International Monetary Fund (IMF)
The core mission of the International Monetary Fund (IMF) is to help stabilize an increasingly global economy. The IMF’s original goals were to promote orderly and stable foreign exchange markets, restore free convertibility among the currencies of member nations, reduce international impediments to trade, and provide assistance to countries that experienced temporary balance-of-payments deficits.
Over the years, the IMF has shifted its focus from exchange rate relations among industrialized countries to the prevention of economic instability in developing countries and countries from the former Eastern European bloc. The Mexican economic crisis in 1994 prompted an unprecedented bailout of $47 billion and launched the recent trend of providing rescue packages to major economies in the developing world. In the past several years, the IMF approved a $19 billion rescue package for Turkey and led a $17.2 billion rescue for Thailand, a $42 billion package for Indonesia, and a $41.5 billion deal for Brazil. South Korea got a whopping $58.4 billion when it was on the verge of bankruptcy. These rescue packages helped stabilize the respective economies and avoid total economic collapse of the countries involved.
To qualify for assistance, the IMF may require that countries take drastic economic steps, such as reducing tariff barriers, privatizing state-owned enterprises, curbing domestic inflation, and cutting government expenditures. Although many nations have resented such intervention, banks worldwide have used the IMF as a screening device for their private loans to many developing countries. If countries qualify for IMF loans, they are considered for private credit. A growing world economy in the early 21st century resulted in fewer crises for the IMF to manage. Its loan portfolio fell to the lowest level since the 1980s, and its influence over countries and their economies diminished.