The IMF was created in 1945 with relatively limited functions and authority. It took on additional roles over time in response to fundamental changes in the world economy. As might be expected with a party that finances bankrupt countries, the IMF is subject to many controversies. An analysis of some of those controversies suggests that the IMF should focus on its core competencies and allow other entities to assume responsibility for other functions.
Critics attack the IMF for making its loans conditional on a package of macroeconomic policies that result in an austerity program that prevents real economic recovery and crushes the hope of the people of the country. The IMF "standard form is a set of quantitative conditions on macroeconomic variables attached to a stand-by agreement."" The country must meet various objectives as a condition for the loan and later disbursements under the loan. (Harris, 199) .
The IMF or any creditor can properly make its loans subject to a package of conditions that controls how the debtor will conduct its business on a going forward basis to provide for repayment of the loan. However, in continuing the application of the same conditions designed to regain macroeconomic stability after macroeconomic stability has been restored seems unreasonable. This results from having the IMF as both short term and long term lender.
Critics say that the IMF uses a "one size fits all- approach in its dealings with the debtor countries when a more tailored approach would produce better results. Critics particularly point to the Asian crisis in 1997 as an example. The crisis began with the mid-1997 devaluation of the Thai baht. Foreign savings had been invested in emerging market stock markets. The expected returns included only a low risk premium for currency depreciation because the Asian governments were viewed as guaranteeing exchange rates tied to the US dollar.