The International Monetary Fund as an Organization - Essay Example

The International Monetary Fund as an Organization, Review/Evaluate/Critique Its Strategic Plan for This Organization Introduction The IMF (International Monetary Fund) is an international association that was established in the year 1944, and later 29 member states joined it, in 1945. The main goal for its formation was to make exchange rates stable and reconstruct the international payment system after the WWII economic crisis. Various countries donate money through a quota system and those nations with payments imbalances borrow them for varied purposes. The purpose of the IMF is to work with an aim of advancing global financial cooperation, create high employment levels, emphasize sustainable economic growth, secure economic stability and reduce poverty levels across the globe. The stated objectives of the organization is promoting economic cooperation across the globe, improving the international trade among the member states, maintaining stable exchange rate, creating more employment and make financial resources obtainable for their member states in order to enable them meet B.O.P ( Balance Of Payment) needs. Literature Review and Discussions Delivering the stated objectives of IMF is vital because it will create conditions necessary for ensuring that the member states are well and truly to the part of economic recovery; thus achieving sustainable development. Therefore, IMF should implement effective strategic plan that will enable them to deliver their stated objective effectively. First, there is need to enhance economic policy and encourage its member states to create a 1coherent strategy in all sectors in order to meet the stated objective of the association. Encouraging countries to maintain economic stability is vital and this is through developing sound monetary policies. Although the economic crisis that resulted due to credit crunch issues have impacted economic performance of many nations, some of are still under economic recovery. 2Blanco and Carrasco argue that it is the role of the IMF to encourage countries to adopt sound economic policies. This can be done through proposing rules that would require nations to comply with the conditions set forth by stabilization fund for accessing pool of currencies. This condition will create longer-term stability through disseminating economic and monetary policies; hence helping nations to overcome future economic crisis. Building enhanced financial departments across the states for monitoring and assessing risks associated to financial stability is vital; thus maintaining public financial stability. Although the role of the states have changed and evolved in the recent decades, it is now apparent that good governance and financial monitoring are the key to the successful achievement of socioeconomic growth. Enhancing the member states to create an enhanced budget formation and spread the government bonds in order to achieve success is crucial. Mirandola (2011, p. 536) argue that one way of solving global financial crisis is to monitor and evaluate risks linked to financial stability. Many countries face varied financial challenges because of high public demand in the global economy. Therefore, reforming the government system, establishing higher accountability and transparency can create financial stability. In addition, greater participation with other government institutions or agencies is one of the effective strategies for driving the economic growth and increasing employment level in the state. The IMF should emphasize on the need to greater participation with other government bodies through broadening the tax base and distributing the tax burden in a way that will create economic growth. Countries can implement tax policies, which can promote fairness and competitive advantage within the member states. 3Ailinca, Iordache and Milea also argue that internal institutional reform can improve the performance level because this will increase participation level; thus facilitate the international trade among the member states. Focusing on financial inclusion in order to enable easy access to financial services by citizens is vital. This can enable citizens to improve their business activities; thus reducing poverty issues within the state. 4Mirandola in his article presents information about the effective plan that can bring economic reforms and help in streamlining the global financial imbalances. The author focuses on the need for improving the governance of international financial affairs and promoting organizations such as WFA (World Financial Authority) and WFU (World Financial Unit). The WFA plan is an organization that emphasizes on proper management of global liquidity and preservation of financial resources (Mirandola 2011, p. 441). Many countries face varied challenges in an attempt of achieving the development goals; thus the IMF should encourage their member state to implement economic reform strategies vital for achieving economic growth. Promoting economic cooperation is also significant and this can be achieved through working together as member states. Fostering sustainable, economic and social development is crucial, and this can be achieved through developing efficient, transparent, accountable and participatory governance. Developing effective policies for creating sustainable development in the key areas is crucial because it will enable countries to improve their economic and social development. The IMF should help their member countries to make effective adjustments in order to restore B.O.P equilibrium. This can be achieved through establishing flexibility in the currencies and they should be efficient and transparent. Encouraging the member states to be accountable for every aspect will contribute to social and economic success. In order for the IMF to fulfill their objectives, they must obtain resources through quota subscriptions from their member countries. The quota subscriptions depend on the size of the member state and the significant of its currency globally. 