International Finance Essay

1842 WordsSep 24, 20148 Pages
International Finance Essay The Role and Performance of IMF International Monetary Fund. Introduction: It is an organization which was started in 1944 in Bretton Woods Conference and formally created by 29 countries in 1945. Its basic goal is to assist in the reconstruction of the world’s international payment system post World War 2. It describes itself as an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty around the word. After almost 60 years of existence there are conflicting views on the importance and role of IMF for today’s international economy, and on its effectiveness. In this paper I describe what does IMF and how far it has been effective in its role. So what does IMF actually do? Many of us think that IMF as an institution that lends credits to those countries what have found themselves in difficulty, either as a consequence of poor policies or through some external and non-controllable circumstances, such as sudden drop in commodity prices or financial crisis in neighbouring countries, in return those country who lend money are obliged to impose painful austerity policies, usually involving reductions of budget deficits, through spending cuts or increased revenue(taxation), a rise in interest rates to reduce inflation, and an alteration of the exchange rate (devaluation). Even though that view isn’t wrong, I mean it is part of what IMF actually does, and what is actually happening in some European countries, but as I said it only gives a partial picture of what actually IMF does, In its mandate which was laid out in first Article of Agreement in 1944 in Bretton Woods NH, is very general: that is to: to promote international monetary cooperation, facilitate the growth of the

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