The International Monetary Fund (IMF) (Advantages or Disadvantages)

My Dear Readers, I have been writing posts on various topics and among those were mostly related to Economics, international markets, currency and topics related to finance and Financials. Today I decided to touch-base another related sizzling topic, IMF, (The International Monetary Fund). I think my readers would be interested to enhance their knowledge on IMF, what it is? And how it works and Why? I would also pose some thought provoking questions for my respected Readers as well. Let me first highlight some key information on IMF.


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The IMF was considered to be established in 1944 in one of the United Nations session as it was thought that there is a need of an organization who could help and support the countries facing economic/ financial issues. The concept was to develop an outline for economic cooperation at the international level. IMF was considered as an international organization to work inside the United Nations and it will have its registered members. Currently, IMF has 190 members. The main rationale behind establishing IMF was to support/ facilitate a short-term economic cooperation and trade at international level, it also aims to help its member countries to sustain their economic growth and through which the poverty level could be decreased. It is governed and overseen by an executive Board of governors.

We also need to know from where IMF gets money and funding? Basically, IMF gets its financials from the member countries (when they get registered). The IMF's resources mainly come from the money that countries pay as their contribution after becoming a member, the contribution (payment) depends on the allocated shares which is finalized and based on the countries’ economic situation/ condition at the global level, later, the member countries are eligible to borrow money (on interest and on certain terms and conditions and for an agreed time period) from IMF when they face financial deficit or any other financial issues.

We also need to understand that the re-payment of the principal borrowed amount has particular %age of interest and the important factor are the Terms and Conditions (increasing taxes on household, industrial, food items and other manufacturing materials etc.) on which the loan is approved. There is one major aspect that the increase in Taxation on all materials directly effects the poor citizens at the grass root level. The question is that will this action help and support economic growth?

Keeping in view the purpose and rationale of establishment of IMF, one may ask a question that how successful IMF is to achieve its aim and objective? How many member countries supported by IMF has really stood on their own foot and have successfully sustained their economy and economic growth? And have they succeeded to decrease the poverty level in their countries?


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As per my research, the poor or developing countries which has become dependent on IMF funding, are still struggling to get out of the situation. Currently, as per the Credit Outstanding list issued by IMF for the recent month of September 2023 i.e. from 1st to 29th of September 2023, there are 94 countries which has outstanding payments to IMF which means that 94 out of 190 member countries are dependent on IMF funding. As per the highest amount borrowed from IMF, Argentina is on the top of the list, while Egypt, Ukraine, Ecuador and Pakistan stands 2nd, 3rd, 4th and 5th on the Ranking Chart.

Now the re-payment of the borrowed amount with interest, is a critical challenge for these countries and also for others. How can they strengthen, sustain and grow their economy as they have to fulfill the requirements of IMF year by year, they have a sword hanging on their heads? Because the total and complete focus will definitely be on the re-payments, how will the county be able to move ahead with other activities of the country? A simple example is the country named Pakistan, it came into existence in 1947, and in 1950 it become the member of IMF and in 1958, Pakistan was the First Country which applied for Financial Assistance from IMF and since then till date, the country could not get out of the financial crisis and has completely become dependent on IMF funding to run the country.

Dear Readers, IMF as an organization is not only supporting and providing financial assistance to its member countries (countries which apply for funds) it also has the mission to guide and advice on countries financial Policies (as mentioned above that implementation/ increase in Taxes). Apart from this, IMF also performs the responsibility to develop the capacity of the financial team/ staff of the loan applying country in terms of all areas related and concerned to reinforce financial management, consolidation of statistics, strengthening economic growth, taxation policies etc. so that the country could achieve the goal of economic growth and sustainability.


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Now if that is the situation, the country must become capable to get out of the financial crisis, (as most countries couldn’t as per the economic reports), Having said and learnt on the purpose, role and responsibilities of IMF, I would like to pose some thought provoking questions (apart from the already posed questions above), to my honorable readers that is the need of IMF essential? Is it not making countries dependent? Why countries do not come out of the critical financial situation, if they are provided/ facilitated with guidelines/ advices and financial assistance? Why the capacity building and Training of financial teams/ staff does not work? As a number of countries (borrowing funds from IMF) are still struggling to get rid of financial crisis? so another question needs to be answered that whether it is the failure of IMF who facilitates and supports the countries in terms of policy guidelines and Training of financial teams/ staff of the country or is it the failure of the country’s regime who could not implement the policies in appropriate way as per guide lines? Please think over and I would appreciate your valuable comments.

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