International Mercenary Funds?

 

Established following World War II to help with post-war recovery, the International Monetary Fund (IMF) serves as a lender to modern governments and an overseer of international financial markets. It has no shortage of both supporters and critics.

In its infancy, the IMF was only responsible for supervising pegged exchange rates, but grew in scope and influence in subsequent decades, particularly after the collapse of the Bretton Woods system in the 1970s. Now the IMF provides loans to help member nations fix perceived balance of payments problems and fight off crises.

The most notorious example was the bailout of the Greek government in 2011. As of 2020, the IMF has 189 member nations. Each member nation publicly accepts and supports the goal of global economic stability and, in theory, a subjugation of some sovereign authority to support that goal. The IMF is funded mainly through what are called "quota contributions" from its members.

Each IMF member nation is assigned an annual quota amount, based on the size of its economy when it joins the IMF. The IMF also has substantial gold holdings that it can sell and is authorized to borrow up to an amount approximately equal to its annual quota contributions. 

IMF supporters claim it is a necessary lender of last resort for areas in crisis and it can impose necessary or difficult reforms on backward economies. Critics counter the IMF supersedes national autonomy, exacerbates economic problems more often than not, and serves as a tool for the wealthiest nations only.

Economists also frequently criticize the IMF for creating a moral hazard on national scales. Critics of the World Bank and IMF have argued that policies implemented by countries, intended to control inflation and generate foreign exchange to help pay off the IMF debts, often result in increased unemployment, poverty and economic polarization thereby impeding sustainable development.

Other theories suggest that countries may sign onto IMF agreements because of the austerity conditions associated with IMF programs. Political leaders could then use the IMF as a scapegoat for unpopular policies, such as the restructuring of public finances. Although entering into an IMF agreement may have serious long-term economic costs, developing nations may find it too difficult to pass up short-term support during a financial crisis.