Nations have become politically independent but remain economically chained in an endless cycle of dependency. The late 1960s was a time when colonial rulers lost power over African colonies, forcing them to grant independence. In 1944 in Bretton Woods, New Hampshire, USA, another form of modern colonialism was created, under the banner of foreign aid from two financial institutions: the International Monetary Fund (IMF) and the World Bank (WB ). The United States holds 17% of the vote in the IMF, while 49 African countries hold less than 9%; this demonstrates the unequal power relationship present in global organizations. Furthermore, the world's seven richest countries collectively control 45% of the World Bank's votes. The World Bank was created with the aim of eliminating poverty in developing countries by offering short-term loans, while the International Monetary Fund focuses on economic growth and long-term involvement, both going hand in hand with goals of economic stability. Considering the underlying motivations of the IMF it is based on factors detailed by Horace Campbell and Howard Stein, “currency devolution, demand management, liberalization of foreign rates to their natural market level, elimination of government subsidies, reduction of government investment in economy, the encouragement of the private sector”. Tanzania became an independent state in 1961 and became a member of the International Monetary Fund in 1962 within a year. In the case of Tanzania, a postcolonial nation, it found itself and still finds itself in an endless cycle of debt and dependency. Located in East Africa with a population of 49.2 million people and a gross domestic product (GDP) of 44.8954 billion (USD) plus $3,100 per capita. In the midst of all this, Tanzania has millions of dollars in debt. In the current global era, neoliberal policies indoctrinated in financial institutions such as the World Bank and the International Monetary Fund have negatively affected Tanzania's development, through endless debt collection, conditions attached to loans and the implications these policies have had on human development. The World Bank and the International Monetary Fund appear to be the ultimate debt institution, but both sides of the equation need to be thoroughly analyzed. Taking resources is not as easy as it was years ago, so lending money opens the door to powerful states stealing from vulnerable states in times of need. Just as in the pre-colonization era, states in the Global North viewed colonies as investments; in the case of Tanzania today we see a repetition of this story. With the introduction of the dependency theory, once aid is accepted along with high interest rates, space is given to the exploitation of resources. It is essential to understand why the nations of the Global South are in debt, to understand that neoliberal development policies are not implemented to allow states like Tanzania to grow. The application of sanctions on Tanzania and the free trade agreement supported by the World Trade Organization (WTO) highlights the lack of development. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay The International Monetary Fund (IMF) and the World Bank (WB) are the last options for countries like Tanzania. States find themselves in difficult situations caused by post-colonization problems and internal events; this forces states to ask money-hungry organizations for help. ANDIt is necessary to explore understanding the important implications that arise from debt. The debt crisis in Tanzania has been going on for a long time and has an impact on the country's economy. In 1986, the government of Tanzania signed an agreement with the World Bank (WB) and the International Monetary Fund (IMF) for a loan of 445 million dollars (USD). In 1990 Tanzania's debt amounted to $6.5 billion, later rising to $8.7 billion. The reason the debt has increased is that the IMF and World Bank have targeted high interest rates that they know the Global South nation would not be able to repay. Evidently when the IMF and the World Bank know that a nation is unable to repay loans it is because various factors must be put in place. The factors are “the existing debt stock and its debt service, the future path of its deficits, the debt financing mix and the evolution of its repayment capacity in terms of the foreign currency value of gross domestic product (GDP), exports and public revenues”. ”. Examining the factors that determine the ability to repay debt only makes it clear how unrealistic it is for Tanzania to get out of debt. Being in debt affects the economy so heavily because a nation's (GDP) is based on its production and export potential. However, the IMF forces states to devalue their currency to allow foreign investment in and have a knockdown effect. This means that local markets will fail because imports will flood the market, which will have an economic impact. “Tanzania at independence inherited an agriculture-based economy with reliance on a few cash crops for the majority of its export earnings; the limited amount of industry was mostly limited to the processing of goods.” Coming to that, the economy