The Problems That the World Bank and IMF Created for Zimbabwe
Zimbabwe had agreements with the World Bank in the later 1980s when it signed an arrangement with the IMF in exchange for a $484 million loan. In order to get the loan, Zimbabwe had to accepted the conditions required by the IMF of the policy changes, which including Zimbabwe to “cut its fiscal deficit, tax rate reductions, the deregulation of financial markets, to dismantle protections for the manufacturing sector and “deregulate” the labor market, lowering the minimum wage and eliminating certain guarantees of employment security” .
IMF’F enforced the policies on removal of the protections for the manufacturing sector, trade liberalization, and reduced government spending combined with a drought that happened in 1992, led to Zimbabwean economy into a recession, which was a great contrast comparing to Zimbabwe’s economic growth during the 1980s, before the implementation of structural adjustment imposed by IMF based on the agreements for exchanging the loan. In addition, reduced protection of the manufacturing sector and the reduction in public spending and labor market deregulation caused real wages dropping and a higher unemployment rate.
In order to meet the IMF’s fiscal targets for adjustment, Zimbabwe had to cut down the expenditures on health care, which led to the quality of public health care dropped. As a result of the wage cuts, many doctors ...
... middle of paper ...
...in the world, so some of the resources now spent on debt service could be reallocated to spend on vital needs such as health care and clean water.
Although the possibilities exist; the question is if these international financial institutions are willing to make these fundamental changes: To cut the number of constrained conditions that attached to their lending. To stop imposing their economic models and policies which may cause controversial to the borrower nations. To give the borrowing countries the flexibilities to spend the loan on the basic infrastructure and other crucial programs such as clean food, health care and education. To reduce the restrictions and make it possible for many poorest countries to have the access to the debt-relieve programs. To allow the borrowing governments to adjust their economic polies according to their own developing pace.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- International Monetary Fund (IMF)/World Bank IMF is collectively called the International Financial Institutions (IFIs) and has three main activities which are surveillance, financial assistance and technical assistance. This a 187 member-countries organisation that was formed just after world war 2 in late July 1944 at Bretton Woods in Hampshire with the aim of stabilizing global economic markets (international currency market and contraction of international trade) and resuscitating economies of different countries that had been affected by world wide depression that was caused by world war 2.... [tags: Poverty, World Bank, International Monetary Fund]
923 words (2.6 pages)
The Impact Of Transnational Industries And Global Financial Institutions Such As The World Bank And International Monetary Fund
- This essay aims to explore and critically analyse the impact of transnational industries and/or global financial institutions such as the World Bank and International Monetary Fund (IMF) in the sub-Sahara Africa. It will explore the impact on health, economic, and environmental, political and cultural determinates on developing countries. A country in the sub-Sahara Africa region will be used as a prime example in dealing with some of the above institutions and their outcomes, and a conclusion given.... [tags: World Bank, International Monetary Fund]
841 words (2.4 pages)
- Introduction The following paragraphs will describe a project that was funded by the World Bank or International Monetary Fund (IMF) that created problems for the nation that received its assistance. They will also answer questions from my perspective as to if I feel that the negative impact could have been avoided and if I think that the World Bank and the IMF is able to provide financial assistance in a consistently objective, unbiased and responsible manner.... [tags: World Bank, Economics, Finance]
740 words (2.1 pages)
- The World Bank and International Monetary Fund (IMF) are two of the most powerful international financial institutions in the world. They are the major sources of lending to African countries, and use the loans they provide as leverage to prescribe policies and dictate major changes in the economies of these countries. The Problems That the World Bank and IMF Created for Zimbabwe Zimbabwe had agreements with the World Bank in the later 1980s when it signed an arrangement with the IMF in exchange for a $484 million loan.... [tags: World Bank, Economics]
828 words (2.4 pages)
- World Bank Fails Indigenous Farmers in Ethiopia Any discussion of the International Monetary Fund and the World Bank must surely open with a discussion of their inception. Both International Monetary Fund and the World Bank were brought into being during intensive meetings of First World leaders at Bretton Woods, New Hampshire, in 1944, following the economic ravages of the second World War, based upon the idea of supporting economic development in struggling nations (Driscoll, 1996). To many however, the World Bank functions as an obvious enforcer of a Western agenda that undersells local economies in small nations and has garnered a reputation of leaving “underdeveloped” economies in ruin... [tags: United Nations, World Bank, Human rights]
992 words (2.8 pages)
- The International Monetary Fund (IMF) The International Monetary Fund (IMF) was established in 1946, along with the World Bank. The IMF was developed to promote all monetary cooperation and remedy economic problems incurred during the post - war reconstruction period (Baylis; 2008: 245). The IMF was therefore considered as the “rule keeper” and an important component in public international management. In the pursuit to stabilise the exchange rate system, the IMF reserves the authority to change exchange rates.... [tags: World Bank, International Monetary Fund]
1780 words (5.1 pages)
- The World Bank and the International Monetary Fund are two organizations that are used interchangeably, but are function very differently from one another. Both the World Bank and the International Monetary Fund were created during the post-World War II era to help stabilize the international economy. The IMF focuses mainly on international affairs and finance of the whole world, where the World Bank directs its attention toward developing countries. The United States and The People’s Republic of China are two of major members of both the IMF and the World Bank, which contribute their efforts on expanding and solidifying the economies of the other member nations.... [tags: government, rates, funds]
702 words (2 pages)
- Application: Critical Analysis Much can be said about the International Monetary Fund (IMF) and the World Bank (WB). Beginning with the facts, both are international institution established after the Second World War to promote economic cooperation and development. They are part of the United Nations (UN) system, providing financial and technical assistance to countries around the world. Although membership is voluntary, almost all nations are members. Furthermore, both organizations have made critical contributions to ensuring and promoting global economic stability, development, and integration.... [tags: application, critical analysis, United Nations]
2180 words (6.2 pages)
- The International Monetary Fund and the World Bank were created as a result of the Bretton Woods Conference. Both provide assistance to countries suffering economically. While the IMF is a cooperative institution that aims to create an organized global system of payments and receipts, the World Bank is an institution that aims to help developing countries (Driscoll 1). Both play a part in the economies of struggling nations with the goal of reducing their burden and helping them to survive in the global economic system.... [tags: Bretton Woods conference, economic history]
1008 words (2.9 pages)
- WRITTEN ASSIGNEMENT UNIT 2 For the European Union one of the largest interventions made by the International Monetary Fund and the World Bank is the continuing support being provided to Greece in the aftermath of the financial crisis in 2008. In 2009 Greece found itself at the centre of a serious financial crisis what it was forced to admit that it had been under declaring the level of its debts for many years so that it could enter the European Union and particularly the Euro Zone.... [tags: European Union, Euro, Eurozone]
741 words (2.1 pages)