic economies (of the Asian Tigers, South Korea, etc) and has helped make
The tradeoff is in front of you: do we let the IMF
as a banking institution keep making loans with
a degree of risk to countries that are not
as transparent as others? Or, do we design
another institution with more force in challenging
sovereignty and saying, if you take my money we
will SEE that you do the right thing with it?
Or do we just avoid helping countries that need
short term capital loans for liquidity?
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