The International Monetary Fund (IMF) is the organisation that oversees the macroeconomic policy of all of its members (most of the world), it particularly focusses on policy that affects exchange rates or the balance of payments; because its goals include stabilisation of international exchange rates as well as trying to facilitate growth and development. Members pay a certain amount that goes into a pool which is then used to bail out failing members - a sort of "insurance" system.
The IMF conducts its work by publishing reports on its members. One of these reports was published in 2009 on the Spanish economy and mentioned that Spain needed to introduce policies to improve its international competitiveness, as their wage and unit-labour costs were outpacing the other countries in the euro area.
Are there no critics of the IMF?
ReplyDeleteThere's a good section on wikipedia about the criticisms of the IMF
ReplyDeleteFirstly, critics say that financial aid is always bound to certain "conditionalities". Basically that the money will only be given if it is spent on certain things, which could be seen as a rather totalitarian way of doing things.
Also, Joseph E. Stiglitz, former chief economist and Senior Vice President at the World Bank, in his book Globalization and Its Discontents. Argued that by converting to a more Monetarist approach, the fund no longer had a valid purpose, as it was designed to provide funds for countries to carry out Keynesian reflations, and that the IMF "was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community"
(took that from wikipedia as i struggled to put it in my own words without directly copying it...)