It is given that societies are fluid and therefore Essays - Economy

It is given that societies are fluid and therefore many an aspect of them, in this instance the IFIs will eventually become irrelevant. But like any organism self-preservation is inevitable and so hence the policies that covertly keep the poor as such. They have various mechanizations that aid in doing such, from increasing unemployment which reduces economic buying power to industrial sabotage by subsidy removal. They also have their fingers in the political field too though they feign ignorance and zero intent in meddling there . That said they do also function in a positive manner which is help ing bridge economies of different zones and institutions. They also help( ed ) many a nation develop into what they're today. However the destruction is through the following; Privatization of African economies , subsidies, S APs, loan repayment periods and methods and also political interference. According to Fischer (2001: 237), one of the IMF's main contributions to reforms is that it stands consistently for a particular approach to economic policy. Therefore, the long-run impact of the IFIs reaches beyond the immediate effects of conditions and finance. T he IMF is an intergovernmental institution established by an international treaty in 1945 to create a framework for international economic cooperation focusing on balance of payment problems and the stability of currencies. it focused and offered a way which has the following effects; (i) To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems. (ii) To facilitate the ex pansion and balanced growth of international trade... (iii) To promote exchange stability... (iv) To assist in the establishment of a multilateral system of payments in respect of current transactions and in the elimination of foreign exchange restrictions... (v) To make the general resources of the Fund temporarily available to members for balance of payments purposes under adequate safeguards... (vi) In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members . The IMF provides policy advice and technical assistance to help countries build and maintain strong economies. The organization also makes loans and helps countries design policy programs to solve balance of payment problems. IMF loans are short and medium term and are funded mainly by the pool of quota contributions that its members provide. Each member country has a quota. The quota approximately determines a member's voting power, the amount of foreign exchange it may purchase from the IMF and its allocation of special drawing rights. As a result of third world debt crisis in the 1980s the IMF had to function as the lender of last resort and acted to avoid major economic catastrophe by providing new loans for debtor countries. The IMF has been criticized with regards to its strict conditions attached to its loans. The institution has been like a savings and loan association rather than a commercial bank. It can lend its funds but cannot create new funds in the way a bank can create deposits. As for the World Bank the following; M erged 5 different organizations namely International Bank for Reconstruction and Development (IBRD) , International Development Association (IDA) , International Finance Corporation (IFC) , Multilateral Investment Guarantee Agency (MIGA) , International Center for the Settlement of Investment Disputes (ICSID) . Therefore making it the ultimate institution to fund developmental projects for example building schools and health centres providing water and electricity etc. the World Bank makes loans for projects and as for its funding it relies on its ability to borrow in the international capital markets and contributions from members. Voting power of nations is proportionate to the capital subscriptions. The World Bank is the leading organization in the field of multi-lateral financing or investment and technical assistance. Critics for allowing politics corruption favoritism incompetent consultancy and inef ficient bureaucracy to dominate the evaluation process and financing of projects. The bank is the world's biggest source of aid to developing countries but although it has progressively increased the scope of its lending programs, it is unable to respond to the capital needs of debt-ridden third world countries. Besides the direct ,carrot-and-stick" effect of conditionality, there are