The Role of IMF in providing assistanse to countries to overcome their economic problems - Assignment Example

How Successful Has the IMF Been In Helping Countries to Overcome Their Economic Problems? Table of Contents Table of Contents 2 Overview 3 Role of IMF 3 IMF in Mitigating Economic Problem of Countries 4 References 7 Overview International Monetary Fund (IMF) has been playing an important role towards the development of the world economy. Apart from this, IMF has been devoting utmost contribution towards the development of low-income countries. IMF is an international organisation that has been established in the year 1944. The organisation is headquartered in Washington D.C., United States. The organisation has been a significant consideration for developing the global financial condition. After the establishment of IMF, the condition of world economy has dramatically changed. To operate the global financial development, IMF has introduced few improvements in its policies for managing the needs in terms of balance of payment. IMF has been developed with the aim of managing macroeconomic factors and to implement structural policies for every poor, rich and middle-income member nations. In this context, the mission of the organisation has been to monitor and manage economic trend that prevails in the global economy (Vasquez, 1999). Contextually, the intention of the study is to explain the procedure based on which IMF contributes towards the development of economic conditions of several countries. Apart from this, the study explains the functions of IMF in enchantment of the global economy. Role of IMF The important role of IMF is to foster global growth and provide economic stability by providing right policies, advice and financing to member countries of the organisation. IMF is also helpful in reducing poverty globally to a certain extent as well as helps in developing nations to achieve microeconomic conditions. It has been observed that IMF has been playing three major roles in the international monetary system. The major role of IMF is to monitors economic as well as financial development of several countries. Apart from this, IMF also lends funds to several countries suffering ballade of payment difficulties (Bradlow, n.d.). Besides that, the major role of IMF is to promote global monetary and exchange stability in the global economy. The organisation with the implementation of effective policies relating to technical assistance and mitigating economic difficulties has been to secure a balanced growth in international trade. In terms of monitoring current transaction, IMF led to the establishment of a multilateral system of payment for current transaction. Apart from this, IMF is able to provide technical assistance as well as proper training to those countries in need for, in order to manage the growth of the economic conditions (Weiss, 2014). IMF in Mitigating Economic Problem of Countries IMF is recognised to be one of the most important organisations that help or support many countries to overcome monetary challenges. In this context, IMF also helps the member countries to maintain a stable international financial system. However, it has been observed that economically developed countries are more hurtled by several financial and economic crises. Though the developing countries are stated to be strong, but the impact of financial crisis has been observed in a delayed manner. IMF is an important organisation for assisting member countries to develop their economic structure during the period of financial crisis (Weiss, 2014). IMF is recognised to be successful in reducing the impact of different crisis situations faced by member countries, as it plays an active role in the global economic crisis. IMF has 188 countries as members since 2008. It has made an immense contribution towards promoting and supporting countries suffering from financial crisis. IMF has introduced crisis firewall for economic development of the member nations. For meeting the financial needs and requirements of countries, IMF has significantly bolstered its lending capacity during global crisis. This system also helps to strengthen global economic condition and increased financial stability. During global crisis, IMF works as major and prime source of global financing medium. Being a major and prime source of global finance, it has increased the quota subscriptions for the member countries (Shakow, 2008). IMF also acts as a crisis lending source during global financial and economic crisis. IMF has been modifying the lending framework with the intention of ensuring that the member nations are offered with required financial assistance for reviving from crisis to a greater extent. The lending framework of IMF has been overhauled for making it suitable with the needs or requirements of the nations. IMF and its lending framework has been emphasising on crisis prevention by improving financial flow (Lombardi, 2005). This process is also known as transmission of crisis via financial flow. Besides that, IMF also plays a vital role for the development of several poor countries. The countries having lower income are receiving resources devoted to concessional loan. IMF has increased resource availability towards low income countries via poverty reduction and Growth Trust. In addition, IMF has formulated plans in enhancing analysis of economic trends and devising appropriate policies accordingly for the development of the member countries. In the year 2011, IMF has initiated to undertake chief schemes for reinforcement of surveillance that helps to respond to a major globalised and interconnected world (International Monetary Fund, 2014). Correspondently, IMF provides assurance to the member countries by making a fund of general resources available for them during crisis. IMF also provides those countries with adequate protection and opportunities to recover crisis or shortfall. By providing exchange stability, IMF ascertains in maintaining exchange stability among the member countries. This process can be helpful for avoiding competitive exchange depreciation. In this respect, IMF has been performing different functions that include crisis lending, lending flexibility, analysis as well as advice, lessons drawn from crisis and governance’s reform. These procedures have assisted the organisation in managing economic instability of the member nations towards better balance of payment (International Monetary Fund, 2014). IMF is an international organisation that has been dealing with global financial or money market. The function of IMF has been helpful in supporting the member countries of IMF. IMF has introduced several policies, advices as well as reforms in its framework for providing better support to the member countries. Apart from this, IMF has contributed towards the development of low-income countries. It enables the availability of resources and develops a fund including general resources for low-income countries. IMF has made a complete contribution towards the development of the global economy. It is also concluded that IMF has achieved success in providing financial support to the member countries. References Bradlow, D. D., No Date. The Changing Role of the IMF in the Governance of the Global Economy and its Consequences. Global Governance, pp. 1-46. International Monetary Fund, 2014. The IMF’s Response to the Global Economic Crisis. External Facts. [Online] Available at: http://www.imf.org/external/np/exr/facts/pdf/changing.pdf [Accessed on March 2, 2015]. Lombardi, D., 2005. The IMF’s Role in Low-Income Countries: Issues and Challenges. International Monetary Fund, pp. 1-40. Shakow, A., 2008. The Role of the International Monetary and Financial Committee in IMF Governance. International Monetary Fund, pp. 1-28. Vasquez, I., 1999. The International Monetary Fund: Challenges and Contradictions. Publications. [Online] Available at: http://www.cato.org/publications/congressional-testimony/international-monetary-fund-challenges-contradictions [Accessed on March 2, 2015]. Weiss, M. A., 2014. International Monetary Fund: Background and Issues for Congress. Congressional Research Service, pp. 1-24. Read More