Since its founding in 1944, the International Monetary Fund (IMF) has had its share of successes and failures in meeting its primary mission to watch over the monetary system, guarantee 澳洲幸运5官方开奖结果体彩网:exchange rate stability, and eliminate restrictions that prevent or slow trade. The IMF came about because many countries were economically devastated by the Great Depression and World War II.

Over the years, the IMF has helped countries move through many different challenging economic situations. The organization is also continuing to evolve and adapt to the ever-changing world economy. We'll look at 澳洲幸运5官方开奖结果体彩网:the role the IMF has played, as wജell as economic iss⭕ues, the levels of influence some countries have over this organization, and its successes and failures.

The IMF's Role in Global Economic Issues

For many countries, the IMF has been the organization to turn to during difficult 澳洲幸运5官方开奖结果体彩网:economic times. Over the years this organization has played a key role in helping countries turn around through the use🍒 of economic aid. Howeve𒆙r, this is only one of the many roles the IMF plays in global economic issues.

How the IMF Is Funded

The IMF is funded by a quota system where each country pays based on the size of its economy and its political importance in world trade and finance. When a country joins the organization, it usually pays a quarter of its quota in the form of U.S. dollars, euros, yen, or pound sterling.

The other three quarters can be paid in their own currency. Generally, these quotas are reviewed every five years. The IMF can use the quotas from developed nations to lend aid to economically developing nations.

The IMF is also funded through contribution 澳洲幸运5官方开奖结果体彩网:trust funds where the organization acts as the trustee. This comes from the contributions from members as opposed to quotas and is used to provide low-income countries with low-interest loans and 澳洲幸运5官方开奖结果体彩网:debt relief.

Lending Through the IMF

When a country requests a loan, the IMF will give the country the money needed to rebuild or stabilize its currency, re-establish economic growth, and continue buying imports. The IM♔F offers member countries a variety of loans tailored to meet specific uses.

Poverty Reduction and Growth Trust (PRGT) Loans

These are low-interest loans for low-income countries to reduce poverty and improve growth.

Exogenous Shocks Facility (ESF) Loans

These are loans to low-income ♊countries that provide lending for negative economic events that are outside the control of the government. T☂hese events could include commodity price changes, natural disasters, and wars that can interrupt trade.

Stand-By Arrangement (SBA) Loans

Countries with short-term 澳洲幸运5官方开奖结果体彩网:balance of payment issues will apply for stand-by arrangement (SBA) loans from the IMF. SBA loans are meant to help countries emerge from an economic crisis by giving them 澳洲幸运5官方开奖结果体彩网:quick access to the capital they need to restore growth.

Extended Fund Facility (EFF) Loans

Countries with a long-term balance of payment issues that require economic reforms will apply for extended fund facility loans.

Supplemental Reserve Facility (SRF)

The IMF provides supplemental reserve facility (SRF) assistance to meet short-term financing on a large scale. An example of this was when the loss of investor confidence during the 澳洲幸运5官方开奖结果体彩网:Asian financial crisis of 1997 caused enormous outflows of money and led to massive IMF financing.

Emergency Assistance Loans

These are de🥀signed to provide assistance to countries that have❀ had a natural disaster or are emerging from war.

Surveillance

The IMF watches the economics and economic policies of its members. There are two main components of surveillance: country surveillance and multilateral surveillance. Through country surveillance, the IMF visits the country once a year to assess its economic policies and where they are headed. It reports its findings in the Public Information Notice.

Multilateral surveillance is when the IMF surveys global and regional economic trends. It reports these twice a year in the 澳洲幸运5官方开奖结果体彩网:World Economic Outlook and 澳洲幸运5官方开奖结果体彩网:Global Financial Stability Report. These two reports point out problems and potential risks to the world economy a🌠nd financial markets. The Regional Economic Outlook Report gives more details and analysis.

Technical Assistance

The IMF helps countries to administer their economic and financial affairs. This se൩rvice is provided to any member country that asks for assistance and is typically provided to low- and middle-income countries.

Through the use of technical assistance, the IMF can perform useful surveillance and lending to help the country avoid economic pitfalls and create sustainable economic growth. Technical assistance helps countries strengthen their economic policy, tax policy, 澳洲幸运5官方开奖结果体彩网:monetary policy, exchan🍬ge rate system, and financial system stability.

Levels of Influence

With 190 member countries, some members of the IMF may have more influence over its policies and decisions than others. The United States and Europe are the major influences within the IMF.

