Archive of Journal - Financing
Financing – scientific journal for economy
ISSUE 2017, No. 2, Article 4, Year of publication: 8, June, 2017
Economic and political consequences of abandoning the original principles of the international monetary fund
Miloš Grujić*; Dejan Popović**
*National Assembly of the Republika Srpska
**National Assembly of the Republika Srpska
The International Monetary Fund was established following the World War II. The aim of its creation was to establish an international monetary system based on one form of fixed exchange rate. It is regarded that the IMF contributes to the development of international monetary cooperation, stability of the exchange rates, lowering of the level of indebtedness of the IMF member states, and also to reduc-tion of their current account imbalances.Initially devised system, due to certain internal weaknesses (the Triffin paradox) ceased to function at the beginning of the 1970s of the 20th century. However, the IMF continued to exist having had to adapt to new circumstances. Nowadays, the IMF is functioning on some what different principles; among others, it allows each country to choose a regime of the exchange rate. Apart from quotas, borrowing from developed countries and countries with trade surplus represents a source of income for the IMF.Nowadays, the IMF is borrowing money to governments of countries, not monetary authorities. Also, those means are not planned any more exclusively for maintenance of the exchange rate. The IMF approves far larger amounts than originally, with longer return periods and for substantially different objectives. In this paper we investigate whether fulfillment of technical-economic criteria is a decisive factor for getting a loan from IMF. In relation to that, we elaborate on to what extent does the approval for getting the assistance depend on fulfillment of preferential-political conditions of highly developed countries. If the assistance is approved primarily for realisation of set foreign policy objectives of highly developed countries, that is in variance with the main principles defined in the IMF Statute. In that case, „doctrine of economic neutrality“ which the IMF asserts an an essential feature of its policy, can actually represent coverage for imperialistic strivings of the United States of America and other developed industrial countries.
Keywords: Internatioanl Monetary Fund, Washington Consensus, special drawing rights.