International Monetary Fund (IMF)

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International monetary Fund (IMF)
By (Name)
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The City and State
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Executive summary
In this paper, emphasis shall be put on the examination of the international monetary
funding. The paper shall give a brief background of the international monetary fund and
origin. There will be the analysis of the objectives of the international monetary fund,
historical roles, current roles of the IMF and failures. Then finally, the paper shall draw a
logical conclusion summarizing the overall roles of the IMF and the relevance in the modern
economy. As per the articles agreements, the objective of the international monetary fund
include; making sure there is effective resource mobilization to help countries in financial
crisis or difficulties, promoting international trade and cooperation, ensuring that there is a
stable exchange rate system, creation of employment opportunities, promoting sustained
economic growth levels and others.

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Table of Contents
Introduction..........................................................................................................................................3
Analysis and Discussion...........................................................................................................4
Objectives of IMF...............................................................................................................................4
critical assessment of the role of IMF in relation to global trade...............................................5
Advantages of the IMF......................................................................................................................5
Disadvantages of the IMF.................................................................................................................6
Conclusion .........................................................................................................................................7
References...........................................................................................................................................8
Appendix.............................................................................................................................................9

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Introduction
Globalization and Global trade have facilitated the movement of capital, services, goods,
people and ideas paving way for the integration of societies and economies. Therefore
global trade and globalization go hand in hand in the efforts of eliminating poverty. Thus, to
increase the efficiency of the global markets, the IMF had to be formed. The IMF was put in
place to sustain and at the same time restore the globalization benefits through
encouraging global economic cooperation. The Ideas of the famous economists John Keynes
and Harry Dexter played a vital role in the formation of the international monetary fund in
the year 1944 at the Breton wood conference. By the time of the formation of the
international monetary fund in the year 1945, it had only twenty nine member states or
countries (BalGunduz et al, 2017). Until the fall of the fixed exchange rates Bretton woods
system, Gold was very important in the international monetary fund. However, since the
year 1973, Gold's role diminished but it is still a critical asset in various countries reserve
holdings. Most importantly, the international monetary fund is regarded as among the
global largest gold official holders.
Analysis and Discussion
Objectives of the international monetary fund
The overall objective of the international monetary fund was to effectively reconstruct the
system of international payment. The international monetary fund plays a crucial role in
international financial crises and balance of payments difficulties management. The IMF
uses the quota system to mobilize funds from countries to enable countries with BOP
challenges to borrow(Bird et al 2015). The international monetary fund’s aim at improving

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the economic situation of its member states through the above fund and other initiatives or
activities such as surveillance of its members, analysis and gathering of statistics among
others (Hajro and Joyce, 2009). Loans and quotas are the main sources of the international
monetary (Bird et al, 2015).The first Article Agreement of 1944 in Bretton Woods clearly
speculates and explains the overall responsibilities and duties of the international monetary
fund. Below are the objectives of the IMF;
To encourage and at the same enhance global monetary cooperation by putting in a place a
permanent and prudent institution that offers collaboration and consultation machinery on
the global monetary challenges
To enhance stability in exchange rates through a voiding competitive depreciation of
exchange rate and maintaining orderly arrangements of exchange among member countries
To enhance balanced international trade growth and expansion
To help in the multilateral payment systems establishment as per the prevailing exchanges
among member countries (Joseph 2012).
To provide confidence and trust to member countries through availing them the
international monetary fund resources temporarily. The sole purpose of this was to offer
member countries with an opportunity improve their BOP maladjustments
To reduce the time and disequilibrium degree among members with BOP Challenges
Roles of the international monetary Fund
Historical roles of the international monetary fund
The international monetary focuses on promoting economic growth and stability globally.
This is undertaken through financing and policy advice (Joseph 2012). The IMF works hand
in hand with the developing countries of the world to ensure that there attainment of
macroeconomic stability and reduction of the levels of poverty. The international monetary

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fund is of the nature and operations of international capital markets that do not favor a
number of countries making access to financial markets difficult, hence with this in mind,
the IMF Plays the financing role (Joseph 2012).
It is imperative to note that the presence of market imperfections coupled with BOP
challenges, makes the intervention of IMF to offer alternative sources of capital or finance
very relevant to developing countries of the world. Therefore the IMF played a huge role in
ensuring access to finance to countries challenged with various economic problems
especially from third word and developing countries in Africa, Asia and Latin America. It very
clear that following the establishment of the IMF, It was charged with the responsibility to
act as an oversea of the countries fixed exchange arrangements globally. The rationale for
this intervention was to help economies to effective enable Government to focus on
economic growth by managing their overall exchange rates(Joseph 2012).
Also, the other rationale was to ensure that there is provision of short term capital for
purposes of aiding the BOP. None the less the post 1971, floating exchange rates effectively
altered the overall role of the international monetary fund. The international monetary fund
was now vested with the responsibility of assessing and analyzing of the current economies
policies of states that have agreement for IMF loans. This was for purposes of determining if
economic policy or fluctuation has a correlation with the shortage of capital. Also, other
policies that can be undertaken by countries to aid the recovery of the economy were
seriously researched by the international monetary fund (IMF) (Bird et al 2015).
The financial crisis prevention in countries like East Asia in 1997-98, Brazil in 1987 and
Mexico in 1982 were some of the international monetary fund main concerns. The IMF Was
more than determined that to deter to such crises from affecting the world currency and
financial system. The international monitory fund was challenged with implementing and a