Summary
The International Monetary Fund (IMF) is an institution that assists countries when facing a crisis. Its functions are based on providing loans to states to ensure their economies’ smooth and fruitful operation (CNBC International, 2017). However, one of the actions for which the public seriously condemns the IMF is its interaction with Greece. Thus, the Fund has been providing loans with special conditions to the country for a long time to eliminate the crisis (Dullien et al., 2019). Many consider the unethical nature of these actions since it is believed that the IMF did not consider the country’s state when granting a loan.
Ethical Considerations of IMF Bailouts and Loan Conditions
It is ethical for the IMF to loan money to countries characterized by ineffective economic decisions. This is because the Fund focuses on maintaining overall economic stability in the world while helping the economies of many countries. It is noted that “the overarching goal is always to restore or maintain the balance of payments viability and macroeconomic stability” (“IMF conditionality,” n.d., para. 3). When implementing specialized requirements attached to its loans, the IMF ensures the fulfillment of the set terms of the transaction with the country. However, it is worth noting that this measure may be unethical, as it implies depriving a country, for example, Greece, of making its own decisions on the choice of economic policy.
Lessons from the Greek Debt Crisis for Indebted Nations and the IMF
Several aspects should be considered from the Greek case for countries with debt obligation issues and for organizations like the IMF. The first is to ensure openness when providing data on countries’ economic difficulties. This information can contribute to making the most effective decisions regarding loans and other assistance methods for the suffering country. Moreover, it is possible to learn a lesson that there is a need to compare countries’ economic conditions with the conditions that the IMF exposes them to.
References
Dullien, S., Fritz, B., & Mühlich, L. (2019). The IMF to the rescue: Did Greece benefit from the fund’s experience in dealing with highly indebted countries? Journal of Economic Policy Reform, 22(4), 369-383. Web.
CNBC International. (2017). What’s the difference between the IMF and the World Bank? | CNBC Explains [Video]. YouTube. Web.
IMF conditionality. (n.d.). IMF. Web.