GWI OA1
UNIT 8-10
ISP
CONFERENCE #3
ESSAY OUTLINE
Topic- International Debt Crisis- Implications for the Future
Thesis-
In order for the International Monetary Fund and the World Bank to aid in the development and debt reduction of many less developed countries, the structural adjustment policies that determine aid must be modified.
Background Information-
- IMF and World Bank are institutes that lend money to less developed countries to help repay debts
- World bank- was conceived as one of the three post-world war two institutions designed to steer the global economy on a steady course between the rocks of depression and the whirlpool of currency mayhem
- Main job is to stimulate the flow of global capital and to facilitate the expansion of free markets
- IMF is an international organization of 184 member countries. It was established to promote international monetary cooperation, exchange stability and orderly exchange arrangements; to foster economic growth and high levels of employment; and provide temporary financial assistance to countries the help ease balance of payment adjustments
- Both funds require economic restructuring (SAP’s) before a country can qualify for debt relief
- SAP’s – structural adjustment policies/programs- are free market policies imposed as a condition for new loans, implemented by the IMF and World Bank
- Debt crisis came apparent in 1982 when Mexico announced it could not pay its foreign debt, sending shock waves throughout the international financial community as creditors feared that other countries would do the same
- Immediate cause- 1973-when the members of the Organization of Petroleum Exporting Countries (OPEC) quadrupled the price of oil and invested their excess money in commercial banks
