The Debt Trap: The IMF and the Third World

The International Monetary Fund is the most powerful supranational government in the world today. Cheryl Payer exposes and explains in clear non-technical language the system of aid and credit in which the IMF, as the international credit agency with vast powers to dictate internal policies in the borrowing nations, is the keystone. More specifically, this book is about the efforts of poor nations to gain some control over their own economies, the role of the IMF in frustrating those efforts, and the complicity of their elites in that betrayal.Two introductory chapters sketch a model of payment crises, alternative methods for dealing with crises, and the political and social effects of the "solution" favored by the IMF. An important theme of the book is that the death of democracy in Third World countries, whether through military coups or other means, is due to the contradiction between a government's responsibility to its electorate and to its foreign creditors, represented by the IMF.The heart of the book is a series of major case studies which provide a fresh interpretation of the modern history of the Philippines, Indonesia, Brazil, and India from the point of view of their foreign exchange needs and resources, their balance of payments crises, and the effects of the intervention of the IMF. It shows also how the IMF aided the U.S. war effort in Indochina and helped to divert Yugoslavia's socialist development into the dead end of a market economy. Through examination of the external economic relations of these countries it is possible to explain a number of events which are usually attributed to internal causes. As payments crises are now becoming endemic even in the industrialized countries, The Debt Trap has a relevance which extends beyond the Third World and the specific case studies which it chronicles.