The International Monetary Fund is an international financial organisation. Most countries in the world are members of the IMF, but it is governed primarily by powerful countries such as the US and European governments.
The IMF was created to give short-term loans when countries had temporary crises. It has become the primary way powerful countries respond when governments cannot pay their debts. The IMF lends more money, which is used to pay off previous lenders such as banks, hedge funds and oil traders. The IMF then demands that governments cut spending and increase taxes in response to the crisis.
How does international and foreign debt work?
Foreign debt is debt owed to people, companies and institutions in other countries. Such international debts often cause more problems than debts owed domestically, as they lead to money leaving the country. Paying foreign debts therefore leads to worse impacts on the economy of a country.
International debts also tend to be owed to powerful countries and institutions such as the IMF, World Bank or global banks, financial companies and oil traders. These institutions can use debts to impose harmful economic policies on the debtor country.
How the IMF and foreign debt contribute to unjust debt
The IMF is run by its dominant member countries, such as the US and European governments. When countries are struggling to pay their debts, the IMF lends more money, ensuring that Western banks, hedge funds and oil traders get repaid. It then imposes policies on the debtor county, such as cutting government spending and increasing taxes.
If a debtor government tries to access debt relief, the IMF decides whether a country should get debt relief, and if so, how much. It acts as the chief debt collector for international banks.
About Debt Justice
Debt Justice is a part of a global movement to end unjust debt and the poverty and inequality it perpetuates. Only together can we build a fair economy that serves people and the planet. Through fiercely informed campaigning, we build collective power with those affected so together we can rewrite the rules of global finance and build a fair economy for all.