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The higher a countrys foreign debt level, the greater are the chances of default. According to World Bank, the Latin American Countries (LAC) would need US $ 60 million annually during 1991-2000 period. This translates into higher borrowing, higher debts and debt servicing. Budget cuts were immediately felt at the international financial institutions like the Asian Development Bank (ADB), International Monetary Fund (IMF), which decreased access to officially supported credits. Global interest rates rose, which further increased foreign debts. Mexico, Brazil and Argentina could not sustain the economic growth and lurched from one financial crisis to another (Elstrodt, Lenero, and Urdapilleta). Debt has been the largest source of capital flows in the developing countries but despite that, economic development has not been successful. The causes and consequences of such debts have been the subject of debate over the years. This paper will examine the severity of Argentinas debt and the relationship between Argentina and the IMF.
During the Great Depression of the 1930s, UK and France too had defaulted on the debt repayments but the problems in debt repayments in Latin American can be dated back to 1914 when Mexico suspended its payments (Dodd). Owing to a series of corrupt regimes, Argentina has experienced severe economic declines. In 1956, a group of wealthy nations met in Paris to find a solution to the looming debt problems of Argentina. In the 1970s, large amount of lending to Latin America was in the form of syndicate banks loans. Brady Bonds helped in the debt restructuring process and the Brady plan proposed exchanging the loans for bonds that would allow the debt to be traded in financial markets where it would be priced at market value.
Macroeconomic management is essential if the country is to attain sustained growth. Argentina, besides pegging the peso to the US dollar at parity in
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How much will you pay in euro? b How much will you receive (dollars and euros) if you sell 1000 shares? c What will be the total costs and net proceeds in each case (dollar and euros), if the broker charges a 0.2% commission for each transaction? Answer: a) An investor would pay 100,000 in dollars if he would buy the shares of that firm.
The overview consists of the establishment reports of the IMF. It follows with the merits and the demerits of the International Monetary Fund (IMF) along with the major roles being played by it. The study also includes the major criticisms of the International Monetary Fund (IMF) (The World Economy, “The International Monetary Fund”).
The World Bank and International Monetary Fund (IMF) introduced structural adjustment programs, targeting developing countries in as preconditions for securing loans from the global financial institutions1. Since its inception, structural adjustment has had various impacts on the social economic development of the recipient countries.
Detractors contended that despite the fact the Fund was not intended to be, and must not become, a development agency. The view that the Fund must not be advanced to poor nations would have sat restlessly with the portfolio of IMF loaning at the start of the 1980s.
These institutions were designed to be pillars of the post world war global economic order. Crisis prevention and conflict management became established as an important aspect of development policy in the 1990s. It is often assumed that the World Bank and International Monetary Fund in particular have considerable potential in establishing and maintaining peace and stability.
Robert Olivier declared: "their major objective was to provide a world within which competitive market forces would operate freely, unhampered by government interference, for they supposed that market forces would produce optimum results for the entire world.
The study also includes the major criticisms of the International Monetary Fund (IMF), an inter-governmental organization. IMF offers the technical and financial assistance to its members in different areas of economic policy–basically in the field of exchange rates, fiscal, monetary and financial sector policies.
Originally, the principal role of the international monetary fund (IMF) was to consider appraisals made by countries in need of funds.
The chief role of the IMF is to cover up the budget deficits of countries