Posted on February 9, by Scott Alexander I.
The countries work together towards better monetary cooperation across the globe and financial stability; this cooperation is also aimed at facilitating international trade, providing employment to the unemployed, and ensuring sustainable economic growth and development.
The fund also works towards alleviation of poverty in the world. The organization was started in with an original membership of It has risen through years to the current figure of Countries with imbalances in payments would seek help from IMF so as to settle this Woods, This is in order to help the countries restore sanity to their economies so as at least to make reasonable progress.
The fund provides finance to countries that are in debt crisis so as to relieve them of the huge debt repayment processes.
This is usually done at low interest rates which are affordable. However, experts argue that the international monetary fund has given too little attention to this. This is the reason why developing countries have continued to languish from debt crisis.
Most of these debts were taken immediately after the independence of these states. The debts were supposed to be repaid with a certain amount of interest in addition to the principal amount.
Accumulative debts have led to problems, since the countries are unable to pay these debts. The IMF provides funds to very few countries to handle this crisis.
Those paid are also not given enough allocation to help them sort the debt crisis problem amicably Vines, The countries have continually suffered from the exchange rate crisis with little being done by the IMF.
This is when the currencies in these countries are too weak compared to such strong currencies as the American Dollar. This has made the cost of imports increase over the years to such an extent that the exports figure is nowhere near this.
The countries, thus, suffer from an imbalance in payments, which has to be solved through more borrowing. This further worsens the already present debt crisis issues.
The IMF, according to experts, has failed in its mandate to streamline exchange rates. Expensive Rescue Management Procedures The World Bank has also engaged in schemes that are aimed at maximizing profits, while initially, it was not started as a business.
They engage in paying for very expensive rescue operations. These include operations aimed at restoring economies of states following a period of war or political instability. This mechanism has proved difficult for the affected states, since they suffer from repayment of the debts owed to the International Monetary Fund.
This is also risky for the organization in case a state defaults in payment. The Mexican bailout of was an extremely expensive rescue operation. It saw the state spending a significant portion of finance to help sort the crisis.
This engagement was not worth considering; there were other scenarios in developing countries that called for quick reactions Ainley, Countries are sometimes faced with emergency situations that call for stringent measures. Drought and famine is common in developing countries. At one point, it has forced the affected states to seek help from IMF.
Unfortunately, the program comes in at such a high cost that it results into a debt crisis for some of the developing countries. Other emergency cases include floods, internal displacements, especially in countries that have experienced war, earthquakes in certain parts of the world, etc.
The crisis management programs are too expensive, and experts argue that IMF should try to make this affordable, at least for the affected states.
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