IMF: Loan Shark or Savior?? This You NEED To KNOW!!

The imf claims to be an organization That cares all about the world’s Economic growth and stability it Structures policies that it claims help The poorest nations overcome financial Hardship Now anyone can support an organization Like that right Well not so fast in today’s video i’m Going to tell you everything you need to Know about this supranational body and Explain why it should be viewed with Utmost suspicion This is a video you can’t afford to miss [Music] Before this video gets underway i need To make a few things clear okay If financial advice is what you came Here for then i must unfortunately show You the door education and entertainment Are what i dispense so contact a Financial advisor if your finances are a Mess To those who haven’t seen this charming Face before my name is guy and crypto is The thing i adore The coin bureau is home to the greatest Crypto content on display we cover all Aspects of the crypto verse every single Day If this sounds like something you’re After then subscribe to the channel and Tap the notification bell to make sure You always get more as you’ll know by

Now the world of finance has many facets And sometimes i cover more than just Digital assets Today i’ll be going over the imf and Walking you through its origins Functions and controversies step by step The international monetary fund or imf Has been both scrutinized and celebrated For its efforts to promote financial Stability and economic growth across the Globe However time and time again it finds Itself at the forefront of global Economic crisis management So much so that it’s commonly referred To by critics as quote the world’s most Controversial financial firefighter Since its inception in july 1944 the imf Has undergone considerable change as Chief steward of the world’s monetary System Having been officially charged with Managing the global regime of exchange Rates and international payments that Allow nations to do business with one Another the fund recast itself in a Broader more active role following the 1973 collapse of fixed exchange rates Intervening in developing countries from Asia to latin america In 2010 it regained relevance as the European sovereign debt crisis unfolded And just a decade later it responded to The worldwide economic collapse

Triggered by the coronavirus pandemic However the imf has received both credit And criticism for its efforts to promote Financial stability Some economists argue that the fund is In the midst of a major structural Transformation and applaud its vast Expansion of lending capacity and Governance reform as well as its Progressive move away from free market Fundamentalism Others meanwhile suggest that the imf Must go further in implementing changes That will improve the plight of the World’s poor and guarantee the fund’s Relevance within a dynamic and Ever-changing global economic framework Now before we dive deep into the current Role and function of the imf a Comprehensive introduction to the International monetary fund its origins And how it came about in the first place Is only constructive so Let’s get into it In 1944 44 allied nations attended the Breton woods conference to establish a Post-war financial program that would Facilitate economic cooperation and Prevent a repeat of the currency warfare That helped usher in the great Depression The new regime was intended to foster Sustainable economic growth promote Higher standards of living and

Ultimately reduce poverty across the Globe This historic accord founded the twin Institutions of the world bank and the International monetary fund and required Signatory nations to peg their Currencies to the us dollar Now unlike the world bank which was Designed as a lending institution Focused on longer-term development and Social projects the imf was conceived as A watchdog of the monetary and exchange Rate policies vital to global markets The imf is akin to a credit union that Permits its membership access to a Common pool of resources This pool is made up of funds that Represent the financial commitment or Quota contributed by each nation Relative to its size gdp and growth Metrics In theory members with balance of Payments trouble or that are Experiencing financial hardship seek Recourse to the imf to essentially buy Time to rectify their economic policies And restore growth According to its official website the Imf quote works to achieve sustainable Growth and prosperity for all of its 190 Member countries It does so by supporting economic Policies that promote financial Stability and monetary cooperation which

Are essential to increase productivity Job creation and economic well-being The imf pursues its mission in three Fundamental ways surveillance technical Assistance And lending The imf’s surveillance structure entails A formal system of review that monitors The financial and economic policies of Member countries and offers Macroeconomic and financial advice Technical assistance offers practical Support and training directed mainly at Low and middle income countries to help With economic strategy and management And as it pertains to lending the fund Gives loans to member countries that Find themselves struggling to meet their International obligations in terms of Trade debt or monetary contributions Now loans or sometimes bailouts are Provided by the imf to a country in need In return for implementing specific Conditions dictated by the imf itself These conditions are designed to put Government finances on a sustainable Productive footing and restore financial Growth these policies commonly referred To as structural adjustments have Historically included processes such as Balancing budgets removing state Subsidiaries privatizing state Enterprises liberalizing trade and Currency policies and removing barriers

