Specific Examples of IMF intervention

Tim Robbins

This is a thread where we can collate examples of IMF intervention.
I am looking for:

1. The country the intervened in.
2. When they intervened.
3. How bad things were before they intervened? For example what interest rates were they borrowing at and what was the debt to GNP ratio.
4. What sanctions they imposed on the state they were intervening in.

If you can give a specific example and answer the above please do.
Reason why I am doing this because it's difficult to collate the information.

oppenheimer1

Tim Robbins wrote: »

This is a thread where we can collate examples of IMF intervention.
I am looking for:

1. The country the intervened in.
2. When they intervened.
3. How bad things were before they intervened? For example what interest rates were they borrowing at and what was the debt to GNP ratio.
4. What sanctions they imposed on the state they were intervening in.

If you can give a specific example and answer the above please do.
Reason why I am doing this because it's difficult to collate the information.

The UK in 1976

http://www.amazon.co.uk/Good-bye-Great-Britain-1976-Crisis/dp/0300057288

Things were pretty bad, there had been a rout on Sterling and the currency was in freefall.

Public sector cuts were imposed on GB

Tim Robbins

oppenheimer1 wrote: »

The UK in 1976

http://www.amazon.co.uk/Good-bye-Great-Britain-1976-Crisis/dp/0300057288

Things were pretty bad, there had been a rout on Sterling and the currency was in freefall.

Public sector cuts were imposed on GB

Great post.

Anyone anything else to add?

We're all IMF this and IMF that - I think it's important that there's a good knowledge of IMF interventions so there's a deeper understanding. Hence what prompted the question.

Laminations

IMF went into Jamaica in the 1977/78. The IMF responded to Jamaica's request for loan guarantees by conditioning acceptance on a set of austerity measures. The IMF set budgets but didnt target any specific programs to cut AFAIK, but it meant the same thing. 'Spend this amount less on health' = cut out x, y, z.

The following is a clip from Life and Debt, any of it sound familiar??

https://www.youtube.com/watch?v=YoIJPwfsbqg

@ 1.55

'The whole idea was to set conditions which the government could not meet. And when the government failed to meet them, you would have to renegotiate a new loan in which the conditions became tighter'.

Count Dooku

Macroeconomic fundamentals in South Korea were good but the banking sector was burdened with non-performing loans as its large corporations were funding aggressive expansions. During that time, there was a haste to build great conglomerates to compete on the world stage. Many businesses ultimately failed to ensure returns and profitability. The South Korean conglomerates, more or less completely controlled by the government, simply absorbed more and more capital investment. Eventually, excess debt led to major failures and takeovers. For example, in July 1997, South Korea's third-largest car maker, Kia Motors, asked for emergency loans. In the wake of the Asian market downturn, Moody's lowered the credit rating of South Korea from A1 to A3, on 28 November 1997, and downgraded again to B2 on 11 December. That contributed to a further decline in South Korean shares since stock markets were already bearish in November. The Seoul stock exchange fell by 4% on 7 November 1997. On 8 November, it plunged by 7%, its biggest one-day drop to that date. And on 24 November, stocks fell a further 7.2% on fears that the IMF would demand tough reforms. In 1998, Hyundai Motors took over Kia Motors. Samsung Motors' $5 billion dollar venture was dissolved due to the crisis, and eventually Daewoo Motors was sold to the American company General Motors (GM).
The South Korean won, meanwhile, weakened to more than 1,700 per dollar from around 800. Despite an initial sharp economic slowdown and numerous corporate bankruptcies, South Korea has managed to triple its per capita GDP in dollar terms since 1997.

http://en.wikipedia.org/wiki/1997_Asian_Financial_Crisis

Saadyst

Laminations wrote: »

IMF went into Jamaica in the 1977/78. The IMF responded to Jamaica's request for loan guarantees by conditioning acceptance on a set of austerity measures. The IMF set budgets but didnt target any specific programs to cut AFAIK, but it meant the same thing. 'Spend this amount less on health' = cut out x, y, z.

The following is a clip from Life and Debt, any of it sound familiar??

https://www.youtube.com/watch?v=YoIJPwfsbqg

@ 1.55

'The whole idea was to set conditions which the government could not meet. And when the government failed to meet them, you would have to renegotiate a new loan in which the conditions became tighter'.

Not watched the clip, but from the title (IMF decimating one country after another)... I guess it's not going to be a balanced report.

Regardless, the IMF needs to be stringent, as it is usually due to a lack of adhering to good standards and guidelines that countries get into a fiscal mess in the first place. They can't come in and say, "Ah sure Cowen, you want a few dozen billion euro to help fix the HSE? Yeah, that's no problem".

