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"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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Introduction

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. ...read more.

Middle

When Argentina changed president, the IMF changed attitudes (i.e. as if that country was not their "friend" anymore). I hence believe that the collapse of Argentina's economy is due to the gradual mistrust of the IMF towards the new president (i.e. De La Rua) who originated the exit of millions of dollars to other countries leading to the devaluation of the peso. As said in this assertion, the IMF "bled the patient" when they obliged Carvallo to defend a "zero deficit" plan (i.e. reduction of pensions and public service salaries, increase of tax, etc). This led the country to poverty, plunging it into very high debts. In addition, another point that I think is relevant is that the IMF has a particular policy, which consists of if there is no confidence, no money is provided. I see some unfairness here. In order to explain this, let me stick to the case of Argentina, this time in comparison with other South American countries. Whilst the IMF left Argentina without help, Brazil received millions of dollars from the global fund without restrictions or requirements. ...read more.

Conclusion

This is its obligation; I look at it as the same duty parents have to carry out over their children (i.e. obliged to provide shelter, care...). The problem is that the IMF resources are limited and sometimes insufficient to help states in difficulties. In conclusion, it can be said that I have adopted a structuralist point of view and agreed with the assumption. This is due to several reasons, one of the main ones being that I really believe the IMF creates huge damage in some countries' economic health, e.g. It did not succeed to calm (but worsened) the Asian markets after the Baht (i.e. Thailand) crisis or the South American market with the Argentinean crisis. "Bleeding" those countries is surely not the best way to attract again FDI and to transmit a message of confidence in the country for further expansion. It is true that it helps to pay debts back to banks but in the long term, it generates more harm than gain. It has been suggested that the IMF's adjusting policies push nations into a stronger recession; its aids can be valuable but it needs to adapt them to each region and must stop using a "global" ideology. ?? ?? ?? ?? 1 ...read more.

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