International Monetary Fund is an organization that its primary responsibility is to foster international operation through trade and economic growth. The organization formed in the late 1940 and it has a membership over the world. Its purpose is to ensure that it can eliminate poverty and enhance development through employment and international trade. The world bank works in hand with the organization where they assist in providing resources for the members’ country. However, it does not solemnly depend on the world bank, but members also contribute through the quota system. IMF focuses on ensuring that it monitors economies of the member’s country as well as leading to their balance of payment. It works with the government of each member country so that it is easier for them to establish their policies. Besides, working with the government provides easier accessibility to the challenges affecting the country, which makes it easier for them to strategies on the remedies to cater for challenges. Amendolagine et al. (2019) argue that it helps in modernizing the economy and also assists in correcting underlying problems.
The International Monetary Fund focuses on ensuring that it protects its members from crises that arise on different occasions. One of their paramount policy that has significantly assisted in stabilizing the member economy is their lending strategy. The plan is crucial because it is through it that countries can overcome any epidemic, either external or domestic. Depending on the nature of the crises, the IMF acts as a bridge to return to the initial position. It allows the country to restore its economy to a stable and sustainable economy. In this case, the organization implements a comprehensive strategic plan that will be able to respond to the emergency of a different caliber. In these cases, the market becomes more accessible for investors and international businesses establishment. For the effective running of the policies established, the organization embraces transparency and accountability to attest that their role achieved.
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According to Moosa and Moosa (2019), t he management sets strategic plans that will help in creating a conducive environment where business established and employment created. In this case, the international market becomes interested in building their businesses in the country since the economy is promising. The government plays a significant role in this case because it is through them that the IMF can be able to implement these roles. By initiating pro-active remedies that cater for growth and financing of the economy, it helps in preventing crises. In doing this, it ensures that the interest of the businesses owners is protected and again, the business environment becomes appealing to investors.
The IMF lending policy plays a significant role in stabilizing the economy of the members at any given time. For instance, a country may be faced with prices drop on their export. In this, it becomes a challenge because it weakens its capital outflow as well as an export base which deteriorates the country’s economy. In this case, the international monetary fund organization indulges in finance the economy by providing the resources needed to ensure the economy strengthened. The international business, in this case, benefits because they will be able to import and export their products without any hinderers. A stable economy gives the international business to establish more of their business in the said country because assured of the progress.
Most of the global business look at the market progress in terms of growth and levels of heightened risks. With the IMF in place, it gives brings about market confidence for the investors. For developing countries, it is essential for their economy to be appropriate and inviting for international business to spearhead growth at all levels. The IMF does not finance the specific project but instead seeks to fund the countries overall financial needs. Some of the progressive policies that the IMF wants to adjust corrective policy measures that may entail partial borrowing by low-income countries. With this, it prevents abrupt actions by the government, such as compression of government spending. With the IMF support, the members’ economy significantly increases, which leads to investors’ confidence and more establishment of international business.
References
Amendolagine, V., Presbitero, A. F., Rabellotti, R., & Sanfilippo, M. (2019). Local sourcing in developing countries: The role of foreign direct investments and global value chains. World Development , 113 , 73-88.
Moosa, I. A., & Moosa, N. (2019). The Effects of IMF Operations on Social Expenditure. In Eliminating the IMF (pp. 111-134). Palgrave Macmillan, Cham.
