On Friday, the Senate passed a $108 billion blank check for IMF expansion, as part of the military supplemental, in response to a request from the administration in fulfillment of the U.S. commitment to global stimulus pledged at the G-20 meeting in April. Since this appropriation was not included in the House version of the bill, it is possible that the funding might be stripped, as Rep. Obey has stated is his preference, and Republicans have threatened to do. More likely, it provides an opportunity to include various key reforms, without which the funding will likely not achieve its intended impact of global stimulus and may actually do more harm than good
The Center for Economic and Policy Research reviewed the IMF loans given to countries since the onset of the crisis in September 2008, and found that the IMF has been mandating contractionary economic conditions
on recipient countries, including fiscal deficit reductions, monetary tightening, and inflation-targeting measures that are actually exacerbating the recessions in recipient countries. This is shocking news, confirmed by press reports from Latvia
(hospital and school closures, wage cuts), Hungary
(wage and pension reductions, tax increases, cuts in social spending), Ukraine
(tax hikes, pension cuts), Serbia
(mandated layoffs, tax increases), and other recipient countries
, particularly given that the point of IMF funding is to provide countries with resources to stimulate their economies during the global recession.