WASHINGTON - May 20 - The tides are changing for US-backed financing institutions like the International Monetary Fund (IMF), as regional lending organizations are offering options without the historical conditionalities of IMF loans.

President Barack Obama recently wrote a letter in support of a bill to give $108 billion to boost IMF resources. On Sunday, the Senate agreed to add it to the military spending bill.

Economist Raul Moreno, from the University of El Salvador, is among the growing number of people who believe that the IMF does more harm than good through its loan-giving practices. "Through the loans, the international financial institutions, like the World Bank and the IMF, establish a mechanism of conditionality. Governments applied for loans and immediately their ability to spend was handcuffed by the conditions of the loan. Through which governments were forced to adopt neo-liberal policies," he says.

After receiving billions of dollars from G20 countries, Dominique Strauss-Kahn, Managing Director says that the IMF has rid itself of the controversial conditions it imposed in the past. The bank opened up a new  condition-free option, known as the flexible line of credit.

Reza Moghadam, IMF Director of Strategy, Policy and Research, says that this option is "[for] those countries, the Fund is prepared to provide rapid, large financing, based on their track record, without the normal imposed conditionality during the programs."
New lending options have emerged out of the growing global dissatisfaction with the IMF. Countries like Russia, Iran, and China have offered crisis-time lending around the world, and there has also been a rise of regional lending banks in Asia and South America.

These new lending institutions are attractive because most offer condition-free loans and they are not tied to the United States. Moreno says that there is an advantage in having alternative lending options that are regionally based. "It's clear that in the current situation, with fresh winds rising from the South, there are other options. There's the Bank of the South project, which arose out of the ALBA [Alternativa Bolivariana para los Pueblos de Nuestra América] framework. I believe this is a possible way for the governments and peoples of the Latin American and Caribbean countries to access a kind of financing that isn't conditioned to impose the failed policies of the neo-liberal model."

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