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    IMF Austerity Programs

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    Your cousin's latest interest is The International Monetary Fund, about which you are now chatting online.

    The IMF was established by the United Nations in 1944 to provide loans to countries in financial distress at a relatively low interest rate. Nations having balance-of-payments problems can borrow from the IMF for short time periods and such loans include economic and financial stipulations on the debtor nation. Typically, such stipulations require that the debtor nation follow an austerity program that limits government spending, domestic consumption, and imports.

    Your cousin wants to know, what do you think about the goal of the IMF's aid to distressed countries? What has been the controversy surrounding the IMF austerity programs? What are examples of the IMF successes and failures?

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    You will of course need to decide for yourself whether to recommend the IMF's policies to your cousin or not. The stated goal of the IMF is economic stability. The question you need to ask yourself is "how important is economic stability?" Many criticize the IMF because it tends to support the status quo, often military dictatorships. These regimes, while friendly to the US and Europe, tend not to be overly-concerned with human rights. Labor rights often suffer under such regimes. However, advocates of the IMF's policy argue that economic stability is essential to democracy, and by facilitating economic stability the IMF is indirectly paving the way for a future democracy.

    To achieve its goals the IMF offers loans if the country agrees to restructure its economy. The IMF focuses and advises governments on macroeconomic policies which affect its ...

    Solution Summary

    Overview of IMF aid to distressed countries and controversy surrounding the IMF austerity programs