"The IMF in many ways is like a medieval doctor where no matter what the ailment, you apply leeches and bleed the patient

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Discuss this assertion by stating whether you agree or disagree and provide reasons:

“The IMF in many ways is like a medieval doctor where no matter what the ailment, you apply leeches and bleed the patient. My experience is that they are very successful in steering countries’ resources toward paying debts to commercial banks, but they are disastrous in terms of the long-term economic health of these countries.”         

                                                                      John Cavanagh (1992)

Before arguing about whether I agree or disagree with this statement, it would be interesting to begin with an explanation of what the IMF actually is. It is an international organization which was established for different purposes, like for exchange stability or for promoting economic growth. Its main objective was to provide financial help to “suffering” nations in order to relieve their balance of payments and increase their standard of living. Now that we have in mind what this institution does, I would like to point out that I think this statement resumes perfectly what the IMF achieves in countries. It is important to note that I particularly cultivate the fact that it damages the countries’ economic health after time. In this essay, I will initially try to explain why I think the IMF is harmful in the long term, putting a lot of attention in Argentina’s current economic crisis. I decided to structure a big part of my essay on what is happening there because I believe it was caused by the IMF’s inadequate intervention and also because it shows extremely well the general consequences this institution always brings. Although this crisis is just a single example, I know that it applies to a global scale. In a second paragraph, I will refer to the point being made in the second part of the assertion, which is that it can be beneficial.

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In a first part, the IMF can be considered as a “disastrous” organization “in terms of the long term economic health of the countries”. Firstly, it is important to say that the IMF only lends to “friends” or “rich” countries; LEDC’s are thus punished. The best example is Argentina. After a disastrous year (1989) with an inflation rate of over 3000%, the IMF supported the convertibility plan (i.e. 1 local peso equalled 1 dollar) designed by the economist Carvallo. This help was granted partially because of the excellent relationship between the US president (i.e. Bill Clinton) and the ...

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