To foreign investment and international Capital flows Now at the top of the imf’s Organizational structure is the board of Governors This is the highest decision-making body Of the imf and consists of one governor And one alternate governor for each Member country This governor is appointed by the member Country and is usually the minister of Finance or the governor of the central Bank All powers of the imf are vested in the Board of governors the board of Governors may delegate to the executive Board all except certain reserved powers Now the day-to-day operations of the imf Are overseen by its 24-member executive Board which represents the entire Membership and is supported by the Member staff Since october 2019 the imf has been led By managing director christolina Giorgieva the second woman to be Selected for the role George’s a native of bulgaria was Previously the acting president of the Imf’s twin institution the world bank Now if you’d like to know more about how The imf is structured i’ll leave a link In the description below to its official Website for your convenience Now the imf is commonly referred to as

The world’s financial crisis firefighter Signifying a benevolent entity relied Upon by member countries to deal with Crippling sovereign debt and to prevent Any contagion from spreading through the Global financial system As i previously mentioned a member Country will typically summon the imf When it can no longer finance imports or Service its debts to creditors which is Usually a sign of potential crisis In these instances the fund will Typically extend the government in Question alone and help organize a new Debt repayment structure that the Country can manage In exchange the member country will Agree to implement a series of imf Reforms designed to rectify its balance Of payments and restore foreign exchange Reserves at its central bank Now the lending conditions are designed Not only to guarantee the repayment of Loans but also to ensure that the money Borrowed will be spent in line with the Economic objectives stated by the fund Of course the imf cannot force its will On its member countries as these accept Its conditioned financial assistance on A voluntary basis Much of the fund’s work has historically Been done in developing countries with Interventions in argentina brazil Indonesia and mexico to name a few

However the 2008 global financial crisis And subsequent european debt crisis Necessitated major bailouts across Various advanced eurozone economies such As greece iceland ireland and portugal And this is where potential Controversies come to life On that note the european sovereign debt Crisis which began in 2010 represented a Stark shift in the imf’s focus with the Majority of its programs being centered On the european economic framework This was a catalyst for much debate and Controversy and potentially some Conflicts of interest In fact as opposed to providing loans to Emerging markets on the periphery of the Global economy the imf was instead Concerned with unsustainable debt loans To fully developed countries And this focus shift was epitomized by The imf’s intervention in greece where The fund the european commission and the European central bank together called The troika pledged 375 billion dollars in three separate Bailouts over eight years Now two aspects of the greek Intervention signaled a more assertive Firm and powerful imf compared with its Previous interventions Firstly the greek bailout marked the First time the imf lent to a eurozone Country since the euro was launched in

2002 Secondly the size of the assistance Package relative to greece’s imf Membership contribution which is usually Limited to a 600 surplus of the Country’s contribution size was Absolutely extraordinary At 3 200 Greece’s financial relief package was The largest ever granted to an imf Member country But what’s particularly intriguing about This is the obvious illustrative Contrast with other struggling eurozone Countries at the time For instance during the same period the Imf agreed to loan portugal around 30 Billion dollars in relief funds and Ireland roughly 25 billion dollars But this is just one example pointing Towards the imf’s controversial lending Policies of which much has been recently Written For instance in his 2002 book titled Globalization and its discontents nobel Prize-winning economist joseph stiglitz Denounced the imf as a primary culprit In the failed development policies Implemented in some of the world’s Poorest countries Moreover stiglitz argues that many of The economic reform policies the imf Requires as conditions for its lending Which include fiscal austerity high

Interest rates trade liberalization Privatization and open capital markets Have often been counter-productive for Target economies and devastating for Local populations The fund has also been widely criticized For overreach or what is commonly Referred to as mission creep by imf Critics William easterly makes this case in his 2006 account of the failures of western Aid to the underdeveloped world And while he does in fact acknowledge Some imf successes in firefighting Financial hardship in mexico and east Asia in the mid-1990s he criticizes many Of the funds interventions in severely Impoverished nations such as many in Africa and latin america as overtly Ambitious and intrusive In addition he also describes many of The funds loan conditions and technical Advice as being out of touch with Ground-level economic realities Let’s have a look at the asian crisis For instance For thailand indonesia south korea and Malaysia the much celebrated asian Economic miracle came to an abrupt end In 1997. After three decades of virtually Uninterrupted expansion these countries Saw their financial systems collapse Their economies falter and millions of

