IMF and Argentina

Paper Summary:

This paper discusses how the International Monetary Fund (IMF) developed the economic policies of Argentina in the 1990's, at which time the lending policies seemed to be ideal for the nation. It examines how since this time, many economic experts have discovered many inherent flaws in these policies, which indicate the need for change. It analyzes how with Argentina's recent default and subsequent economic demise, the IMF has been forced to reconsider its current lending policies. It shows that while Argentina may serve as a model case to urge the IMF to adopt a policy that requires less conditions and more ownership by national policymakers, as long as the IMF has an interest in human conditions, its approach to lending will still have to be made according to economic rather than political criteria.

From the Paper:

"Under its lending policy, the IMF required Argentina to initiate a Structural Adjustment Program (SAP), which aimed to promote the balanced expansion of world trade through the stability of exchange rates, preventative measures against competitive devaluations, and efficient correction of payments problems (Graham, 2002).
Basically, the IMF ordered Argentina to increase exports and minimize imports. By increasing exports, a member state brings in external capital, which can be used to repay its debt (Mussa, 2002, p. 312). To do this, Argentina needed to attract foreign companies for exports. The IMF required that the nation eliminate any political legislation that would prevent foreign investment, such as labor unions and minimum wage laws."

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