IMF needs to change its modus operandi.

ISLAMABAD -- The International Monetary Fund (IMF) was launched in 1944, tasked by its 44 founding members with 'monitoring the international monetary system (IMS) and global economic development to identify risks and recommend policies for growth and financial stability'.

Its original purpose was to provide short-term loans to nations that had balance of payments problems under the newly created Bretton Woods exchange rate system.

The IMF is an international institution of 190 member countries. The United States and its Western allies being the largest contributors have a majority of voting rights and decision-making powers.

Supporters of the IMF include who's who of the corporate and political elite from left and right, the corporate community, and in particular banks, which are direct beneficiaries of the IMF bailout funds.

The IMF, being the lender of last resort for countries in balance of payments crisis or in danger of default, almost always ties its bailouts to excessive austerity measures. Its loans are tied - in the IMF jargon - to the 'structural adjustment programme'. These center on raising taxes and/ or spurning tax rate reductions, balancing the budget at all costs, devaluing the currency and increasing interest rates.

Such anti-growth policies, delivered in line with the IMF diktat, have been shown in the majority of cases to have actually increased countries' dependence on the IMF over time. Just think of what has happened in Argentina, Pakistan, Ecuador, Egypt or Ghana.

The tragedy is that for the past 50 years, the IMF has been peddling wrongheaded advice across the globe to countries seduced by 'free' IMF funds and thus compelled to follow economically destructive fiscal and monetary policies, creating a network of loan addicts.

The IMF is more like Hotel California: you can check-in, but you never check-out. Unless and until the IMF alongside its partner the World Bank changes the modus operandi, over time their influence will diminish on the global stage.

Alternative financial institutions of the recently expanded BRICS group will emerge to compete with the G7 on setting global rules and standards. This would seem to appeal to many developing countries, which want to reform the current international and financial system but do not want to explicitly take sides between the United States and China.

The IMF has a dreadful track record and is a relic of the 20th century; it must adapt to the realities of the 21st century...