The United States

The United States has the largest percentage of voting rights in the IMF with a 17.4% share as of Sept. 2023, and contributes the largest quota of any single country. Over the years there have been many complaints that the U.S. uses the IMF as a way to support countries that are strategically important to them, rather than based on economic need.

Many members feel that they should have more of a stake in what the organization does when it de𒁃termines how and in what ways to help out the different countries.

Europe

Many European countries have resisted the efforts for a readjustment in voting rights and influence at the IMF. In the past, a European has generally held the managing director position of this organization; however, as the world continues to change there is a greater demand to give more of a voice to new 澳洲幸运5官方开奖结果体彩网:emerging economic countries.

🦩 There have been discussions that Europe could pool its quotas and maintain a strong voice going forward. However, if the countries try to individually maintain the levels they have, their voice of influence could continue to diminish.

Successes and Challenges of the IMF

The IM🐼F has had many successes♈ and failures over its history. Below we highlight two examples of this.

Jordan

Jordan had been impacted by its wars with Israel, civil war, and a major economic recession. In 1989, the country struggled with a high 澳洲幸运5官方开奖结果体彩网:unemployment rate and an inability to pay its loans. The country agreed to a series of five-year reforms that began with the IMF. The Gulf War and the return of 230,000 Jordanians because of Iraq's invasion of Kuwait put a strain on the government, as unemployment continued to increase.

In the period from 1993 to 1999, the IMF gave Jordan three extended fund facility loans. As a result, the government undertook massive reforms of 澳洲幸运5官方开奖结果体彩网:privatization, taxes, 澳洲幸运5官方开奖结果体彩网:foreign investment, and easier trade policies.

By 2000, the country was admitted to the 澳洲幸运5官方开奖结果体彩网:World Trade Organization (WTO), and one year later signed a free-trade accord with the United States. Jordan was also able to bring down its overall debt payment and restructure it at a manageable level. Jordan is an example of how the IMF can foster strong, stable economies that are productive members of the global economy.

Tanzania

In 1985, the IMF came to Tanzania with the aim of turning a broke, indebted socialist state into a strong contributor to the world economy. The first steps taken were to 澳洲幸运5官方开奖结果体彩网:lower trade barriers, cut government programs, and sell state-owned industries.

By 2000, the once-free healthcare industry started charging patients, and the AIDS rate in the country shot up to 8%. The education system that was once free started to charge children to go to school, and school enrollment, which was at 98% in 1981 dropped to 66% in 2000. (As of 2021, the latest data, it is 97%).

As a 🦩result, th🌱e illiteracy rate in the country increased by nearly 50%. This is an example of how the organization failed to understand that a one-size-fits-all strategy does not apply to all countries.

Notwithstanding, the IMF continued its efforts to provide Tanzania with various types of assistance, and over time, the nation achieved some success in different areas. The annual inflation rate went from a high of 37.9% in 1994 to 4.1% in 2004. Simultaneously, 澳洲幸运5官方开奖结果体彩网:real gross domestic product (GDP) grew from 1.6% in 1994 to 7.4% in 2004. It is at 5.2% as of April 2023.

However, these improvements have been difficult to sustain. After over 35 years of IMF assistance, Tanzania still struggles to maintain consistent economic momentum, while problems with fiscal management have led to expenditure arrears and a higher level of 澳洲幸运5官方开奖结果体彩网:non-performing loans.

Inflation did prove particularly challenging, going back up to double-digits in 2012 when it spiked to 16% before coming back down to 7.9% the following year.

Since 2013, the country has managed to continuously bring inflation down and keep it at manageable levels. In the years before the Covid pandemic, inflation was below 4% and as of April 2023, it is at 4.9%.

During the pandemic, despite keeping inflation steady, real GDP plummeted from 7% in 2019 to 1% in 2020. In June 2020, the IMF approved $14.3 million of relief to Tanzania, noting in its press release that the money was critical to helping the country meet its 澳洲幸运5官方开奖结果体彩网:debt service needs and freeing up resources for public health spending.

The Bottom Line

The IMF does serve a very useful role in the world economy. Through the use of lending, surveillance, and technical assistance, it can play a vital role in helping identify potential problems and being able to help countries to contribute to the global꧅ economy.

However, the United States and Europe have historically dominated the governing body, and the IMF has had successes and failures. While no organization is perfect, the IM♓F has served the purposes that it was estಞablished to do and continues to keep evolving its role in an ever-changing world.