As the coronavirus c… C. its lack of power and authority. Provide member countryâs information on economy. While the United States and the United Kingdom sponsored plans for a postwar international monetary organization open to all countries, there were people of influence who advocated less formal ar-rangements confined to a smaller group. IMF conditionalities have also been widely debated. The IMF has not always been complemented about its way of working it also has been subject to a series of criticisms. In addition, five of the twenty-four Executive Directors are represented by the US, Japan, Germany, Britain, and France respectively while another nineteen of the twenty-four are represented from a pool of 188 member countries whom have nominated and elected the Executive Director5. Some of the criticism includes failure to understand the third world country economic conditions, the pre-dominant European Managing Directors, or Western-oriented viewpoints. The International Monetary Fund been criticized for: Correct encouraging moral hazard among banks. the international monetary fund has been criticized for exacerbating moral hazard The IMFC structure comprises of the Executive Board, appointed by each country, and Executive Director, elected by each group of countries. The International Monetary Fund (IMF) is an international organization, headquartered in Washington, D.C., consisting of 190 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world while periodically depending on the World Bank for its resources. Thailand, Malaysia, and Indonesia) seeking financial aid to increase its interest rate and reduce its fiscal spending9. The IMF does not follow the basis of one nation with one vote but multiple votes are assigned to member countries. The SBA has interest rates lower than the interest rates in the private capital market. The IMF has provided lending facilities to member countries in times of economic crisis, eased the global recession, and supported economic growth and recovery. In 2009, the IMF had announced the restructuring of its lending facilities in order to improve its loan condition, introduce new lending facilities for poorer countries, provide greater flexibility of the terms and conditions, and enhance its primary lending facilities that are seldom utilized by its member countries. This safety net, critics charge, delays needed reforms and creates long-term dependency. PERHAPS no economic measure has ever received the careful consideration, extensive discussion and painstaking labor that went into the formulation of the proposal for an International Monetary Fund. However, this standard is increasingly being questioned and competition for these two posts may soon open up to include other qualified candidates from any part of the world. 4. It was planned at the Bretton Woods Conference (1944), and its headquarters are i Nazi Germany and Imperial Japan) and were concerned about the future of Europe including the rebuilding of itsâ infrastructure and the worldâs financial and economic system. By the end of 1944, the International Monetary Fund (IMF) was established by concerned countries who were afraid of another global depression caused by World War . The appointed governor of member country is allowed to cast all votes that the country has. However, as seen on the table below, these new lending facilities ended up benefiting Eastern European countries more than the rest of its member countries which is another criticism to the IMF western-oriented viewpoints. the IMF has also been criticized for exacerbating moral hazard, when people behave recklessly because they know they will be saved if things go wrong The IMF has been criticized because the governance structure has been dominated by the developed countries. There are no pre-qualification restriction and, thus, any non-member country is allowed to apply for IMF membership. According to the IMF, the SDR is viewed not as a world currency, but rather a unit of account for exchange and account settlement between member countries. IMF and itsâ governing structure Critics contend that IMF policy prescriptions provide uniform remedies that are not adequately tailored to each countryâs unique circumstances. There are twenty-four Executive Directors and twenty-four alternates whom have the roles and responsibility of the IMFâs day-to-day operations while advising the BOG. This material is available only on Freebooksummary, We use cookies to give you the best experience possible. The IMF has been glorified, but also criticized because of the importance granted to the market economy, the Fund being defined as a supporter of financial globalization. In a floating exchange rate, the relative value of a currency: However, IMF has many critics and criticism to its monetary and reformist policies. China is a clear example as the country has now overtaken the US in terms of economic size. As stated earlier, member countries usually appoints its finance minister, president of the central bank, or top senior government officials to the post. In addition, the limits are doubled and funds are available sooner with simpler and flexible terms & conditions. Consequently, the countryâs quota is weighted amongst the member countries in order to derive itsâ voting rights and eligible financing amount. The past and more recent financial crisis (i.e. The final criticism of the IMF is that it has become too powerful for an institution that lacks any real mechanism for accountability. A. its lack of a "one-size-fits-all" approach to macroeconomic policy. The International Monetary Fund has been an important tool to develop economies, prevent crisis and help out failed economies, however, its reluctance to modify the strict control over the macroeconomic conditions, had brought criticism from all the political spectrum. According to Ariel Buiraâs book âReforming the Governance of the IMF and the World Bankâ, the author states âeach member countries has 250 votes plus 1 additional vote for each SDR 100,000 of its quota3.â Currently, the IMF website indicated the total quotas is US$362 billion with the total number of votes of 2,519,762, of which the US holds 16.75%, China holds 3.81% and Thailand holds 0.60%4. In … C. its lack of power and authority. Opponents of the IMF argue that the loans enable member countries to pursue reckless domestic economic policies knowing that, if needed, the IMF will bail them out. D. using external experts to gain knowledge about a country. In the end, whether critics are right or wrong, the IMF has profoundly changed the global economy and continue to do so as long as the world needs an institution with huge international financial assets to borrow in time of economic crisis. The IMF has been criticized for not electing a non-European, or non-Western member countries, as Managing Director. Opponents of the IMF argue that the loans enable member countries to pursue reckless domestic economic policies knowing that, if needed, the IMF will bail them out. and exchange rates are none of its business.”6 The Fund has been criticized for retreating from its role as an umpire for the international monetary system, and some have also called for the Fund to play a much more active role in addressing global imbalances by more forcefully advocating exchange rate realignments of major currencies.7 6. Conclusion In recent decades, aid by organizations such as the International Monetary Fund and the World Bank has been criticized as being primarily a tool used to open new areas up to global capitalists, and being only secondarily, if at all, concerned with the well-being of the people in the recipient countries. 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