Yes, the IMF exemplifies the folly of global institutions. How long have they propped up kleptocracies like Argentina? "Democracy" is just a nice coat of paint over unbelievably corrupt countries where citizens will never see a dime of those loans yet will have to bear the burden of paying them back.

They are predators, they are usually eyeing the conversion of these loans into assets (which will be bought cheaply) once the country defaults.

> and charged my country interest ON THE AVAILABLE FUNDS

That's actually fair. The problem is that many countries lack the capacity to satisfy the conditions and requirements for unlocking such funds. My understanding (and you can correct me if you have more accurate fact), is that the WB pass this interest to the relevant country rather than charge it for profit. Since the money was allocated by the institutions, they expect yield whether it is deployed or not. Obviously, the WB is not going to bear that cost.

From my perspective it's a pretty complicated question. Like loans can be very beneficial if they are used to make sensible investments. So that's a good reason to give them out. But as you mention if it just goes straight into the private pockets of bad people that's not good. But realistically it's never so black and white. Some money will be used for sensible investments, some will be used to build a giant statue of the leader, a third part to cousins, and a fourth to buy votes. So it's a question, is a sufficent proportion used for good? And also is the leader legitimate? If a leader is very impopular then we may say the he cannot take loans on his people's behalf, that the people are not bound by any agreements he makes.

But anyway I'm curious about your thoughts, what is the alternative? How would a better system look like?

IMO a bureaucrat shouldn't be able to put an institution in debt.

This sounds strict, but think about it: every single company I've seen (correct me if this is biased in the wrong direction) doesn't allow just any employee to take out a loan. Heck, even the CEO can't just go to the bank and take out a loan if the collateral are assets/equity in the company - the board needs to approve that.

Why would we allow someone who's tenure is basically guaranteed to be <5 years to take out loans?

I know this sounds like a non-answer but maybe it's that simple: a specific institution/bureaucrat can't take leverage. The central govt can take out loans and increase budget to hand out.

So why did your country take the loan if it was so terrible?

My comment comes from a rude awakening I had: I thought these institutions and their bureaucrats we're well-meaning people. Naively, I thought 'hey if you work at a place like that what other motive do you have but to help?'.

Some of the employees in those institutions are actually connected politically locally and they favor insiders from their party. Others want the press-release and don't give a fuck if the project actually gets completed or if it impacts people. They're just as involved in politics as the locals: I'll give you this loan so you have cash to do whatever and you help me with this project I'm pushing throughout the region.

Sounds like a regular day at the office I guess but dunno I thought people who worked in these institutions wanted to do good. I guess I ate up some propaganda and never questioned it until I saw it first-hand through my wife's experience.

I think the point is that the cronies at the top took the loan on behalf of the country. They don't care that the terms of the loan are bad because they will personally get rich either way and paying back the loan is somebody else's problem.

Bingo.

Because 'my country' isn't a conscious entity. The people inside the institutions are cronies of current senators.

The loans are a way to circumvent budgeting. Not sure on specifics but it's easier for them to accept the loan vs getting cash handed to them by the country's comptroller (Contraloria is the entity in Spanish).

The loan is usually so terrible because the IMF is supposed to be the lender of last resort.

You go to the IMF when no one wants to loan you money.