Their citizens return to poverty all Within the space of a few months The financial crisis quickly spread to The philippines and hong kong and then To brazil and russia Now as many analysts have pointed out The asian crisis was the result of Several factors According to some one potential factor Was the zeal shown by the u.s treasury And the imf in encouraging countries to Open up to short-term foreign capital in The mid-1990s These critics also argued that the entry Of foreign capital into and the Following swift exit from economies Whose financial and supervisory Structures were ill-equipped to regulate And absorb that capital Proved to be devastating for those Countries In a report from 2002 thomas c dawson From the external relations department Of the imf admitted that the fund didn’t Act in the most efficient of ways Throughout the asian crisis He noted that as a result of the Criticism received during and after the Crisis the imf has become more vocal in Pointing out the risks of rapid capital Account liberalization Furthermore in the case of the asian Crisis dawson also confessed that the Imf had clearly not kept up to date with

The rapid financial developments in the Region mentioning that better monitoring Of international capital markets Constituted just one of the steps Through which the imf could have reduced The scale of the crisis Now during the latin american debt Crisis of the 1980s a period often Referred to as quote the lost decade Many latin american countries became Unable to service their foreign debts The federal reserve u.s commercial banks And the imf responded to the crisis with A number of actions that ultimately Helped alleviate the situation albeit With some unintended consequences During the 1970s two large oil price Shocks created account deficits for many Latin american countries At the same time these shocks created Current account surpluses amongst oil Exporting countries With the encouragement of the us Government large u.s banks were willing Intermediaries between the two groups Providing the exporting countries with a Safe liquid place for their funds and Then lending those funds to latin America Latin american borrowing from u.s Commercial banks and other creditors Increased dramatically during the 1970s At the end of 1970 total outstanding Debt from all sources totaled only 29

Billion dollars but by the end of 1978 That number had skyrocketed to 159 Billion By 1982 the debt level reached a Whopping 327 billion dollars With the global rise of interest rates In the early 1980s and the general Shortening on repayment periods for Loans by u.s commercial banks latin American countries soon found their debt Burdens unsustainable The spark for the crisis occurred in August 1982 when mexican finance Minister jesus silva herzog Informed the federal reserve chairman The u.s treasury secretary and the International monetary fund managing Director that mexico would no longer be Able to service its debt which at that Point totaled 80 billion dollars Other countries quickly followed suit And as transcripts from the july 1982 Federal open market committee illustrate Committee members felt it was necessary To take action As the crisis spread beyond mexico the United states took the lead in Organizing an international lender of Last resort a cooperative rescue effort Among commercial banks central banks and The imf Under the program the imf agreed to Restructure the country’s debt while it

And other official agencies lent them Funds to pay the interest rates on the Loans these countries had borrowed from U.s commercial banks But the imf and these other official Agencies didn’t offer to cover the loans Themselves In return these countries agreed to Undertake structural reforms of their Economies and to eliminate budget Deficits Now the latin american debt crisis Illustrates the often complex convoluted And controversial relationships between The imf and its major creditor members A successful resolution of mexico’s Financial difficulties was economically And politically crucial for the united States but the extent of mexican Indebtedness put a solution out of reach Of the u.s authorities But the challenge for the imf was to Balance the interests of all of those Affected countries whether debtor or Creditor in circumstances that were Critically important to its largest Member and principal creditor the united States To critics this appeared to be a blatant Example of favoritism by the imf towards The u.s in order to keep its largest Contributor happy Now asia and latin america aside for Decades the imf has also played an

Important if at times controversial role In the economies of sub-saharan africa It’s also clear that over the years its Mandate has evolved from a principal Focus of ensuring monetary stability and Mitigating the effects of liquidity Crises towards the promotion of Long-term macroeconomic development and Social goals Beginning in the 1970s the imf’s Imposition of strict fiscal and economic Conditions in response to monetary Crises such as the 1973 oil shock was Met with criticism over what some viewed As the imf’s intrusion into the affairs Of developing economies Certain commentators blamed the Austerity measures required by the imf For increasing rather than alleviating Poverty in poorer countries in africa Including zambia tanzania south africa And more Furthermore according to a study of imf Programs from 1992 to 2013 it concluded That countries participating in imf Programs with conditions attached Specifically performance criteria Conditions are associated with an Increase in long-term investor sentiment This effectively equates the imf’s Lending procedures and associated Structural conditions to those of an Investment vehicle designed to prosper And capitalize on the long-term interest

