International Monetary Fund Essay

International Monetary Fund Essay

The Intercontinental Monetary Finance (IMF) is a central business in the world in whose mandate of multinational in 1945 revolves around world economical and monetary cooperation (imf. org, 2006). By following microeconomic policies in the member countries, this intergovernmental organization deals with or runs the global economic climate. In this firm, almost all the countries in the world work together in cooperation for the common good. The primary purpose of IMF is usually to propagate and stabilize intercontinental monetary program which is type in ensuring and maintaining stable international repayments and exchange rates which might be critical to promote trade between countries. In its efforts to make sure stability from the international economic system, IMF has the responsibility of reviewing the economic developments in the national, regional, and global arena. The main purpose that International Financial Fund began can be discussed in 3 points. First is to promote stable exchange rates while at the same time ensuring that order is maintained in the exchange arrangements among its affiliate countries and prevent competitive exchange by depreciating. Secondly, IMF began to enhance the expansion of international trade in a balanced manner to ensure that all the affiliate countries can usually benefit from increased amounts of employment and real cash flow in addition to raised development and utilization of economic resources of the member countries. Thirdly, IMF has the mandate to lead in the establishment of a new system of repayment which is multilateral in character and which functions to eliminate the many restrictions imposed simply by foreign exchange and which impedes the blossom set stage of globe trade (munfw. org, d. d). The 184 member countries are required to adopt plans which keep them safe from monetary and economical crises, encourage economic steadiness and policies which have the capability to raise the living standards of the residents (imf. rg, 2006). In any given organization, the mission and the set goals are very crucial since they form the basis pertaining to the strategies and supervision of different affairs in the corporation including the essential area of making decisions which determines whether the desired goals will be attained or certainly not. It is therefore the goal of this conventional paper to describe the mission and the goals of International Monetary Fund and in addition analyse the process of decision making in the orgaization so as to achieve these types of goals. One of many mission of IMF is to offer economical assistance to numerous countries which have faced crises of balance-of-payments as a result of home-based policies. The governments of such countries do not have a selection other than to borrow from the IMF in order to propagate numerous economic actions in their countries. On the part of IMF, it has to safeguard the interest of the shareholders and for that reason it requires the fact that countries borrowing the funds put in place rigid policy changes which will assist in repayment. An additional mission of the IMF is to function as a reserve pool for global financial systems. This is because of the fact that different countries especially in the developed community have gathered colosal amounts of resources and money which usually act to insure them against shock absorbers. On the other hand, a large number of countries particularly in the developing universe lack the capability to accumulate resources for insurance reasons but rather might use them pertaining to consumption and investments. The IMF as a result in this case will act as reserve pool which can control these stores so that actually poor countries can get financial assistance in times of economic crises (Eichengreen, 2009). The third mission of the IMF should be to act as a supervisor with regard to macroeconomic activities and tendencies. This means that it must be very sensible in keeping track of the prevaling financial circumstances or tendencies in the whole earth and in circumstance of any signs of economic instability, provide warnings about the same so that ideal actions can be taken. Yet , it has simply played a supporting role since most of these activities have already been undertaken by Financial Steadiness Board (FSB) following the recommendations by the G-20. The goals of the Worldwide Monetary Pay for are in line with the desired goals set by international community in 2000 popularly known as the UN Centuries Development Desired goals. These goals focus on critical aspects of human being existence and they are geared toward ensuring improved living standards by curbing poverty and improving the health of community populations. The time frame intended for the accomplishment of these goals is set to be by the year 2015 and therefore decision making and actions taken are done systematically and resources been able carefully in order to meet the arranged deadline. The areas of focus of the 1st seven desired goals are on eradication of extreme craving for food and lower income, ensuring that major education is accessible by every children, empowerment of women and promotion of gender equality, improvement of maternal health insurance and reduction of kid mortality. The sixth objective is with respect to HIV/AIDS, malaria and also other diseases which has been wrecking havoc in many developing countries. The seventh goal focus on concerns of environment in that IMF intends to accomplish environmental sustainability by the season 2015 (imf. org, 2010). The last aim requires which a global alliance for expansion be produced to address issues of debt settlement, aid and trade. Decisions made by the IMF are made to ensure that the resources available are maintained carefully so that the organization can meet their goals without having problems due to lack good management of accessible resources in several organizations. In the goals defined, it is very clear that IMF targets to provide assistance to poor countries in order to overcome one of the most common problems facing these people such as disease, poverty and illiteracy. However , the organization can be not a expansion institution just like the World Financial institution and local development financial institutions. This implies which it has no requirement to provide money for building physical infrastructure in the poor countries somewhat it just offers loans to the low-income countries on concessional terms in an effort to simplicity the soreness which these types of countries have to endure when coming up with critical changes in terms of their spending (imf. org, 2006). The purpose to make these adjustments is to bring the levels of spending to the proper levels that happen to be commensurate using their income. Subsequently, this helps