The International Monetary Fund and the World Bank: Constructive or Destructive?



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The International Monetary Fund and the World Bank:

Constructive or Destructive?

Simapa (Meemi) Ownsuwan

Ms. Lisa Foran

English 10: Period 8

March 12, 2009

Word Count: 1314

The International Monetary Fund and the World Bank:

Constructive or Destructive?

Thesis: The IMF and the World Bank exacerbate the problems in developing countries by allowing a few dominant nations to exploit lesser nations, by implementing destructive financial policies, and by preventing developing nations from spending money on healthcare.



  1. The IMF and the World Bank were set up during World War Two with the goal of preventing hostilities between nations through global economic security.

  1. The IMF and the World Bank have often been accused of unaccountability and ineffectiveness in crisis-management.

  2. The IMF and the World Bank exacerbate problems in developing countries through the exploitation of lesser nations, destructive financial policies and the prevention of developing nations to spend money on healthcare.

  1. The IMF and the World Bank allow a few powerful nations to dominate in decision-making and thereby exploit smaller, developing countries.

  1. Governments of wealthy Western countries dominate and control the decisions made in the IMF and the World Bank, representing the previous distribution of power during the Second World War.

  2. Wealthier nations are represented directly in the IMF and World Bank, whereas poorer nations are grouped together under one general representative.

  3. Wealthier nations take advantage of lesser nations under the impression of assistance.

  1. The IMF and the World Bank implement destructive policies in an attempt to alleviate crises in developing countries.

  1. The IMF and World Bank financial policies restrain economic growth and cause recession.

  2. The IMF and World Bank implement the same policies regardless of the nature of the crisis.

  3. The IMF and World Bank have worsened the Asian crisis of 1997-1998, as well as the crises in Argentina and Jamaica.

  1. The IMF and the World Bank’s policies deteriorate the healthcare situation in developing countries.

  1. The IMF and the World Bank prevent African nations from sufficiently spending both their own money and foreign aid money on healthcare.

  2. The IMF and the World Bank have caused a decrease in life expectancy and an increase in infant mortality rate, as well as a clear deterioration in the quality of public health care.

  3. The IMF and the World Bank deny that an increase of spending in healthcare is needed.

  1. The International Monetary Fund and the World Bank not only allow the exploitation of developing nations, but also implement detrimental financial policies and prevent developing countries from spending money on healthcare.

  1. The IMF and the World Bank were established during a period of turmoil in order to build global economic security; although both institutions have failed to fulfill their purpose.

Researchers and economists have questioned whether or not the IMF and the World Bank will be needed in the forthcoming economic recession.

The International Monetary Fund and the World Bank:

Constructive or Destructive?

Following the end of World War One in 1918, financial and economical turmoil swept over Europe, America, and the rest of the globe. This caused resentment and aggression between many nations, causing war to once again erupt. Five years following the start of World War Two, an agreement was signed at Bretton Woods, New Hampshire. According to this agreement, power was concentrated in the hands of a few countries that were willing to assume a leadership role in world economics. Two globally influential institutions were consequently set up – the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, which is one of the five institutions that constitute the World Bank Group. The purpose for their founding was an establishment of global “economic security” in order to prevent hostilities between countries that could lead to another world war (Lamb). Throughout their time, the IMF and the World Bank have been facing issues of various degrees around the world, although both institutions have often been accused of “being secretive, unaccountable, and ineffective” in their crisis-management, especially in developing countries (Woods). The IMF and the World Bank exacerbate problems in developing countries by allowing a few dominant nations to exploit lesser nations, through implementing destructive policies, and by deteriorating the healthcare situation in developing countries.

