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The IMF is an international organization with 185 member countries that was established in 1944. Its main purposes are to promote international monetary cooperation, exchange rate stability, economic growth, and employment. It provides temporary loans to countries experiencing balance of payments problems and offers technical assistance. The IMF's resources come from member quotas and it oversees macroeconomic and financial policies in member countries. While IMF intervention has supported some governments, critics argue it has also destabilized countries and increased poverty through its policy conditions.
The IMF is an international organization with 185 member countries that was established in 1944. Its main purposes are to promote international monetary cooperation, exchange rate stability, economic growth, and employment. It provides temporary loans to countries experiencing balance of payments problems and offers technical assistance. The IMF's resources come from member quotas and it oversees macroeconomic and financial policies in member countries. While IMF intervention has supported some governments, critics argue it has also destabilized countries and increased poverty through its policy conditions.
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The IMF is an international organization with 185 member countries that was established in 1944. Its main purposes are to promote international monetary cooperation, exchange rate stability, economic growth, and employment. It provides temporary loans to countries experiencing balance of payments problems and offers technical assistance. The IMF's resources come from member quotas and it oversees macroeconomic and financial policies in member countries. While IMF intervention has supported some governments, critics argue it has also destabilized countries and increased poverty through its policy conditions.
Copyright:
Attribution Non-Commercial (BY-NC)
Formatos disponibles
Descargue como PPTX, PDF, TXT o lea en línea desde Scribd
of 185 member countries. It was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment. a ÷ The IMF was conceived in July 1944, when representatives of 45 governments agreed on a framework for international economic cooperation.
÷ The IMF's founders charged the new
institution with overseeing the international monetary system to ensure exchange rate stability and encouraging member countries to eliminate exchange restrictions that hindered trade. am
÷ The IMF's primary purpose is to ensure the stability of the international monetary system²the system of exchange rates and international payments. ÷ To maintain stability and prevent crises, the IMF reviews national, regional, and global economic and financial developments. am
÷ The IMF also makes financing temporarily available to member countries to help them address balance of payments problems ÷ It also provides technical assistance and training to help countries build the expertise and institutions they need for economic stability and growth. am
÷ The IMF's resources come mainly from the quotas that countries deposit when they join the IMF. The United States, the world's largest economy, has the largest quota in the IMF. ÷ The IMF earns income from the interest charges and fees levied on its loans. It uses this income to meet funding costs, pay for administrative expenses, and maintain precautionary balances.
! In its oversight of member countries, the IMF focuses on the following: ÷ Macroeconomic policies relating to the government's budget ÷ Macroeconomic performance²government and consumer spending, business investment, exports and imports, output (GDP), employment, and inflation; ÷ Balance of payments ÷ Financial sector policies ÷ Structural policies that affect macroeconomic performance ÷m !!
÷ Most of the IMF's loans to low-income countries are made on concessional terms. ÷ The IMF is not a development institution. ÷ The IMF also participates in debt relief efforts for poor countries that are unable to reduce their debt to a sustainable level. ÷ The IMF implemented the Multilateral Debt Relief Initiative (MDRI) in 2006 by canceling the debt owed to it by 19 countries. ÷ The IMF and the World Bank have been urging their members for years to eliminate barriers to trade. Pm
÷ Two criticisms from economists have been that
financial aid is always bound to so-called ³conditionality's", including structural adjustment programmed.
÷ Conditionality¶s, which are the economic
performance targets established as a precondition for IMF loans, it is claimed, retard social stability , while Structural Adjustment Programs lead to an increase in poverty in recipient countries. Pm
÷ The IMF sometimes advocates "austerity programmed,"
increasing taxes even when the economy is weak, in order to generate government revenue and balance budget deficits, which is the opposite of Keynesian policy.
÷ These policies were criticized by the former chief economist
and Senior Vice President at the World Bank.