is based on the money a country earns and also the money it uses but with IMF cases the money will go back to the international market and not to Tanzania market. The IMF and World Bank not only put Tanzania in debt, but also have guidelines that allow nations to repay loans using a Eurocentric and paternalistic approach by adding sanctions. Tanzania faces many problems trying to keep pace with the international economic community. Loans that involve more than just repayment, for example if your credit card company has placed a restriction on what you can spend the money on, compared to the loan. Accepting a loan from the IMF or World Bank comes with restrictions on reserving the aid. Furthermore, with their refunds there are no improvements expected for Tanzanians. In the case of Tanzania, in 1986, around the same time the loan was hit, Ajit Singh, one author states that the penalty imposed at the time was “A large devaluation of the national currency; a reduction in public sector financial needs through the reduction or elimination of consumer subsidies and many other social expenditures; an increase in interest rates to increase domestic savings; and a reduction in the money supply.” Devaluation of Tanzanian currency or adjustment of exchange rate is one of the biggest risks “Tanzanian shilling is overvalued and this is a serious problem, economic reforms should start with devaluation: devaluation of one shilling would not be healthy for the economy because it could be inflationary.” Inflation would not only destroy economic value, but also monetary value. This means that, based on inflation rates, Tanzania's currency would have no value compared to other countries. The effect ofdevaluation of the currency was seen not shortly after. In June 1986 the Tanzanian shilling at one of its lowest points was when T.Shs 17.80 was worth 1 US dollar. Considering today “$1 (USD) is equal to 2236.71 (T.Shs)”. “To clarify and comment on some of the key points of disagreement between the Fund and Tanzania, and outline the analysis of alternative macroeconomic policy options, if any, that may still be feasible for the Tanzanian economy.” Singh, A tells us how at the time Tanzania believed that the policies undertaken by the IMF would worsen their social and economic development. The IMF sanction not only affected the economy but also social services. Horace and Howard in their book talk about how the IMF program had implemented “the introduction of school fees, a cut in public sector employment”. The effect this has on the public is that if jobs are cut and schooling now costs money, how will citizens afford it? IMF cuts social programs and medical care On June 5, 1988, a newspaper reported that there was a sudden increase in mothers dying in child labor due to cuts in medical care. Other factors causing the increase were blood shortages and lack of medical transportation. Without government funding, hospitals cannot function as they should. In one case it was stated that “with only three syringes per 300 patients, the risk of illness from unsterilized needles is high.” Debt and penalties are immediate effects that are seen soon after the loan is booked, but long-term effects such as lack of development are not seen until it is too late. Tanzania is an underdeveloped country because it lacks industrialization, education, living standards, healthcare and life expectancy. With these factors, what they all have in common is monetary or economic growth, but with IMF and World Bank debts and sanctions economics, growth is impossible. Ajit Singh said the IMF restrictions "reduce public sector borrowing needs through the reduction or elimination of consumer subsidies and many other social expenditures." For example, Tanzania can improve its healthcare system, but the money that should be allocated to healthcare services is going back to pay the loan. Healthcare is an important feature in development because if the population of a country is healthy it can contribute to development. Industrialization is significant because most African countries like Tanzania have raw but no industrial materials to make the final product “International Monetary Fund policies are likely to be deindustrializing, reducing rather than increasing production levels.” Companies also do not pay an adequate amount for the raw materials they lead to exploitation, but due to one of the IMF guidelines is to break down trade barriers to allow foreign investors. African states would not get the profit worth the material. Trade barriers are critical because with the restrictions governments impose on goods and services they are able to impose taxes and stop them. For example, when a nation breaks down trade barriers, local agriculture actually matters because it will become cheaper to pay for. Which leads to the fact that the local market will not benefit because the money and sales will go back to imports and will have no benefit for the economy. Private entrepreneurs such as Board of Internal Trade (BIT) “a group of companies dealing with import and distribution, reforms in this sector have meant that private entrepreneurs can now import and.