5Broome argues that implementing effective strategies for managing financial crisis is vital in an economy. Therefore, IMF should implement poverty eradication strategies across their member states because poverty eradication is one of their main objectives. Poverty is one of the problems that have hindered many developing nations from achieving their stated objectives that aims towards economic growth. The World Bank and IMF should implement effective poverty reduction strategy and encourage developing nations to create a strong poverty-focused government by implementing their own strategies for fighting poverty issues. They should engage the population in poverty eradication process and create a comprehensive plan that aims to reduce poverty levels. Many developing nations have been unable to meet the millennium development goals because of poor implementation of strategies. Therefore, the IMF should offer a detailed country’s plan in detail that aims in promoting growth and reducing poverty within the specified period. One of the major issues impacting the member states from achieving economic growth and maintaining financial stability is increased corruption and poor financial regulations. 6Haynes critically examines the evolving surveillance mandate of the International Monetary Funds from both legal and policy perspectives. The author contends that while financial regulations have been significant, there is need for structural adjustments in lending activities in order to maintain financial stability. The structural adjustments and policy reforms should be transparent and every nation should be accountable for the money used in economic development activities. Transparency is the only way of curbing corruption; thus enabling countries to improve their performance level. This is crucial because cases of corruption is rampart especially in the third world countries; thus impacting the effective roles of IMF in creating economic development. Therefore, the IMF should encourage the member states to conduct monitoring and evaluation of projects in order to ensure that funds are well utilized in development activities. This will enable them to track the way funds are being used; thus moving towards economic growth. Conclusions In conclusion, there is need for the IMF to enhance economic policy and encourage its member states to create a coherent strategy in all sectors in order to meet the stated objective of the association. Building enhanced financial departments across the states for monitoring and assessing risks associated to financial stability is vital; thus maintaining public financial stability. They should encourage countries to highly participate with other government institutions or agencies because this can drive the economic growth and increase employment level within the state. Fostering sustainable, economic and social development is essential, and this can be achieved through developing efficient, transparent, accountable and participatory governance. Lastly, they can also implement poverty eradication strategies with an aim of eradicating poverty level across their member states. Bibliography Ailinca, A., Iordache, F., & Milea, C. (2012). Some Considerations regarding the International Monetary Fund's Reform. Economic Insights - Trends & Challenges, 64(4), 113-120. Blanco, S., & Carrasco, E. (January 01, 2005). The functions of the IMF and the World Bank. Transnational Law & Contemporary Problems, 9, 1, 67-91. Broome, A. (February 01, 2010). The International Monetary Fund, crisis management and the credit crunch. Australian Journal of International Affairs, 64, 1, 37-54. Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. (2012). International business: The new realities. Upper Saddle River, N.J: Prentice Hall/Pearson. Davis, E. (2005). Pension fund management and international investment -- A global perspective. Pensions: An International Journal, 10(3), 235-261. Haynes, J. (2012). Overseeing the international financial and monetary system: a critical analysis of the International Monetary Fund's Article IV surveillance mandate. Law & Financial Markets Review, 6(4), 292-295. doi:10.5235/LFMR6.4.292 Jones, P. W. (2007). World Bank financing of education: Lending, learning and development. London: Routledge. Mirandola, C. S. (2011). Solving Global Financial Imbalances: A Plan for a World Financial Authority. Northwestern Journal Of International Law & Business, 31(3), 535-591. Rao, S., Das, P., & Boudreaux, D. (2012). Economic Relevance of 12B-1 Fees for Shareholders of International Mutual Funds. International Research Journal Of Finance & Economics, (89), 102-107. Reinert, K. A., & Reinert, K. A. (2012). An introduction to international economics: New perspectives on the world economy. 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