Analysis of the International Monetary Fund: Objectives and Impact

This report provides a comprehensive overview of the International Monetary Fund (IMF), defining it as an international organization fostering global monetary cooperation and financial stability. It outlines the IMF's characteristics, including its role as a lender to governments and overseer of financial markets, its near-global membership, and its work in promoting economic stability and reducing poverty. The report details the IMF's objectives, such as promoting international monetary cooperation and maintaining orderly exchange arrangements, and discusses the benefits, including providing advice to countries, assisting with balance of payment deficits, and offering crucial loans. However, it also addresses the detrimental aspects, such as the IMF's perceived ineffectiveness in promoting exchange stability, unsound policies for exchange rate fixation, inadequate resources, and high interest rates. The report concludes by highlighting the IMF's role in promoting exchange stability, maintaining orderly exchange arrangements, avoiding competitive exchange depreciation, and fostering international monetary cooperation. This document is available on Desklib, a platform offering a wide range of study resources for students.

International Monetary Fund

Meaning of contempraray Issue
• A contemporary issue can be
defined as any idea, topic, event
in a given subject that is relevant
to the present day.It can be found
in almost any matter of
interest.For example the IMF
works to foster global growth and
economic stability by providing
policy, advice and financing to
member, by working with
developing nations to assist then
achieve macroeconomic stability
and reduce poverty.
Terrones, M., 2016.

MEANING AND DEFINATION OF
INTERNATIONA MONETARY FUND
• IMF refers to the international Monetary fund and its
is an international organization which headquartered
in Washington D.C of 189 countries working to foster
global monetary cooperation, secure financial
stability, facilitate international trade, promoter high
employment and sustainable economic growth band
reduce poverty around the world.IMF serves as a
lender to modern government and an overseer of
international financial market.
Gaspar, V., Obstfeld, M., Sahay, R. and
Laxton, D., 2016

Characteristic of international monetary fund-
• The international monetary fund serves as a lender
to modern government and an overseer of
international financial market.
• IMF provided the basis of the international
monetary system.
• The IMF has near global membership of 188
member countries.Virtually the entire world belongs
to the IMF.
Gaspar, V., Obstfeld, M., Sahay, R. and
Laxton, D., 2016

Continu...
• It works to foster global growth and economic
stability by rendering policy, advance and finance to
members.
• It is working with developing nations to assist
them achieve macroeconomic stability and reduce
poverty.
Terrones, M., 2016.

Objective of international monetary fund
• IMF main aim is to promote international
monetary cooperation through a permanent institution
which renders the machinery for consolation and
collaboration on international monetary problems.
Another objective is to maintain orderly exchange
arrangement among members and to promote
exchange stability. It try to avoid competitive
exchange depreciation.
Gaspar, V., Obstfeld, M., Sahay, R. and
Laxton, D., 2016

Benefits of IMF
• IMF serves as a council and adviser to countries
attempting a new economic policy.It also publishes
paper on new economic topics.
• If the country have balance of payment deficit then
international monetary fund organization assist
member nations in several capacities.
• IMF most important function is its ability to render
loans to member nations in requirement of bailout.
Terrones, M., 2016.

Contin..
• It provides an external assessment of the economy,
which assist the government to implement popular
ideas.
• If country is seeing an exodus of currency due to a
balance of payment crisis, then the international
monetary fund render the crucial loans in order to
stable the economy.
Terrones, M., 2016.

Contin..
• Supporter argue that the IMF can also impose
necessary reforms on an economy.Reform such as
privatization, fiscal responsibility, control or money
supply and attacking corruptions.These policies may
cause Short term pain, but are essential for preventing
future crisis and long term development.
Perrelli, R. and Schimmelpfennig, A., 2016

Detrimental of IMF-
• The IMF has been passive in its approach and not
has been effective in promoting exchange stability
and maintaining orderly exchange arrangement.This
is considered as one of the major disadvantage of
IMF.
• The unsound policy for fixation of exchange rate is
one of the disadvantage of IMF.Some of the
provision of IMF are unsound.
Perrelli, R. and Schimmelpfennig, A., 2016

Contin..
• The resources at the disposal of the IMF are not
adequate to cater to the needs of member countries
which is a setback of IMF.Uncertain capital inflows
into the international financial system necessitates the
strengthening of the fund resources.
• High interest rate charged on itys advance are
considered one of the major disadvantage of IMF, so
the debt servicing for the less developed countries is
difficult.
Perrelli, R. and Schimmelpfennig, A., 2016

Conclusion
• IMF promotes exchange syability
• It maintain orderly exchanger arrangement among
members
• It avoid competitive exchange depreciation
• It promote international monetary cooperation
Perrelli, R. and Schimmelpfennig, A., 2016

References
• Terrones, M., 2016. Financial De-Dollarization; A
Global Perspective and the Peruvian Experience (No.
16/97). International Monetary Fund.
• Gaspar, V., Obstfeld, M., Sahay, R. and Laxton, D.,
2016. Macroeconomic Management When Policy
Space is Constrained; A Comprehensive, Consistent
and Coordinated Approach to Economic Policy (No.
16/09). International Monetary Fund.
• Perrelli, R. and Schimmelpfennig, A., 2016. Surprise,
Surprise; What Drives the Rand/US Dollar Exchange
Rate Volatility? (No. 16/205). International Monetary
Fund.

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