this post was submitted on 29 Jan 2024
2 points (66.7% liked)

Economics

478 readers
70 users here now

founded 2 years ago
2
submitted 11 months ago* (last edited 11 months ago) by MicroWave to c/economics
 

A geopolitical bias, outdated governance and a too market-oriented framework are only some of the structural deficits of these institutions

As the Bretton Woods institutions complete 80 years of existence – since they were agreed upon at an allies’ conference on a postwar financial and monetary order in the New Hampshire town – some stocktaking is inevitable. This is however a rather depressing exercise.

The international financial institutions, the International Monetary Fund and what came to be known as the World Bank, were created in a buzz of optimism about the potential for international economic co-operation as the second world war was coming to a close. But their functioning has fallen far short of what the architects of the system then would have hoped.

In their first decade, both institutions were heavily focused on lending for reconstruction. Thereafter, when lower-income countries did start receiving funds, the conditionalities associated with the loans – heavily oriented towards ‘fiscal discipline’, expressed as austerity and privatisation of public goods and services – became highly controversial and very often did not deliver the desired outcomes. Through the debt crises of the developing world in the 1980s and 90s, the IMF effectively became the debt collector, enforcing programmes designed to benefit (or even save) the creditor banks based in the Global North.

So well-known was this pattern that by the early part of this century, most lower-income countries had opted for self-insurance, holding excess foreign-exchange reserves to avoid having to approach the IMF. The institution was in decline, with few client countries, and increasingly irrelevant.

no comments (yet)
sorted by: hot top controversial new old
there doesn't seem to be anything here