Role and Responsibilities of the International Monetary Fund

Role and Responsibilities of the International Monetary Fund

The international monetary fund is the organization of the United Nations that produces the responsibility to promote the monetary cooperation and the international trade. It came in to existence in 1945, at the United Nations Monetary and financial Conference. Till today, it has 186 nation-members.

It works by surveillance, lending and technical assistance. The surveillance involves the partnership between the international monetary fund (IMF) and its member nations. They, after accessing the economic position of the members, offer a detailed advice, and help them to formulate strong and workable economic policies. Lending consists of the provision of financial aid to the needy countries on low interest rates. additionally, it offers technical assistance in the fields like banking, fiscal and economic in addition as exchange rate policies. It helps the members to fight against the threats of terrorism.

The major responsibility of international monetary fund is to already out the world currencies and to devise plans of economic adjustment for the nations that need an economic reorganisation. Its membership is obtainable to the countries who agree to to comply with the terms regulated by the board, comprising of the members of every nation. The general obligatory terms include avoiding the manipulation of exchange rates and abstaining from the discriminatory money practices.

It emphasises on an orderly management and adjustment of the exchange rates. The adjustments play an active role to provide assistance to the developing countries to meet with the heavy exchange demands that are imposed by the high import prices, declining export earnings and development programs.

Its creation is seen to prevent the castigatory money devaluation and trade limitations, which have been the major cause of the economic depression. In other words, the role of international monetary fund is to create a financial and economic stability. Economic stability is about giving breathing room to the countries. A program coupled with IMF financing is designed by the national authorities to mediate financial stability. Many countries buy gold bullion to keep stocks for their money.

IMF is playing an active role in reducing poverty in the third world counties or the under developed countries. It is working independently or in cooperation with the World Bank and other organizations. Its programs include the poverty reduction and growth facility (PRGF) and debt relief to the heavily indebted countries (HIPC).

It efficiently addresses the balance-of-payment problem. Any member facing this problem can apply to the IMF for the needed foreign money from the reserves. The member may use this foreign exchange for the period of five years, and then return the money back to the IMF resources. The advantage of using these resources is that IMF offers low market rates of interest for using these funds.

In the year 2000, the managing director and the members of the IMF settled on several leading policies that included the endorsement of the persistent non-inflationary economic growth, enhancement in the stability of the international finance system and pondering over the chief macroeconomic and financial areas. additionally, keeping in view the situation of the global economy in the next few years, IMF has pre planned and has started making the arrangements to add to its resources.

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