Business International Law - Essay Example

However, this fund is just made accessible after the country requiring the loan has applied certain structural adjustment program (www.imf.org). Structural Adjustment Programs (also known as SAPs) are economic policies created by each country but having shared common principles. These common principles include the devaluation of currency against the dollar, export-led development, privatization, and improved free market practices. States following SAPs are usually obliged to balance their budgets, release import and export limitations, and lessen or stop state subsidies as well as price controls.

While the IMF obliges states to make an effort to balance their budgets, they object to the plan of raising taxes. As an alternative, states practicing SAPs are generally required to cut expenses for education, healthcare and social services (Battikha, 2002). These SAPs are the chief cause of such a quarrel over the International Monetary Fund. However, using a liberal view it can be seen that in 'most' of the cases SAPs hurt the states more than they aid. The execution of SAPs has become the source of riots and disputes.

Algeria can be taken as an example of it. In October 1988, riots were caused due to the high prices and increased unemployment caused by the implementation of SAPs. During the riots more than 200 people were killed. In order to support this point some more examples would be helpful. Like during the riots in Jordan, due to the increase in prices brought about by SAPs, five citizens were killed in April 1989. In Venezuela, from February 28th to March 2nd, 1989, approximately 600 inhabitants were killed and more than 1000 injured as riots broke out because of the increase in fuel and public transportation prices, caused by SAPs (www.

Whirledbank.org). IMF worked in Thailand during 1980s when the state was facing a depression resulted due to a rise in the price of oil, decrease in the costs of agricultural exports, heavy burden of foreign debts and deficit in the external financial accounts. A stabilization program was designed for Thailand which was supported with a strategic structural adjustment program and was implemented with a joint effort of The World Bank and IMF. This helped Thailand to recover from the financial instability it was going through from.

Furthermore it is established that the similar instruments which were used by the IMF in tackling