My intention was to confine posts to the World Bank and its sister multilateral development banks. They offer more than sufficient fodder for DOGE. However, the IMF’s latest attempt to raid taxpayers warrants a mention.
The International Monetary Fund was created under the Bretton Woods Agreements as a facility to stabilize exchange rates under a fixed exchange rate system backed by gold. That system, along with the reason for the IMF to exist, effectively collapsed in 1971 when President Nixon ended gold backing for the U.S. dollar and, formally in 1973.
Ever since, the IMF has deftly maneuvered not only to survive but to expand despite having no reason to exist.
The most recent reinvention – sponsored by former Secretary of the Treasury Janet Yellen – is for the IMF to become the subsidized financier of the Global Green New Deal.
Of course, this requires more of other people’s money (OPM). The process of lifting this from taxpayers was to first establish a facility known as Resilience and Sustainability Trust. This was established in 2022 as a trust fund to which IMF member countries could commit a portion of their contributions to the IMF.
The new facility was required in order to make long-term, concessional financing available which could not easily be done under standard IMF protocols. And, of course, when you are risking OPM you want it to be as easy as possible.
Under the RST, concessionary loans – below market interest rates for bad credit risks – are available for 20 years plus a 10.5 year grace period on repayment of principal. The interest rates charged are zero for most borrowers and up to 1% for others.
With these terms, Solyndra might still be alive!
In usual IMF double speak, there are very complicated explanations of how this financing will not be for “project” but for foreign exchange support, stabilization and other seemingly complex arrangements. Don’t be fooled. They are intent on financing the Global Green New Deal.
Here’s proof:
The Biden Administration requested $21 billion in combined contributions to the RST and another IMF trust called the Poverty Reduction and Growth Trust. Congress wisely declined to allow any allocation to RST.
Recognizing that having countries divert funds from traditional IMF programs into the never ending demand for project financing, nothing could be done but to ask donors for more OPM.
In 2023, Secretary Yellen obliged by ushering through a 50% increase in the size of the IMF worth some $960 billion. The U.S. portion of this was to be some $55 billion. Democrats attached authorization of this to the National Defense Authorization Act (NDAA) for Fiscal Year 2025 – despite it having nothing to do with national defense.
To date, these funds have not been appropriated. Hopefully, the Congress and the Trump Administration will keep it that way.
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The IMF and the WB have been struggling with critical talent shortages for about 3 decades now. Top economics graduates consider them as 4th rate employers (after academia, the private sector and the Fed) so they end up with very poor analytical capacity. This fact alone should make the US consider a major overhaul of their existence.