Question

Before 2008, the International Monetary Fund was focused on developing countries with balance of payment problems. However, after 2008, it has completely change its policy. Describe and discuss this new policy. Is it effective? Give at least 5 examples. 200 words minimum

Answer 1

As we know that IMF introduced policies for helping countries from financial problems

The Financial crisis were dealt based on the IMF policy

IMF loans are meant to help member countries tackle balance of payments problems

Its not actualy a development bank

In Starting days more than half of its lending went to industrial countries

But later on in the capital market, Financial needs are met

Example :- The oil shock of 1970... This lead some middle financial countries to depend IMF

in 2008 the IMF began making loans to countries hit by the global financial crisis.

They have programs with lots of countries

committed more than $325 billion in resources to its member countries

It was during the financial crisis

Later on after 2008 the IMF introduced a new framework with the following

• modernizing conditionality
• a new flexible credit line
• enhancing the flexibility of the Fund’s regular stand
• lending arrangement
• doubling access limits on loans
• adapting its cost structures for high-access
• precautionary lending
• streamlining instruments

IMF smooth adjustment to various shocks

IMF programs can help unlock other financing

Prevent crisis by IMF

Example : Once additional loan and subsidy resources are mobilized, these changes will boost available resources for low-income countries to $17 billion

It was effective strategy by the IMF to involve in the lending framework with new adoptations

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