bring about important reconstructs which improve much stronger and sustainable financial growth resulting in poverty eradication in the damaged. In addition , pursuing streamlining of your country’s economic policies, the IMF bank loan given to a certain country may attract various other donors who also are encouraged to present more financial support. Consequently , this firm has well elucidated methods which are used to fight low income and achieve the rest of the goals which they have set to complete by the 12 months 2015. Decision making at the IMF revolves around two major elements one of them being on membership rights of countries which may want to sign up the organization and the other hand on the internal operations from the organization. Both of these areas can be important in ensuring the sustainability from the operations within IMF. For instance, bearing in mind which the major supply of money in the organization is definitely the quotas that happen to be contributed simply by different countries upon getting started with the organization, making decisions at this stage is critical since it effects directly on the financial stability of this business. Quotas are basically a mirrored image of the size of the financial systems of the affiliate countries in order that a country having a broad economy in terms of variability of control, national cash flow, monetary stores and result is required to first deposit more in to the IMF kit than a country whose size of the economy is small and whose trade variability is not really great. The decisions made on the volume of subgroup a particular region is required to deposit also impact the voting benefits of that country as a member with the IMF. This means that, the larger the quota of your member country, the more decision making power or voting electrical power it possesses. For instance, the contributes the largest quota in the IMF package and therefore has the highest decision-making power by nearly 18%. On the other hand the whole African continent due to its little quota inside the IMF offers only a 5% decision-making power (munfw. org, d. d). The Board of Governors can easily review these types of quotas periodically and enhance them once deemed important. The IMF staff and management include different bodies which control and take care of the affairs of the corporation to facilitate the realization of the set down goals by 2015. These include the Board of Governors, Worldwide monetary and financial committee, the Exec board, as well as the standing committees. However , the top decisions are produced by the Panel of governors. The whole IMF staff plus the management happen to be accountable to the managing movie director of this organization who is hired by the professional board to whom he is as well accountable. The supreme decision-making body of the IMF is a Board of governors which can be made of one particular governor and one alternate governor by each member region who is hired to represent the interests in the country at the organization. The alternate chief excutive of each affiliate country is normally the chief of the servants of the central bank and also the minister of finance. The board of governors can be bestowed with all the responsibility of making decisions concerning membership and also internal functional activities of the organization including changes that could be required to the Fund’s structure. Decision making method requires adequate time and hence the Board of governors usually meets twice every year to deliberate upon critical problems. The Executive board gets the responsibility of carrying out the day-to-day actions of the organization. The panel is chaired by the managing director who may be assisted by simply three mouthpiece managing owners. The affiliate countries or perhaps groups of countries elect or appoint twenty four executive administrators make the bulk of the board. To ease the making decisions process in the board level, most affiliate countries will be grouped in to constituencies however the largest investors that is US, Germany, Asia, UK, Portugal are not assembled but rather each offers one couch. The decision producing with regard to scheduled appointment of professional directors is some countries based on the quantity of votes that a particular nation has so that a country together with the highest range of votes appoints the executive director. Good decision making process is characterized by consensus which is effectively embraced inside the organization where the plank relies on consensus in making decisions. The nature of this consensus is dependent upon the number of executive directors who also agree or perhaps disagree using a certain concern. In the lumination of the principle that a good decision making method gives space for viewpoints and views from every members included, IMF is definitely keen making possible a voting exercise to happen in case different opinions crop up in the initial stages from the decision making process. In this voting approach, a needed the greater part is established in order to give a direction on decision making. However , the percentage majority necessary will be dependant upon the nature of the choice which is being made so that a 51%, 66% or 85% majority can be required (brettonwoodsproject. rg, 2005). During this procedure, the managing director of the IMF who chairs the executive plank is required to guidance the panel to consider matters coming and be patient until that period when a wide majority has turned a clear decision on the concern under discussion. Decision making process is characterized by the presence of options or alternatives so that if one fails, the other alternative can be used to see whether the anticipated effects will be accomplished. This is exactly what occurs at IMF when the the greater part still does not precipitate consensus. The alternative should be to go by the simple majority of the voting electricity in which a decision can be quickly made by using a collective agreement involving G-7 chairs and a few directors (brettonwoodsproject. org, 2005). The IMF as a firmly rooted firm is therefore a good example of a company whose exceptional management technique is shown by its ability to facilitate many poor countries particularly in Africa conquer common challenges such as lower income and disease. The mission and the goals set by this organization proceed hand in hand with all the Millennium Development Goals and therefore consistent management of all the resources available to the corporation is critical to satisfy the 2015 time focus on. The decision making process employed by the IMF as well points to one of many key reasons for successful functions since it presents alternatives, democracy and discussion in addition to the well-organized management personnel.

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