Several nations across the globe are facing economic crises due to global disorder, and these nations do not have sufficient funds to run their economies smoothly. Under such circumstances, these countries are compelled to approach the International Monetary Fund (IMF) and the World Bank for loans.
The IMF is considered the “lender of last resort.” It steps in to help only when countries face severe financial crises and are unable to secure regular borrowing. However, the IMF offers loans with strict conditions and riders, which force the recipient countries to make cuts in expenditure, leading to increased social and economic hardships.
The IMF was established after the Second World War to stabilise the global economy. Headquartered in Washington, D.C., the organisation has expanded to 191 member countries, up from its original 44 founding members. It works with the United Nations and other international organisations to maintain global economic stability.
Any nation can join the IMF by contributing a certain quota based on its economic strength. The United States makes the largest contribution to the IMF and therefore holds the greatest influence within the organisation.
The IMF’s total lending capacity is around $1 trillion. When the IMF extends loans, it uses the collective resources of its member countries. Wealthier and more stable economies often act as lenders, providing the funds that the IMF uses for its lending operations.
The amount owed to the IMF is generally expressed in Special Drawing Rights (SDRs), which is the IMF’s own accounting unit. It is based on a basket of five currencies — the U.S. dollar, euro, pound sterling, Chinese renminbi, and Japanese yen.
Argentina has borrowed the highest amount from the IMF, with outstanding debt of 41.8 billion SDRs (approximately $57 billion), followed by Ukraine with 10.4 billion SDRs ($14 billion) and Egypt with 6.9 billion SDRs ($9 billion). Pakistan ranks fourth, owing about $8.96 billion to the IMF.
In fifth place is Ecuador, with debt amounting to $8.83 billion. It is followed by Ivory Coast in sixth ($4.22 billion), Kenya in seventh ($4.09 billion), Bangladesh in eighth ($3.97 billion), Ghana in ninth ($3.63 billion), and Angola in tenth ($3.62 billion).