THE INTERNATIONAL MONETARY FUND
SUMMARY
The center of the International Monetary Fund's central mandate is to prevent crisis like global economic reform, global financial crisis, they stop this by loaning countries money . The mandate has evolved with the changes in the global economy, enabling the IMF to keep their central role within the international financial structure. The 24 member Executive Board that represents 188 globalized countries provides guidance for the IMFC (Ministerial Committees) and daily business such as economic policy issues and IMF staff health checks . The Board of Governors is the highest decision making factor of the IMF, made up of one governor from each country. The Board of Governors has the right to approve quota ($) increase, admittance of new members and withdrawal of members.
OBJECTIVES
The aim of the IMF is to promote the exchange rate stability and international monetary cooperation and to assist with poverty reduction in countries. The IMF facilitate the growth and balance of international trade and provide resources to help balance payments for members whilst assisting the global community with poverty reduction. In order to achieve succession in helping international economies understand the monetary system they loan money, do extensive research of stats, forecasts and tracking, advise governments and banks, technical assistance and lend concessional loans.
POWER AND CRITICISM
What is at the sole of the IMF is to lend money, survey and advise economical choices of state governments and ensure technical assistance. States only approach the IMF if they have hit "rock bottom" in their economy , states must declare radical economic reform to obtain financial assistance from the IMF, this is often a criticism. The IMF power is growing when in September 2013 they took on the major role of promoting global financial stability and rebalancing growth, this enabled them to oversee individual countries efforts in reviving global economy. Since 2010 the IMF have gone from being a $250 billion dollar institution Fund to a one trillion dollar one in four years. The IMF also has the power of committing a country to economic reform if it weer to benefit them. Loaning money states also puts it in power but it helps states in meeting payments where as Morocco and Jordan have a three year ,line of credit. The IMF do not experience many difficulties as they have the money to have the power and hold ownership of someone.
CASE STUDY
The Bretton Woods agreement
The IMF begun in July 1944; after representatives of 45 countries meeting in the town in the midst of northeastern United States, agreed on a framework for international economic cooperation, that was to come into existence at the conclusion of the Second World War (1939-1945). They commonly agreed that such a framework was desperately needed to avoid a repetition of the disastrous economic policies and downfall that had contributed to the tragic Great Depression.
The International Monetary Fund, IMF, was formally established in December 1945, when its first 29 member countries signed its Articles of Agreement (the rules, regulations surrounding the IMF and its signatories). It began initial operations on March 1, 1947. Later on in that same year, the first country borrowed money from the IMF, being France.
In an IMF mission statement, they define their role as: ‘In this difficult environment, the IMF is helping governments to protect and even increase social spending, including social assistance. In particular, the IMF is promoting measures to increase spending on, and improve the targeting of, social safety net programs that can mitigate the impact of the crisis on the most vulnerable in society. Below are some examples of how IMF-supported programs seek to protect social spending in a way that is both fiscally sustainable and cost-effective.’
Fund in Greece:
In 2010 the IMF board unanimously approved Greece’s request for a three-year Stand-By Arrangement which amounted to 30 billion euros, which was the largest programs approved by the Fund ever to date. The role of the bail-out in Greece was to (as stated on the IMF website):
· Minimize the impact on the most vulnerable groups, pension cuts were targeted to the highest pension recipients and those receiving supplemental pensions. The government is reviewing other social benefit programs to improve their targeting, and in this context is planning to introduce a pilot mean-tested minimum income support program in mid-2014.
· The government has launched employment programs that target unemployed youths and jobless households, and is expanding public and social work programs and training programs to fight long-term unemployment, supported by EU structural funds.
· Spending cuts in health focused mainly on reducing prices for pharmaceuticals, where Greece had one of the highest per capita outlays in the OECD in 2008. At the same time, several schemes are being put in place to provide free healthcare access for the uninsured, including health vouchers and poverty booklets.
Role in Eurozone crisis
The IMF provided several 'bail-outs' to countries in the Eurozone which could not pay off their mass debt. Greece had the highest debt out of any of the 17 countries in the Eurozone, and Irelands was also right up there. Ireland received an $121bn rescue package from the IMF and EU. For a detailed summary of the Eurozone crisis visit: http://www.aljazeera.com/news/europe/2011/12/201112681226496176.html