IMF AND HOW IT HELPS. BARBADOS GDP Per Capita Today: $15,000 GDP Per Capita 2000: $11,675.

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Presentation transcript:

IMF AND HOW IT HELPS

BARBADOS GDP Per Capita Today: $15,000 GDP Per Capita 2000: $11,675

 Background  Economy Used to depend on sugar, but turned to tourism in the 1990s.  The Problem  In the early 1990s, the BOP (balance of payment) deficit increased rapidly due to a drop in tourism and increased government spending. This led to rapid inflation.  If you ran the IMF, how would you try to help? BARBADOS

 What the IMF did  With IMF help the government cut spending by cutting workers wages and jobs and improved the tax system. Reducing inflation encouraged foreign investment.  Result  Though the measures were harsh, they worked. Inflation fell to just 1%, and GDP grew as workers found jobs. However, there is always danger as Barbados relies on the unpredictable nature of tourism. BARBADOS

TURKEY GDP Per Capita Today: $11,000 GDP Per Capita 2000: $4,220

 Background  Turkey’s economy is a mixture of agriculture and modern industry. It is currently a candidate to join the EU.  The Problem  Since 1980, it has averaged between 40 to 100 percent inflation due to too much government spending on agriculture and social security.  If you ran the IMF, how would you try to help? TURKEY

 What the IMF did  Reduce number of government employees, make all businesses privately owned, and make the tax system more efficient.  Result  Turkey’s GDP has grown at a healthy rate, and inflation has fallen below ten percent. The government debt still remains high however. TURKEY

SOUTH KOREA GDP Per Capita Today: $26,000 GDP Per Capita 2000: $12,000

 Background  One of the “Asian Tigers”, it has experienced rapid growth since the end of the Korean War.  The Problem  Investors lost confidence in large conglomerates, and pulled their money away from Korean stocks and assets. Many companies went bankrupt, and the currency devalued.  If you ran the IMF, how would you try to help? SOUTH KOREA

 What the IMF did  The IMF gave Korea a substantial loan of money in order to restore confidence and GDP growth. Supervision standards of financing were raised to international standards.  Result  Korea quickly rebounded and paid back the IMF sooner than expected. The Korean currency stabilized and it is still doing well today as there is more trust in Korean companies. SOUTH KOREA

UGANDA GDP Per Capita Today: $572 GDP Per Capita 2000: $255

 Background  Land locked country in Africa. After British left there was a struggle for power. Since 1986 they have been improving human rights and the economy.  The Problem  Uganda owed other countries vast amount of debt plus interest. This caused investors to not want to put money into Uganda leaving it one of the poorest countries in the world.  If you ran the IMF, how would you try to help? UGANDA

 What the IMF did  Under the IMF’s Heavily Indebted Poor Country program foreign countries and banks agreed to cut the amount of money Uganda owed them. This debt relief gave Uganda the ability to spend money on it’s country such as more jobs and universal health care.  Result  Poverty has greatly reduced, there is low inflation, increases in exports, and more aid is coming in. However, it is still overall a poor country with rebel forces and disease problems that needs solving. UGANDA