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GEOG 216 (241)

Section 5: International Financial Institutions

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McGill University
GEOG 216
Geraldine Akman

International Financial Institutions 12/5/12 1:01 AM IMF ‘Stabilization’ Demands Debt crisis à fear of western bank collapsesà IMF stabilization demands • Free up barriers to trade • Privatize state enterprises • devalue local currency • generate foreign revenue through exports • economic liberalization IMF: (International Monetary Fund)- an international financial institution that attempts to promote monetary cooperation and stability globally • Created after the 2 world wars • try to convince countries to stop playing with the value of their currency • facilitates international trade • helps countries adjust to temporary international payment problems o balance of payments: will occur when a countries total earnings on foreign trade fall short of total spending • e.g. offers shorter term loans and technical assistance for monetary management IBRD: (The World Bank)- an international financial agency established to provide longer-term loans for particular projects, at commercial rates of interest IMF and IBRD rescue packages… Stabilization policies and structural adjustment programs (SAPs) Increase economic efficiency and restore growth Allows debtor nations to rewrite/reschedule debts if they: • deflationary policies • invoke ‘austerity’ programs à ways to clear debt or get out of a recession, let market control things o decrease size of the civil service à happening today in Canada o decrease public spending on social programs (health and education) o public sector wage freeze (happening at McGill, strike last fall) o reduce subsidies on basic foods *trying to get governments to spend less money* • Institutional reforms o Reduce government intervention in the economy o privatize the commercial sector o Neoliberalism o deregulate an
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