Page 262 - DMGT401Business Environment

Unit 12: International Monetary Fund

and official statistics. The IMF provides technical assistance and training mainly in four Notes
areas:
(a) strengthening monetary and financial sectors through advice on banking system
regulation, supervision, and restructuring, foreign exchange management and
operations, clearing and settlement systems for payments, and the structure and
development of central banks;
(b) supporting strong fiscal policies and management through advice on tax and customs
policies and administration, budget formulation, expenditure management, design
of social safety nets, and the management of internal and external debt;
(c) compiling, managing, and disseminating statistical data and improving data quality;
and
(d) drafting and reviewing economic and financial legislation.
4. Reducing Debt Burdens: In 1996, the World Bank and the IMF unveiled the HIPC Initiative
to reduce the debt burdens of the world's poorest countries. This initiative was viewed as
a means of helping the countries concerned achieve economic growth and reduce poverty.

Did u know? Facts about IMF

Current membership: 184 countries
Staff: approximately 2,700 from 141 countries
Total Quotas: $327 billion (as of 2/28/05)
Loans outstanding: $90 billion to 82 countries, of which $10 billion to 59 on concessional
terms (as of 2/28/05)

12.1.5 Criticism of IMF

It is said that IMF policy makers support capitalist dictatorship, and is friendly to American and
European corporations. Critics claim that financial aid from the IMF is always come bound with
conditionalities, throwing the IMF's stated goals to the winds.
The IMF frequently advocates currency devaluations, criticised by proponents of supply-side
economics as inflationary. Secondly, they link higher taxes under "austerity programmes" with
economic contraction.
It is believed that IMF interventions aggravate poverty and the debts of developing nations.
Argentina, which had been considered by the IMF to be a model country in its compliance to
policy proposals by the Bretton Woods institutions, experienced a catastrophic economic crisis
in 2001, generally believed to have been caused by IMF-induced budget restrictions – which
undercut the government's ability to sustain national infrastructure even in crucial areas such as
health, education, and security – and privatisations of strategically vital national resources. The
crisis added to widespread hatred of this institution in Argentina and other South American
countries, with many blaming the IMF for the region's economic problem.

India's Relations with the International Monetary Fund

India and the IMF have a positive relationship. The IMF has provided financial assistance to
India, which has helped in boosting the country's economy. The IMF praised the country for it
was able to avoid the Asian Financial Crisis in 1999 and was also able to maintain the average

LOVELY PROFESSIONAL UNIVERSITY 255