THE IMF NEEDS A CRISIS TO SURVIVE

The International Monetary Fund (IMF) lends from its Poverty Reduction and Growth Facility (PRGF) a very small proportion of the financing made available to developing countries. At the end of 2004 outstanding PRGF credits were less than USD 9,900 billion or 10% of total outstanding IMF credits. In 2005 the total PRGF lending approved was less than USD 500 million. The IMF is also being marginalized in the provision of finance and liquidity to developing countries. All major emerging market economies, except Turkey, have now paid off what they owed and exited from IMF supervision, leaving only the poorest countries as its sole regular clientele - barely a strong rationale for an institution established to secure international economic stability. This situation also creates a problem for the IMF. Poverty lending does not generate enough income to pay the staff and run the institution, and the Fund relies primarily on crisis-lending to emerging markets to generate some USD 800 million per annum to meet its administrative expenses. Ironically, the financial viability of the IMF has come to depend on financial instability and crises in emerging markets.