The
international monetary fund, IMF, is an intergovernmental organization that
oversees the global financial system by following the macro economic policies
of its members countries, in particular those with an impact on exchange rate
and the balances of payments. It is an organization formed with a stated
objectives of stabilizing international exchange rates and facilitating
development through the enforcement of liberalizing economic policies on other
countries as a condition for loans, restructuring or aid. If in headquarters in
Washington, Dc.
History, Organization purpose: The IMF idea was conceived in 1944 during
the united nations monetary and financial conference when representatives of 45
governments met in Brethenwoods, New Hampshire, USA, to agree on a framework
for international economic co-operation. The IMF was finally established in
December, 1945 when the fist 29 countries signed its article of agreement. The
influence of the IMF in the global economy steadily grow as its membership
steadily increased. The attainment of political independence by many developing
countries boosted its membership. Another more recent factor was the collapse
of the Sovieh Bloc which enable many of the former communish countries to seek
IMF membership. The expansion of the IMF membership together with the changes
in the world economic relationships have compelled the IMF to make charges in a
variety of ways in order to continue to serve its purpose effectively.
At
its inception in 1945, the goal originally was to stabiles exchange rates and
assist in the reconstruction of the world’s economic and payment systems which
was seriously dislocated by the awesome
destruction of the World War II. Member countries contributed to a common pool
from which they could borrow from an
temporary basis especially by countries with deficit balance of payments. The
IMF was important in helping the world stabilize the economic system at the
time of its creation. It works to improve the economies at its member
countries. In June 2009, the IMF described itself as …an organization of 186
countries working to faster global monetary
co-operation, secure financial stability, facilitate international
trade, promote high employment and sustainable economic growth and reduce
poverty…4 all UN member states
participate in the IMF with the exception of the Morth Korea, Andorra, Monaco,
Lecihten Stein, Tuyahu and Manuru. Cuba left in 1964 while Taiwan was expelled
in 1980.
Assistance and reforms: The primary mission of the IMf is to provide financial
assistance to countries that are faced
with some level of serious economic difficulty. The IMF uses funds deposited
with it from the collective resources of its 189 member courtiers. Member
states with balance of payment problems may request loans to help fill gaps
between what countries earn and are able to borrow from other official lenders
and what countries must spend to keep operationally afloat including the
ability to cover the cost of importing baric goods and services. In return,
countries are usually required to launch certain reform programmes which are considered
necessary to reshape the economic destiny of the state, enhance productivity
and improve the several economic position of the state. This is often described
as structural adjustment programmes. there reforms are thought to be beneficial
to countries with fixed exchange rate policies, that may engage In fiscal,
monetary and political practices which may lead to economic crisis itself.
Nations with severe budget deficits, rampant inflation, strict price controls
or significantly over-valued of payment problems. The structural adjustment
programme, SAP, are at least intended to ensure that the IMF is actually
helping to prevent financial crisis
rather than merely funding financial recklessness.
Achievements/Criticisms:
the role of the IMF as a global fiscal umpire has been controversial
since the cold war period. While some argue that the fund hare worked hand to
maintain global economic sanity and progress, critics insist that the IMF has
not been a source for good.
1. IMF
policies are seen to support authoritarian regimes and military dictatorship as
long as such are friendly to American and western corporations.
2. The
IMF is seen as generally apathetic to views of democracy, human rights and
labour rights, despite glasing abusus in such countries, the IMF continue to do
business with the leadership while furning a blind eye to the night of the
citizens whose rights are desecrated.
3. The
IMF defends itself by asserting that economic stability is a precursor to
democracy. The axian seem to be that economic freedom would ultimately be a
forerunner to political freedom and others rights that go with its.
4. Critics
argue that economic aid is often tied to stringent conditionalities. The
structural adjustment programme, SAP has been widely condemned us anti people
and highly insensitive to the nights of ordinary citizens in developing
countries. Depending them of baric amenities and infrastructure which should be
the responsibility of government to provide.
5. Critics
argue that most of IMF conditionalities retard social progress and stability
and lead to an increase in poverty levels and reduced standard of living in the
recipient countries.
6. IMF
have been accused of representing and protecting only the interests and
ideological preferences of the western financial community.
7. IMF
loans under acts governments ability to sustain national infrastructure even in
crucial areas such as health, education and security.
8. Privatisation
of strategically vital national resources which tends to place control at the
exploitative hands of the wealthy while the poor continue to suffer severe
disadvantages.
9. Enhances
the level of poverty and hunger by denying people early access to food and
other vital nutritional elements. Cost of living becomes extremely high and largely
unaffordable.
10. Strict
conditions on IMF loans impedes affective health care delivery systems as
public health care are structurally weakened. A Cambridge university study in
2008 revealed that deaths in eastern Europe by tuberculosis role by 16%, as a
result of under funding of health projects, dilapidated infrastructure,
inadequate health personnel, bad working conditions and brain drain.
11. The
IMF encourages indebted countries to engage in eco systems damaging projects in
order to generate cash flow. These include oil drilling, wal, deforestations
and other environmental unfriendly activities.
12. The
IMF advocates currency devaluation which is considered by economists as
inflationary. Some economists argue that currency devaluation which is often
recommended to developing countries is destructive to the economy.