The IMF and the World Bank allow few powerful nations to dominate in decision-making and thereby exploit smaller, developing countries. Decisions made in the IMF and the World Bank are influenced by voting shares; countries with greater voting shares have more control over what is said and done. Governments of wealthy countries including the United States, the United Kingdom, Germany, France, China, Russia, Saudi Arabia and Japan are directly represented in the IMF and the World Bank, allowing them the biggest voting shares and ultimately the most power in decision-making. In contrast, groups of smaller developing countries are combined together under one representative, allowing each separate country much less voting power when compared to their wealthier counterparts (Woods). For example, the US currently has 17% of the total voting shares, whilst India, a developing nation, has less than 2% (Lamb). This allocation of voting shares portrays the distribution of power which existed during the period of economical turmoil leading up to World War Two (Griesgraber and Ugarteche). Although the purpose for the founding of the IMF and the World Bank was to establish global economic peace, clearly this has not been accomplished. According to Ian Lamb, a writer for New Presence: Prague Journal of European Affairs, the mutual goal of the IMF and the World Bank is to “entrench the economic and cultural hegemony of the still-dominant Western powers…under the guise of aid and assistance”. Thus, the IMF and the World Bank do not serve as a means for achieving global economic security; they actually very cleverly devise methods for Western countries to take advantage of other nations and strengthen their own economies under the impression of financial aid.

The IMF and the World Bank implement destructive policies in an attempt to alleviate financial crises in developing countries. Although the IMF and the World Bank have been facing crises of various kinds, both organizations tend to implement the same policies over and over (Griesgraber and Ugarteche). These repetitive policies exacerbate crises through restraining economic growth, limiting and slowing aid cash flows, and more often than not inducing recessions (“Deadly Dictates: The IMF, AIDS and the Healthcare Crisis”). Such can be proven through examining perhaps the most detrimental IMF and World Bank related crisis, the 2001 case of Argentina’s collapsed economy. Argentina was already suffering from steadily rising inflation and debts when the IMF and the World Bank advised her president to raise the value of the Peso to equal that of the US dollar. This caused debts to increase, and the continually rising inflation to soar. Consequently, when Argentina was $93 million in debt, the Peso eventually collapsed. The IMF and the World Bank then withdrew all financial support, refused to discount their loans as well as lobbied for Argentina to pay up her debts, which was clearly an impossible task (“Profile: International Monetary…”). The IMF and the World Bank also devastated other third world nations through their policies; Jamaica and various other developing countries followed the IMF and the World Bank’s advice to open up to global markets, which in the end led to local farmers going out of business (Lamb). In addition, the IMF and the World Bank also exacerbated the infamous Asian Crisis of 1997-1998 through short-term stabilization policies (Griesgraber and Ugarteche). Evidently, the IMF and the World Bank wreck havoc upon already severe financial crises, although regrettably both organizations also have destructive effects on another major crisis, healthcare.

The IMF and the World Bank’s policies deteriorate the healthcare situation in developing countries. This is most evident in Africa, a place that is lacking in sanitation where thousands die daily from AIDS as well as other diseases brought by insanitation. The IMF and the World Bank prevent African countries from spending both their own funds as well as donated funds on healthcare. Instead, more than 70% of foreign healthcare aid money was diverted, mainly to paying down debts (“Deadly Dictates: The IMF, AIDS and the Healthcare Crisis”). Kenya is an example of one of the many African countries suffering from the AIDS pandemic. According to Soren Ambrose, the coordinator of the Solidarity Africa Network in Nairobi, Kenya’s life expectancy declined from a low 57 in 1986 to an even lower 47 in 2000. Over a ten year span, Kenya’s overall infant mortality rate increased from 62 per 1000 in 1993 to 78 per thousand in 2003, and under-five mortality rate increased from 96 per every 1000 births to 114 per 1000. Although several factors affected these statistics, they were predominantly attributed to the IMF and the World Bank’s health programs, the focus of which was to cut down on budget expenditures and consequently led to deterioration in the standard of care in Kenyan public hospitals. Currently, two or more people occupy the same bed in most hospitals, and doctors and nurses have been rapidly emigrating to North America and Europe because of how the IMF and the World Bank’s healthcare program has limited wages for medical staff (“The IMF, the World Bank and the HIV/AIDS Crisis”). It is clear that the IMF and the World Bank depreciate the healthcare situation for countries of abject poverty, but although both organizations are currently under heavy criticism for their destructive health programs, representatives have stepped up to declare that there is no need for more money to be spent on improving sanitation and healthcare (“Deadly Dictates: The IMF, AIDS and the Healthcare Crisis”). This lack of responsibility obviously conveys how the IMF and the World Bank do not care about the welfare of countries.

