The IMF was created in 1944 with the specific mandate of stabilizing the international monetary system. While in theory designed to bring stability, in practice, the IMF has done everything except follow its mandate. Critics argue that the IMF has only served the role of promoting the American and European model of economic development and in this regard, the most contentious issues have been with the IMF’s structural adjustment policies. These programs offer assistance that is contingent on economic restructuring and often times, this restructuring limits the ability of states to implement independent economic policy.

One would naturally expect that since the economic aid has always been conditional, the IMF would be able to withhold assistence from countries whose human rights records have been far from perfect. Quite the opposite in fact-the IMF has financed some of the world’s most brutal dictatorships in history. During the 1970’s and well into the 1980’s, the IMF propped up dictatorships around the world including Pinochet in Chile, Mengistu in Ethiopia, Suharto in Indonesia and Marcos in the Philippines, just to name a few.

Unfortunately for the IMF, they have recently fallen on bad times. While it encourages countries to run balanced budgets, it finds itself in a major deficit. Most countries have paid off their debts and there seems to be little room in today’s international financial system for an organization that many in the developing world blame for their misery and underdevelopment. In fact, earlier this month, Venezuelan President Hugo Chavez jokingly remarked that his government is willing to buy some of the IMF’s gold reserves in order to keep the struggling organization afloat.

Mark Weisbrot, Co-Director of the Center for Economic and Policy Research discusess the IMF’s bleak future in this opine originally published in the Los Angeles Times.

‘The IMF is back,” declared the International Monetary Fund’s managing director, Dominique Strauss-Kahn, at its annual spring meeting earlier this month in Washington. And not a moment too soon either. To hear the organization’s economists tell it (as they mingled in five-star hotels, long black limos and posh restaurants with bankers, businessmen and finance ministers from around the globe), they’ve arrived on the scene just in time to help solve the world’s financial crisis.

But despite the bravado, the reality is that today’s IMF is not what it once was. These days, the world’s most famous deficit police force is running a whopping small-country-size $400-million annual deficit of its own and is being forced into some of the same kinds of “structural adjustments” it used to impose on indebted Third World nations. In just the last four years, the IMF’s total loan portfolio has shrunk from $105 billion to less than $10 billion; over half of the current portfolio consists of loans to Turkey and Pakistan. To cut costs, the agency is reducing staff and closing offices.

The IMF’s loss of influence is probably the most important change in the international financial system in more than half a century. Until just a few years ago, the IMF — originally created at the Bretton Woods conference on international economic cooperation in 1944 — was one of the most powerful financial institutions in the world and the major avenue of influence for the United States in developing countries.

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