÷ He argued that by converting to a more Monetarist approach,
the fund no longer had a valid purpose, as it was designed to provide funds for countries to carry out Keynesian. Pm
÷ In case of Argentina,
÷ which had been considered by the IMF to be a model
country in its experienced a catastrophic economic crisis in 2001 , which some believe to have been caused by IMF- induced budget restrictions which undercut the government's ability to sustain national infrastructure even in crucial areas such as health, education, security and privatization of strategically vital national resources. Pm
÷ The major argument against the IMF by leading economist is
that the weaker are getting weakest. When the IMF gives loans it imposes conditionality¶s on the borrowing countries. However, it does not make sure where the actual funds are going.
÷ The borrowing countries are often not able to come out of
the crisis and they fall in to a crazy cycle of debt and interest payment. The corrupt politicians of the developing countries then burden the general public with high taxes to pay out their debts. Pm
÷ IMF has no effective authority over the domestic policies of
its members. It is in no position for example to force a member to spend more on schools or hospitals and buying less military aircrafts, or constructing huge presidential palaces.
÷ It intervenes for weaker countries. It can and often does urge
members to make the best use of scarce resources by refraining from unproductive military expenditures (only the weaker) or by spending more money on health and education. "m
÷ The IMF, directly and indirectly, has played a crucial role in
the macroeconomic stability of Pakistan since 1988. On the one hand, it has provided direct bilateral support to Pakistan in order to cope with its macroeconomic imbalances like balance of payment deficits.
÷ On the other hand, the IMF has indirect influence on lending
by other donor agencies.
÷ This is evident from the fact that whenever Pakistan enjoyed
good relations with the IMF, other lending agencies also provided money to Pakistan and vice versa. "m
÷ Since 1988, Pakistan has not enjoyed smooth relations with
the IMF, because of the latter's dissatisfaction with the economic performance of Pakistan.
÷ It must be remembered that in the 1990s, the nation
suffered many losses on the economic front and the era is thus considered a "lost decade" for the economy of Pakistan.
÷ All macroeconomic indicators showed poor performance,
bringing Pakistan to the brink of default. "m
÷ Moreover, the IMF's relations with Pakistan were
further strained by 1997 due to the policies of former Prime Minister Benazir Bhutto (late)
÷ Large-scale corruption by her People's Party and
its resistance to structural reforms irritated the IMF and World Bank. "m
÷ These programs have so far fallen short of resolving
Pakistan's economic problems.
÷ Poverty has increased in Pakistan, rather than declined.
External debt has increased since the IMF and World Bank became involved in Pakistan.
÷ Unemployment increased in the country as a result of a
downsizing policy adopted by the government under the guidelines of these institutions. m !!
÷ As soon as the leader of the military coup, General Pervaiz Musharraf, appointed Aziz the finance minister flew to New York. After meeting IMF officials on October 29, Aziz said the talks were ³very positive.³
÷ General Musharraf had already indicated his desire to satisfy
the IMF. In his policy statement on October 17 he promised measures to rebuild investor confidence, increase domestic savings, make state enterprises profitable and ensure austerity. m !!
÷ Displeased by the Benazir Bhutto government's inability to implement its recommendations, the IMF welcomed the Nawaz Sharif government when it came to power in March 1997.
÷ In October that year, the IMF approved a three-year
financing package for Pakistan equivalent to $US 1,588 million in support of a medium-term ³adjustment and reform´ program. m !!
÷ IMF officials have been privately saying that they would need a firm and unequivocal commitment by the Nawaz Sharif government at the highest level" to implement its conditions, mainly the 15 percent tax.
÷ The IMF intervention contributed to economic collapses,
ignited socially explosive conditions and added to the political destabilization in Pakistan. It was no surprise that the military exploited the situation to grab power. m !!
÷ IMF intervention to secure an "open economic policy" in Pakistan started in 1988 at the end of military dictator Zia Ul Haq's tenure launched an IMF-assisted structural adjustment program in response to chronic and unsustainable fiscal and external account deficits.
