StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

The role of the IMF in helping poor and debt-troubled countries - Assignment Example

Cite this document
Summary
Toward the end of the Second World War in 1944, there was a need to have an established fixed exchange rate that was standard, this is what led to the creation of the International Monetary Fund (IMF). With the abandonment of the gold standard in 1971, the IMF took on a…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.2% of users find it useful
The role of the IMF in helping poor and debt-troubled countries
Read Text Preview

Extract of sample "The role of the IMF in helping poor and debt-troubled countries"

Download file to see previous pages

Its major function is to maintain international monetary system, the system through which countries make international payments. It basically works toward providing a system that will enable foreign exchange among countries as it promotes investments and encourage a global trade that is balanced (Heakal 2010). Countries accumulate debts by borrowing from other countries or institutions especially when getting funds from outside seems cheaper and easier. This is done for the purpose of investment in areas such as factories, production of raw materials, and to acquire products that cannot be found within their borders.

Borrowing is also done to overcome crises such as wars and natural disasters. There are two means of paying the debts; by simply paying what is owed from the outcomes of the investments especially when loans are invested and managed in viable projects, and by borrowing new loans when conditions are favorable, which is used to offset the older debt (Kocic 2014). The International Monetary Fund is one organization that lends a shoulder to countries with difficulties to pay their debts. These countries experience a situation where their imports and other income sources cannot balance off what they owe.

These countries turn to the IMF for two reasons; through loans, the IMF provides an instant means to offset obligations to external lenders and other lenders (both private and public) such as the World Bank which only give loans to financially struggling countries that have agreed to loan terms with IMF. This puts the IMF in the role of a gatekeeper; for a poor country to get loans from other areas, they must first have a loan with IMF (Multinational Monitor Magazine, 2000). As stated by IMF (2014), when a country is experiencing trouble financially and is unable to pay debts, it puts the international financial system at the risk of instability.

The loan is open to all member states regardless of their economic state; whether poor,

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The role of the IMF in helping poor and debt-troubled countries Assignment - 1”, n.d.)
The role of the IMF in helping poor and debt-troubled countries Assignment - 1. Retrieved from https://studentshare.org/finance-accounting/1642476-the-role-of-the-imf-in-helping-poor-and-debt-troubled-countries
(The Role of the IMF in Helping Poor and Debt-Troubled Countries Assignment - 1)
The Role of the IMF in Helping Poor and Debt-Troubled Countries Assignment - 1. https://studentshare.org/finance-accounting/1642476-the-role-of-the-imf-in-helping-poor-and-debt-troubled-countries.
“The Role of the IMF in Helping Poor and Debt-Troubled Countries Assignment - 1”, n.d. https://studentshare.org/finance-accounting/1642476-the-role-of-the-imf-in-helping-poor-and-debt-troubled-countries.
  • Cited: 0 times

CHECK THESE SAMPLES OF The role of the IMF in helping poor and debt-troubled countries

The International Debt Burden in the Light of Church Social Teachings

But despite the defiance, in real life, the poor are still paying for debts of the rich, and will continue to do so as long as their leaders and governments bow down before dictates of powerful multinationals and multilateral agencies including the imf, WB and WTO.... Africa managed to score a few victories in improving the people's health and lives, only to slide back due to structural adjustment programs imposed by the imf-WB as a condition to approval of more loans for poor countries....
10 Pages (2500 words) Essay

The International Debt Crisis

The countries in Latin America were mostly third-world nations.... The private sector was partly or mostly responsible for the debt crisis because of their extensive borrowing of short-term loans with higher interest rates from foreign countries and banks.... The system operated as the value of the dollar was kept almost constant and any fluctuation in the exchange rates between the dollar and other currencies was accordingly countered by the central banks of the related countries....
5 Pages (1250 words) Essay

National Responsibility and the Just Distribution of Debt Relief among Countries

The paper "National Responsibility and the Just Distribution of Debt Relief among countries" evaluates the arguments for and against total debt relief for poor economies.... Taking all the points of view under consideration, the author suggests if highly indebted countries should be granted full debt relief.... nbsp; Most countries that presently fall under the Heavily Indebted Poor countries (HIPC) category are former colonies for European imperialism....
7 Pages (1750 words) Essay

How effective has the IMF been in helping countries in financial difficulty

There are also a lot of criticisms on how IMF is not accountable and its will in lending to nations that have bad human How effective has the IMF been in helping countries in financial difficulty?... A nation in severe problems and unable in compensating its international bills poses possible problems for the stability of the international financial system which was created to be protected by the imf.... A nation in severe problems and unable in compensating its international bills poses possible problems for the stability of the international financial system which was created to be protected by the imf....
1 Pages (250 words) Essay

The role of the International monetary fund (IMF) in helping poor and debt-troubled countries

To address the increasing needs for funds, the world… Originally, the principal role of the international monetary fund (IMF) was to consider appraisals made by countries in need of funds. The chief role of the imf is to cover up the budget deficits of countries Consequently, the institution offers advice on investments in the public sector.... the imf supports United Nations policies on development.... The first condition is that the imf should have a direct link to the program that is being rolled out with its money....
4 Pages (1000 words) Essay

The Role of IMF in providing assistanse to countries to overcome their economic problems

Also main functions of the imf is under consideration.... This essay considers the role of IMF towards the development of the global economy in the world of today.... The study explains the major functions of imf in facilitation of the global economy functioning.... hellip; Many economists agree that the imf performs three major functions in the international monetary system.... In this context, the mission of the organisation has been to monitor and manage economic trend that prevails in the global economy the imf provides necessary policies, advice and financing to member countries of the organization....
4 Pages (1000 words) Assignment

IMF: Emerging-Market Troubles Risk Triggering Asset Fire Sales

From the article, one can learn that countries such as the U.... The present paper is a review of the article "imf: Emerging-Market Troubles Risk Triggering Asset Fire Sales" written by Ian Talley that expounds on the financial instability and how the U.... This is evidenced by how he expounds on money supply that comprises of money held in the banks and loans "imf: Emerging-Market Troubles Risk Triggering Asset Fire Sales" is an article by Ian Talley that expounds on the financial instability and how the U....
1 Pages (250 words) Essay

Effective Altruism - Helping the Poor

Since wealthy people have the advantage to increase foreign aids to poor countries, such people are better placed to promote global development.... In this regard, effective altruism is essential in order to help poor countries get out of poverty.... UNICEF has revealed that poverty causes the deaths of a lot of children each year with most deaths were all come from low incomes countries.... The paper "Effective Altruism - Helping the poor" discusses that effective altruism is the best method by which the poor can receive the necessary help....
5 Pages (1250 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us