The International Monetary Fund and the World Bank were established during a period of financial and political turmoil in order to establish global economic security and achieve peace, as well as to prevent future economical hostilities. Clearly, both institutions have failed to fulfill their mark. The IMF and the World Bank not only allow the exploitation of developing nations, but also implement detrimental financial policies and prevent developing countries from spending money on healthcare. Many researchers and economists have already questioned the effectiveness of the two Bretton Woods institutions, as well as whether or not their presence will be needed in the forthcoming economic recession. This is because in essence, the International Monetary Fund and the World Bank “[leave] shattered economies around the world, [consign] untold millions to poverty, and directly and indirectly [destroy] social welfare systems, including healthcare and education systems” (“Deadly Dictates: The IMF, AIDS and the Healthcare Crisis”) throughout the world.


Works Cited

Ambrose, Soren. “Preserving Disorder: IMF Policies and Kenya’s Health Care Crisis.” Global Policy Forum. 1 June 2006 <http://www.globalpolicy.org/socecon/bwi-wto/imf/2006/ 0601imfhealth.htm>.

“Analysis: Criticism of the International Monetary Fund and the World Bank. (11:00 AM-12:00 Noon)(Broadcast transcript).” National Public Radio. 12 April 2000. Reproduced in Opposing Viewpoints Resource Centre. Document Number: A166114278. International School Bangkok Main Library, Bangkok, Thailand. Gale Group. 24 Nov. 2008 <http://infotrac.galegroup.com/itweb/isb>.

"Deadly Dictates: The IMF, AIDS and the Healthcare Crisis." Multinational Monitor Vol. 28 Issue 22 (2007): 6-7. Item no. 27696262. Advanced Placement Source. EBSCO. International School Bangkok Main Library, Bangkok, Thailand. EBSCO. 24 Nov. 2008 <http://search.global.epnet.com>.

Griesgraber, Jo Marie, and Oscar Ugarteche. "The IMF Today and Tomorrow: Some Civil Society Perspectives." Global Governance Vol. 12 Issue 4 (2006): 351-359. Item no. 23237631. Advanced Placement Source. EBSCO. International School Bangkok Main Library, Bangkok, Thailand. EBSCO. 24 Nov. 2008 <http://search.global.epnet.com>.

“The IMF, the World Bank, and the HIV/AIDS Crisis.” Essentialaction.org. 13 June 2006. Essential Action. 5 March 2009 <http://www.essentialaction.org/imf/aids_crisis.htm>.

Lamb, Ian. "The IMF and the World Bank-Time for Reform?" New Presence: The Prague Journal of Central European Affairs Vol. 9 Issue 1 (2007): 28-32. Item No. 26402877. Advanced Placement Source. EBSCO. International School Bangkok Main Library, Bangkok, Thailand. EBSCO. 24 Nov. 2008 <http://search.global.epnet.com>.

“Profile: International Monetary Fund's rescue practices that help bring Argentina to the brink.(1:00-2:00 PM)(Broadcast transcript).” National Public Radio. 30 Dec. 2001. Reproduced in Opposing Viewpoints Resource Centre. Document Number: A166022946. International School Bangkok Main Library, Bangkok, Thailand. Gale Group. 24 Nov. 2008 <http://infotrac.galegroup.com/itweb/isb>.

Woods, Ngaire. "Unelected Government: Making the IMF and the World Bank More Accountable." Brookings.edu. 24 Nov. 2008
spring_globaleconomics_woods.aspx>.



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