Question

Formulate a critique of the IMF with respect to its lending practices to developing countries?

Answer 1

International monetary fund has been providing loans to various developing economy in order to help them to survive through different situations with specific objectives. There are certain shortcoming associated with functioning of international monetary fund-

A.recovery processes are not adequate in nature and they are providing loans to such countries which are not able to return them with the money.

B. Sometimes International monetary fund are intervening too much into the recovery of the loan where as sometimes they are intervening not much into the progress of the payments.

C.International monetary fund can also sometime creates moral hazard because they are lending too much to countries which have discrepencies of informations available to them

D.sometimes they are also providing with very high rate of interest to these developing countries and these developing countries are always having a problem in repayment of those loans.

E. Lack of accounting and it is often criticized with no lending to those countries who have bad history with human rights issues.

F.International monetary fund also do not lend on the basis of the financial status of the company and they are rather sympathic in lending loans to various countries like Pakistan and Syria