Rates imposed on the borrowing member Countries Now while i’m not entirely convinced That this is indeed the case what is Certain however is that the imf’s loan Conditions have definitely been a point Of contention Critics of the imf’s role in sub-saharan Africa have argued that the fund’s Associated conditions on loans have at Times proven to be excessive often Overly restrictive and have ultimately Harmed the poorer people of those Countries Yet another point of contention around The imf revolves around its involvement In the covert 19 crisis Throughout the pandemic the imf sought To help countries deal with the economic Turmoil caused by lockdowns and all the Other coveted-related miseries among Other measures the fund doubled the Amount of money available through its Two lending programs for addressing Natural disasters the rapid financing Instrument and the rapid credit facility According to the imf more than 100 Countries requested emergency financing And the fund has provided more than 100 Billion dollars in financial assistance To more than 80 of them Then in august of 2021 the imf began Allocating 650 billion dollars worth of Special drawing rights sdr’s the largest

Allocation in history and more than Double the amount it had approved in the Wake of the 2007-2008 financial crisis Now sdrs function as an internal imf Currency of sorts that countries can Exchange with each other for hard Currency reserves such as dollars or Euros Economists and politicians have urged Governments to support sdr allocations To increase global reserves during the Pandemic however what’s particularly Controversial about these imf-related Sdrs is that they’re measured based on Countries imf quotas and contributions Which reflect their shares of the global Economy this means that wealthier Countries receive the bulk of the Allocation despite enjoying faster Economic recoveries from the pandemic While international aid groups have Argued that richer countries should Share their sdr allotments with poorer Countries the imf has pledged to help Facilitate any voluntary transfers from Wealthier countries to those in dire Need of development and assistance Now this is a major point of contention As throughout the kovit 19 crisis the Imf should have verifiably sought to Allocate the majority of its sdrs and Financial assistance programs to Countries that most needed them

On that note at their june 2021 meeting The group of seven or g7 countries Endorsed a plan to reallocate up to 100 Billion dollars in sdrs to poorer Countries But the question still remains whether The imf should have come up with a Fairer solution with regards to its sdr Allotments to poorer countries during The crisis and whether it should have Come to this conclusion on its own and Without the intervention of the g7 And that concludes most of my video on The imf today Now the imf’s primary function is to Promote stability in the global monetary System so it must firstly monitor the Economies of its 190 member countries This activity known as economic Surveillance happens at both the National and global levels Through economic surveillance the imf Monitors developments that affect member Economies as well as the wider global Economy While it’s unfair to suggest that the Imf’s work has never led to any Improvements it has become clear that Its influence over the fiscal financial And organizational structures of some Countries hasn’t always been well Received The fund’s omnipresence of sorts in the Global economy has at times been the

Subject of heavy criticism and scrutiny Especially in developing countries and Emerging markets This is potentially due to the fact that The imf structure conditions haven’t Always benefited economic growth in Multiple regions including latin america East asia or sub-saharan africa there Have also been concerns about the strong Ties and the invisible gentleman’s Agreement of sorts between the fund and Its wealthiest international Contributors namely the us and the European union which unsurprisingly Seemed to have benefited the most from The ims financial aid allocations That said the imf has also shown efforts Across the board to improve change and Rectify the way it deals with its loan Conditions lending and economic aid And while improvements are said to be Underway i believe that we’re yet to see A fully open unbiased and All-encompassing imf especially when it Comes to facilitating economic support For countries in dire need of Development Anywho folks let’s keep our eyes peeled And let’s wait and see what crystalline George’s and the rest of the imf Executive board come up with you never Know the imf might surprise us for Better Or for worse

And that concludes today’s video folks i Hope you enjoyed it but i would love Your feedback so what do you think of The imf is it at all beneficial to Countries around the globe do you think It will survive in the long term or will Countries prefer borrowing from other International organizations what impact Will the imf have in the future Fire those comments and answers down Below Remember to subscribe to the channel and Ping that notification bell if you’d Like to keep getting the highest quality Crypto content on the scene Make sure you also check out the coin Bureau eclipse channel to get all the Information you need on emergency crypto Market moves i’ll see you very soon but Until then i can also be found on tiktok Telegram instagram and twitter Subscribing to my weekly newsletter will Also make your crypto life supremely Better it’s packed with all the tips and Tricks that will make your game stick You may also want to check out my deals Page it’s got some of the best crypto Deals and promos on the market today Thank you so much for watching folks and I’ll see you all very soon my name is Guy and you have been watching the coin Bureau [Music]