IMF: What is the International Monetary Fund?

 

On 30 June 2015, Greece missed a major loan repayment deadline to the International Monetary Fund. The IMF provided 32 billion euros in emergency loans to save the Greek economy from collapsing.

 

 Why did the IMF take a risk on such a volatile economy? What exactly is IMF?

The IMF was created with the World Bank in 1945, as an overlapping form of UN finance arms. The World Bank focuses on financing and investing in developing countries as well as alleviating poverty. The IMF primarily monitors exchange rates, stabilizes international monetary systems, and promotes global financial cooperation.

 

Since World War 2, the world's economies have become interdependent through trade and investment. While it helps strengthen the global financial system, it also creates weaknesses in the economic chain.

When an unexpected crisis, like a recession or a natural disaster, destabilizes a nation's economy, it can severely affect dependent countries. The IMF's balancing power prevents any possible "domino effect" in the collapse of economies. The IMF is one of several global banks that provide loans to troubled economies to promote a stable world economy.

 The IMF and its sister organizations, the World Bank, serve more Western interests like the US and the European Union. While other global banks, such as the New Development Bank and Asian Infrastructure Investment Bank, serve Chinese and Russian interests more.

In total, the IMF has 188 member states. After the 2008 global financial crisis, African countries suffered severe injuries. Demand for goods imported from Africa declined and international growth slowed. In response, the IMF provided billions of dollars in places like Ghana at extremely low-interest rates. With this support, Ghana's growth rate exceeded 9% in 2011 and remains one of Africa's emerging markets.

Currently, the IMF's largest borrowers are Portugal, Greece, Ireland, and Ukraine. The IMF also gives "precautionary measures as a debt preventive measure before things go awry."

Recipients of precautionary loans include; Mexico, Poland, Colombia, and Morocco. Despite their support, the IMF was criticized for allowing influence on a wider scale. The reason for this is that countries that invest more money in the IMF get more voting rights.

The US comprises one-fifth of all available votes as they are the largest contributor. Additionally, since the IMF is to some extent the last resort, countries in trouble have no choice but are important austerity measures that are not necessarily at their best or agree or agree with their ideology.

 While the IMF is a powerful force for world economic balance, it also openly serves the interests of its member states. With so much influence in the political policies of the struggling countries, domestic problems have to be treated with simple cash transfers and austerity measures.

   However, without this, countries such as Greece may face worse options. If Greece leaves the eurozone on ozone due to the money crisis, it will be disastrous throughout Europe. The European Union is also in danger after Greece refused to take a bailout. wiki

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