The Political Morality of the International Monetary Fund

Questions of international debt, world economic growth rates, and demands by the Third World nations for a "new international economic order" have thrust two relatively unknown international institutions, the World Bank and the International Monetary Fund, into public prominence. Controversy over the IMF-which helps debtor countries balance current accounts and meet debt payments-enters on the "conditions" that the lending institution places on receiving nations. Basically, debtor countries are required to put their economic house in order, usually by decreasing imports, increasing exports, and eliminating subsidies on food, gasoline, and other goods. Often, it is such subsidies that allow a government to maintain political support and control. Thus, meeting the requirements of the IMF can lead to domestic instability, as the riots in the Dominican Republic illustrated. Critics of the IMF often agree with the economic medicine but decry the side effects of the cure. Is enough attention being paid to the diversity of the debt-troubled nations? Is there a separate set of standards for the borrowers and the lenders in the IMF decision-making process? Is the IMF lending process fair? What are the often unintended effects of the IMF on foreign policy?