182 Members Of The Imf example essay topic

"If you owe your bank a hundred pounds, you have a problem; but if you owe it a million, it has. (1) "In the year of 1327, Kind Edward of England defaulted on his Italian debts. This caused the banks of Bard i and Peruzzi in Florence to collapse. Who would know that over 650 years later, the world would still have these types of problems?

After World War II, the need for an organization like the IMF was finally realized. After the war, politicians and economists began to work on blue prints for a postwar world. They envisioned a liberal international economic order, based on stable world currencies and revived world trade. The International Monetary Fund (IMF) finally came into existence on December 27, 1945. On this date, twenty-nine countries signed its charter when meeting at Bretton Woods, New Hampshire. On March 1, 1947 the IMF came into financial operations.

The IMF was established to promote internal monetary cooperation through a permanent institution, which provides the machinery for consultation and collaboration on international monetary problems. Also, it provides temporary financial assistance to countries under adequate safeguards to help ease balance of payments adjustments. In addition, it facilitates the expansion and balanced growth of internal trade. Many critics and even followers of the IMF do not even know what the IMF really is. It is not a development or even a central bank. It is a credit union.

It pays interests on deposits it receives from member nations. The IMF lends money to members having trouble meeting financial obligations to other members, but only the condition that they undertake economics reforms to eliminate these difficulties for their own good and that of the entire membership. Some people believe that if the IMF tells a country to do something, they must do it. This statement is false. The IMF has no authority over the domestic economic policies of its members.

The IMF is a cooperative institution that 182 countries voluntarily joined because they see the advantage of consulting with one another to maintain a stable system of buying and selling their currencies. All 182 members of the IMF contribute to a pool of funds that the agency then taps to aid troubled countries. The IMF currently has around 200 billion dollars. The U.S., Germany, Japan, Britain, France, and Saudi Arabia make up over 35 percent of this fund. Some see the IMF as the agent that won't allow the international monetary system to be disrupted by large-scale failures, particularly by governments.

International banks have made risky loans all over the world because they knew that if trouble arose, the fund would step in to resolve the situation - as it has done in the past. The IMF has played a critical role in many of the epochal events in the 1990's. The IMF lent 18 billion dollars to Mexico in 1994, after the peso collapsed. It gave Russia over 10 billion dollars in 1999.

The IMF has helped drive inflation from 1,000 percent a year down to a tolerable 10 percent a year, thanks to Russia listening to what the IMF said and doing as they suggested. It has given Indonesia 10 billion dollars, and has helped Indonesia de monopolize industries. It gave 4 billion to Thailand, which was the epicenter of the East Asian Crisis. The IMF helped closed dozens of reckless banks. True, the IMF did many little things wrong, however, it did the important ones right. The Philippines is a prime example on how effectively the IMF can work.

For years, Filipinos suffered the weaknesses of economic and business policies. Under the tutelage of the International Monetary Fund for nearly 30 years, and especially during the past decade, they faced up to their problems. Many sectors of their society suffered greatly, and some complained loudly. However, they persisted and, with the help of the IMF and the courage of the Philippine people, they exited from the IMF program. How did they do this? They assembled one of the best economic management teams in Asia.

They worked with the fund to enact 165 reformist laws. They now have a policy framework that rewards economic merit instead of political access. Their banking system is sound; Morgan Stanley puts it in the same league with Hong Kong and Singapore. They have avoided the bankruptcies that have engulfed the region. Inward investment is surging, with this year's level five times that of 1996's.

And inflation is under control at just about 5 percent. As a result of all that, they graduated from the IMF's program at the end of 1997. Many of the Philippine economy's new strengths are the result of policy reforms that the IMF has recommended. There are four reforms that they adopted and feel other countries should too: "1) more cooperation to upgrade domestic financial systems, 2) more surveillance of domestic markets to avoid a buildup of external debt, 3) cooperative regional financing in keeping with the IMF's oversight authority and 4) a bigger role, and greater resources, for the IMF. (2) " The U.S. and other countries must act now to be sure that the IMF has the resources to fulfill the purpose it was established.

There is a growing sense, however, that this fund is more important to lesser-developed countries (LCDs) than to the Group of Seven (G-7) nations. LCD's are countries that have very high debt and very low poverty levels. The G-7 countries consist of Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States. The G-7 must be convinced by the IMF to continue helping the LCDs and other countries in debt. In April of 2000, the G 7 agreed to cancel $70 billion of the $214 billion debt owed by the world's 41 poorest nations.

This is good news for everyone, right? Well, not exactly. To finance the move, they sold off 10 million ounces of gold from the IMF's reserve. This drove down the price of gold - which at $260 an ounce is already at a 20- year low - and means pink slips for many of the South Africa's miners. Falling gold prices have already forced South Africa, the world's largest producer, to lay off 100.