NCPA - National Center for Policy Analysis

Is The IMF Worth It?

November 11, 1999

The International Monetary Fund has been the subject of increasing criticism recently, as observers have begun to conclude that it is not a solution to periodic financial panics in far-flung countries. Rather it is coming to be perceived as part of those very problems.

To qualify for IMF funds, countries must adopt IMF-sanctioned economic policies -- which include devaluing their currencies, sky-high interest rates, steep budget cuts and tax hikes. Economists say some of this advice is poison to reeling economies, squelching domestic demand and making a bad situation a whole lot worse.

Then there are the costs it imposes on stable, developed economies which finance its activities:

  • Staffing has grown 5 percent annually over the past decade and the average IMF worker makes about $114,000 a year.
  • The agency has more than 80 division directors, each making more than $180,000 a year -- plus benefits.
  • Since 1990, IMF lending has soared by about 100 percent.
  • Its assets now total more than $80 billion.

Carnegie Mellon University economist Allan Meltzer estimates the IMF has played a role in causing almost 100 banking crises in the developing world in the last 15 years.

Source: Macroscope, "Au Revoir," Investor's Business Daily, November 11, 1999.


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