÷ It praised the removal of barriers to foreign trade
and investment, reform of the financial system, relaxed exchange controls and the privatization of dozen of state-owned enterprises. m !!
÷ A recent UN-sponsored Human Development in South Asia 1999 report analyzing the impact of the IMF's measures referred to "worsening poverty and income inequality in the wake of structural adjustment programs. Programs have hurt the poor in Pakistan, since the real incomes of lowest groups have declined by nearly 52 percent since the [IMF] adjustment." Performance during Shaukat Aziz Tenure ÷ The biggest criticism for the previous government, when it used to compare its economic performance keeping 1999 as the base year was that the economy then was surviving heavy economic and military sanctions in the wake of nuclear tests conducted in May, 1998. The government of Shaukat Aziz claimed that it has come out of the clutches of foreign lending agencies, especially World Bank (WB) and International Monetary Fund (IMF). They also claim that the inflation declined and they were ready to say good bye to World Bank and IMF. Performance during Shaukat Aziz Tenure ÷ Although Pakistan received record aid, investments and remittances, its external debt went up from $33.6 billion in 1999 to $36.9 billion in June 2007 ÷ However, the situation becomes completely different when borrowing data is littered with corruption and wasteful spending, plus players in the major sectors of the economy do not pay tax at all. ÷ The government claimed that it does not carry around a begging bowl and does not depend on borrowings from IMF anymore. On the other hand, it borrowed more and more from WB and (Asian Development Bank) ADB. World Bank unveiled a lending program of up to 6.5 billion dollars for Pakistan under a new four-year aid strategy. # $ %! " ÷ the IMF has linked disbursal of loans in Pakistan to privatization of a bank, submission of a fiscal responsibility law in parliament, and elimination of tax exemptions. IMF has also asked the Pakistan government to impose 15 per cent General Sales Tax in the 2003-04 budget on bricks, cement blocks, computer hardware, software, specific machinery etc. ÷ Argentina is a prime example of a country that followed the policy recommendations of the IMF to the letter and now that the country is economically, politically and socially a complete basket case, the IMF has, as in other cases, abdicated all responsibility # $ %! " ÷ The increased violence in our society is a direct result of the incredible polarization that has gone on as schools, hospitals, two square meals and the prospect of employment have moved out of the reach of an increasing number of Pakistanis. The service that our public hospitals and schools provide in spite of a pitiful budget allocation, barely 5% for health and education combined, is remarkable (51% of our budget is used to service loans). We can only imagine how much better the system could be with adequate funding Pm
" ÷ Pakistan has decided to borrow $7.6 billion from the International Monetary Fund (IMF) to save its sinking economy ÷ As a part of the agreement, the loan carries a variable interest rate based on the market conditions. The rate may vary between 3.51 per cent and 4.51 per cent. The loan will be extended over a 23 month period and needs to be repaid between the financial years 2011-12 and 2015-16. ÷ that Pakistan would have to raise its national growth rate to 7 percent and bring down the inflation rate to 5 percent by 2012, while the target of keeping the foreign current account deficit restricted to $10.6 billion i.e. 6.5 percent of the GDP by the end of the current fiscal year has been given. The target for Pakistan¶s economic growth for the next fiscal year has been set at 5 percent, while that of inflation at 13 percent.
÷ The central bank needs to be proactive in dealing with economic
and financial issues ÷ The fiscal and monetary policy must be in line with each other. ÷ Government should avoid excessive borrowing from the central bank. ÷ To avoid conditionalties the government should not borrow from IMF and other donor agencies. ÷ Increase investor confidence, encourage overseas Pakistanis to send remittances through legal channels. ÷ Privatization process must be transparent and more organized. ÷ Exports should be increased through value addition and quality. ÷ Revival of major sectors such as cotton and textile ÷ Imports should be curtailed. ÷ Improve tax collection to increase government revenue ÷ Above all, steps must be taken to put an end to corruption and VIP culture.