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IN THE NEWS - January 12, 2002: International Monetary Fund - 2002-01-11

This is Steve Ember with the VOA Special English program, In the News.

A team from the International Monetary Fund completed a two-day visit to Argentina this week. The financial experts were there to examine the country’s economic crisis and how the new government is dealing with it.

Argentina owes other countries more than one-hundred-forty-thousand-million dollars. The country is in the fourth year of a recession. It has an eighteen percent unemployment rate. The economic troubles have led to a political crisis and violent protests in Argentina.

The Argentine Economy Minister, Jorge Remes Lenicov, said the government is seeking as much as twenty-thousand-million dollars in new aid. He said Argentine officials would negotiate with the I-M-F to re-structure the country’s debt.

The International Monetary Fund was created in part to deal with problems like this. In Nineteen-Forty-Five, twenty-nine countries signed an agreement establishing the organization. They promised to cooperate on international financial issues and to help expand international trade.

The I-M-F also seeks to help countries pay their debts when they are experiencing economic problems. In return, governments usually must take action that the I-M-F thinks will help solve the problems.

The I-M-F lends money under an “arrangement.” The arrangement states the conditions the country must meet in order to receive the loan. Officials of the country and the I-M-F develop the arrangement together. Then it is presented to the I-M-F Executive Board. The Board represents the I-M-F’s one-hundred-eighty-three member countries.

If the Board approves the arrangement, then the loan is released in a series of payments. I-M-F officials periodically re-consider the loan. Loan payments continue as long as the country honors the arrangement.

The I-M-F has created a number of loan programs to deal with special situations among its members. The most common loan program is called a Stand-By Arrangement. It is for countries experiencing short-term debt problems. Payments usually are made for twelve to eighteen months. Countries generally are expected to repay the loan within two to four years.

The I-M-F has another program for poor countries. The Poverty Reduction and Growth Facility permits poor countries to borrow money at a very low rate of interest. All other I-M-F programs have interest rates linked to the open market. The Poverty Reduction and Growth Facility also gives countries as long as ten years to re-pay loans.

Many people around the world oppose the I-M-F. In recent years, thousands of demonstrators have protested outside meetings of the I-M-F and similar organizations. Many of these activists say I-M-F policies make industrial nations richer and developing nations poorer. They also say the organization’s activities result in damage to the environment.

This VOA Special English program, In the News, was written by Caty Weaver. This is Steve Ember.