The role of the IMF in helping poor and debt-troubled countries - Case Study Example

Certain occurrences such as post-war rehabilitation or various crises could lead to a situation where a country would have minimal resources to support the running of its government. In order to replenish their reserves, the IMF lends money with certain conditions according to standards it has predetermined for compliance. In order for the countries to pay their international obligations as well as finance their local subsistence, the IMF would lend them the money. The loan is granted provided that they meet conditions set including interest and imposition of fiscal policies that must be enforced by the borrowing state.

These prerequisites result to high-conditionality lending that must be adhered to before they can fully enjoy the loan. The IMF is essentially a bank, and, just as the common knowledge about banking institutions suggest, it is also for profit. First off, a member country may avail of financial assistance if there is a balance in its international payment that it cannot satisfy. It then requests an arrangement through a lending instrument where the IMF (2014) “stipulate specific economic policies and measures a country has agreed to implement to resolve its balance of payments problem” through a Letter of Intent (n.p.).

This is then approved after presentation to the Executive Board and thereafter the funds are transferred in staggered basis according to their enactment of the programs. There have been many criticisms of the fund and how it’s policies of across the board conditions have led to the regression of many borrowing nations. Bird (2005) argues that the commonplace resentment proliferated during the 1990s to end the IMF would not have sat well decades earlier when countries severed communist ties left without funds (p.17). It is a commonplace scenario where countries in debt continue to be in debt unable to