They are not a charity: they provide loans in order that a country can get back on it's feet, and unfortunately, money that is being spent inefficiently or money being spent that the country doesn't have... needs to be stopped.

I'd imagine that they wont have issues if a government wanted to encourage growth, attract investment, or introduce reforms in politics, public service and the financial system.

But I wish that they would have that as part of the package.

Ponster

Argentina in 1999/2000.

A lot of people believe that the IMF who were left to 'fix' Argentina instead were to blame for the meltdown which followed.

Argentina's Crisis, IMF's Fingerprints

Argentina says it better off without IMF advice

Laminations

Saadyst wrote: »

Not watched the clip, but from the title (IMF decimating one country after another)... I guess it's not going to be a balanced report.

True, the film is a critical look at IMF intervention.

They are not a charity: they provide loans in order that a country can get back on it's feet, and unfortunately, money that is being spent inefficiently or money being spent that the country doesn't have... needs to be stopped.

My limited understanding is that they provide loans in order that a country repay its creditors, they look at the short term pay back rather than the long term health of the country. The criticisms of their interventions (on wikipedia) seem to suggest they hamper development and engage in asset stripping, often leaving countries in a worse state.

Saying that, I fully agree with a money lender applying conditions to the loan, I just disagree with the types of conditions the IMF seem to apply

Saadyst

Laminations wrote: »

True, the film is a critical look at IMF intervention.



My limited understanding is that they provide loans in order that a country repay its creditors, they look at the short term pay back rather than the long term health of the country. The criticisms of their interventions (on wikipedia) seem to suggest they hamper development and engage in asset stripping, often leaving countries in a worse state.

Saying that, I fully agree with a money lender applying conditions to the loan, I just disagree with the types of conditions the IMF seem to apply

Yeah, I can see where that comes from. But I'm of the view that... once the IMF is getting involved.. the government of that country has basically screwed up really badly.. so how can there remain a belief that the same government will somehow further the development of the country and help it progress?

Tim Robbins

Thanks for the comments. Can we just post specific facts about interventions and bailouts, rather than rights and wrongs?
Thanks.

So we have
Uk: 1976
Jamaca: 1977, 78
Argentina: 1999 / 2000

Also
Latvia: 2009 http://en.wikipedia.org/wiki/2008%E2%80%932010_Latvian_financial_crisis

Iceland November 2008: 2.1 billion.
http://en.wikipedia.org/wiki/2008%E2%80%932009_Icelandic_financial_crisis


Anything else?

maninasia

Count Dooku wrote: »

http://en.wikipedia.org/wiki/1997_Asian_Financial_Crisis

Korea was certainly a special case, large numbers of regular people dontated gold to the central bank to keep it solvent (so they say). They also learned important lessons from the crisis which probably made them more competitive in the long run. The structure of their economy wasn't that bad overall and their conglomerates were eventually well placed to compete in the booming 2000s as they had the scale to compete in the big capital industries such as semiconductors, automobiles, shipbuilding, energy etc.

virmilitaris

maninasia wrote: »

Korea was certainly a special case, ...

Yes and the average Koreans working hours rose substantially. Before the crisis they worked much less, or so I was told although I can't find any figures to support this.

Koreans now work more than any other nationality in OECD countries with 2,400 hours annually compared to the next highest poland with 1,900 and Ireland in 15th place with 1,500 hours.

From what I've read the whole country basically banded togeather to dig themselves out of that mess. Something I very much doubt Irish people could or would do.

doolox

Yugoslavia accepted an IMF loan in 1989 but had to let go 600,000 workers out of an industrial workforce of 2.7 million, according to a wikipedia article.
The article goes on to cite this economic shock as the starting point of the collapse of Yugoslavia and the subsequent war.

censuspro

virmilitaris wrote: »

Yes and the average Koreans working hours rose substantially. Before the crisis they worked much less, or so I was told although I can't find any figures to support this.

Koreans now work more than any other nationality in OECD countries with 2,400 hours annually compared to the next highest poland with 1,900 and Ireland in 15th place with 1,500 hours.

From what I've read the whole country basically banded togeather to dig themselves out of that mess. Something I very much doubt Irish people could or would do.

1500 hours per annum is only 31.25 hours per week based on a 48 week year. Maybe we need our working hours to rise substantially???

Stinicker

Hungary got bailed out by the IMF recently and I was over there and things are pretty bleak tbh.

ashleey

In Hungary the IMF said 'on Monday all public sector pay is reduced by 30%, welfare by 18%. Anyone not at work that day in PS is assumed to have resigned.' This makes the HSE retirement package look like a very slow process. The IMF gave the PS 3 days.