BENEFITS OF IMF

1. INTERNATIONAL
MONETARY FUND
So far IMF has reduced corruption in developing
countries and helped them reduce in public
spending
NILUFER YASMIN TAHIA ASAD
FACULTY-SHAHID HOSSIAN

2. Introduction
An organization set up in 1944 of 187 countries to
• Lower trade barriers between countries
• To stabilize currencies
• Promote high employment and sustainable
economic growth
• And lend money to developing nations

3. IMF World Map

4. History
Established under Bretton
Woods System to prevent
Technical
Assistance in
Prevent Crisis administrating
Unstable in International monetary
exchange rates Monetary exchange
System rate, taxation
policies, central
bank operations

5. How IMF affected HISTORY
During great depression
countries tried to
• Devaluate their currencies to
compete against each other
• Restrict their citizens’ freedom
to hold foreign exchange
• Raise barriers to foreign trade

6. This breakdown led the IMF's founders to plan an
institution charged with overseeing the
international monetary. The new global entity
would ensure exchange rate stability and encourage
its member countries to eliminate exchange
restrictions that hindered trade.

7. Public finance should be a means whereby governments in low-income
countries are able to increase economic growth and end poverty.
Corruption, however, reduces tax revenue and makes public expenditure
policies ineffective for achieving social objectives.
CORRUPTION AND PUBLIC
FINANCE: AN IMF
PERSPECTIVE

8. IMF officials will regard it as their duty to press for anticorruption reforms in
countries seeking to borrow money whilst World Bank characterized
corruption as a “cancer” on the global economy and emphasized that it was
time for them to take some actions against it.
In August, IMF took the step of suspending the second tranche of an
Enhanced Structural Adjustment Facility when one of its member countries
failed to demonstrate that it was pursuing adequate measures to reduce the
problem of corruption. The World Bank has strongly supported IMF’s move
and warned that its own lending will be “substantially reduced”.
IMF AND WORLD BANK
FIGHTING FOR
ANTICORRUPTION

9. Corruption
impact of poor governance (and the resulting corruption) on
economic efficiency and growth, led the IMF turn its
attention to a broader range of institutional reforms and
governance issues in the reform programs it supports
advocating policies and
Increasing its
Pursuing a more developing institutions
collaboration with other
comprehensive and administrative
multilateral
treatment, in both the systems that eliminate
organizations, in
IMF's regular oversight opportunities for
particular the World
of national economies bribery, corruption, and
Bank, to make better use
and IMF-supported fraud in the
of complementary areas
programs management of public
of expertise
resources

10. Corruption
In future, the IMF will continue helping to curtail
opportunities for corruption in member countries
by supporting reforms in economic policies and
institutions, while intensifying efforts to promote
transparency and accountability

11. Reducing Corruption in Indonesia
• On October 1997, the IMF and the Indonesian
government reached agreement on a package
of economic reforms designed to assist
Indonesia overcome its current economic
difficulties.
• The economic reforms are designed to
remove institutionalized corruption within
governments and their bureaucracies in
economy.

12. Reducing Corruption in Indonesia
• The new Indonesian government pledged to
create a more efficient, honest and fair
economic system in the nation.
• The IMF package will provide the resources for
this important transition to be made. In
reducing corruption, it is hoped that confidence
in the Indonesian economy will be
improved, and investment (especially foreign
investment) will increase

13. HELPING DEVELOPING COUNTRIES FIGHT THE
CRISIS AND THUS REDUCING CORRUPTION
The IMF has Increased resources
opened a new
framework for
loans to the A doubling of borrowing
limits
world’s poorest
nations which the Zero interest rates until
global economic the end of 2011
crisis is
threatening to New lending instruments
that offer more flexible
undermine terms

14. • The International Monetary Fund recently
persuaded the European Union to put up more
cash and give Greece time to push through
spending cuts, thus reducing corruption.
• Low-income countries will receive exceptional
forgiveness through end-2011 on all interest
payments due to the IMF under its concessional
lending instruments.

15. The global economic meltdown of late 2008 made
IMF provide rescue packages for countries like
Pakistan, Iceland, Hungary and Ukraine that
were swamped by the financial collapse.
IMF countries:
India, Iran, Pakistan, Jamaica, Nepal, Nigeria

16. Success of IMF in developing
countries to reduce corruption
To make its financial support more flexible to the
developing countries, the IMF has also
established a new Poverty Reduction and Growth
Trust, which has three new lending windows.

17. The
extended
The
credit
standby
facility
credit
facility
The rapid
credit
facility
POVERTY REDUCTION AND
GROWTH TRUST

18. IMF and Bangladesh
It has reached an Under IMF-supported
agreement with program, the
Bangladesh on a 3-year authorities aim to put
program arrangement Bangladesh on a higher
to be supported by the growth trajectory, as
IMF’s Extended Credit necessary to accelerate
Facility in the amount poverty reduction and
of SDR 639.96 million achieve middle income
status by the next
decade.

19. JORDAN:SUCCESS STORY OF
IMF in reducing corruption
Economic reforms were initiated as part of an
agreement between Jordan and the IMF. The
key objectives of the reforms were on
• reduction of public debts,
• reduction of the budget deficits,
• controlling of inflation,
• tax reforms,
• credit policy reforms,
• investment incentives,
• privatization and
• easier trade policies.

20. India and the IMF
India’s growth is among the highest in the world.
Since mid-2009, IMF has helped the pace of
India’s recovery—led by domestic
demand, especially infrastructure investment to
be strong. Monetary and fiscal policies remain
accommodative: real interest rates are low
and the fiscal deficit remains high.

21. KENYA ECONOMY
During 2003-2007, there was some movement
to reduce corruption in Kenya but the
government did not sustain that movement
However in 2009, IMF approved a
disbursement of around $200 million under its
Exogenous Shock Facility (ESF), which is
designed to provide policy support and
financial assistance to low-income countries.

22. Kenya Economy
• The ESF resources were meant to help
Kenya recover from the negative impact of
higher food and international fuel and
fertilizer costs, and the slowdown in
external demand associated with the global
financial crisis.

23. For a long time, IMF are undergoing actions to
strengthen the tracking of Poverty-Reducing Public
Spending in heavily indebted poor countries
REDUCING PUBLIC SPENDING

24. Reducing Public spending
The IMF responded to the challenges created by
the oil price shocks of the 1970s by helping oil
importers deal with anticipated current account
deficits and inflation in the face of higher oil
prices, it set up the first of two oil facilities.
OIL SHOCKS

25. Reducing Public Spending
From the mid-1970s, the IMF sought to respond
to the balance of payments difficulties
confronting many of the world's poorest countries
by providing concessional financing through what
was known as the Trust Fund
HELPING POOR COUNTRIES

26. ROMANIA
Crisis-hit Romania in May 2009, obtained a 20-
billion-euro loan from the IMF and the EU in
exchange for a drastic reduction in public
expenditure.

27. Uruguay and Trinidad and Tobago: IMF advised
cutting public expenditure
• IMF attempts to discipline the government of
Uruguay with recommendations to reduce
public expenditure and lower fiscal deficit.
• Trinidad- and Tobago-the IMF has called for
reduced spending and the for State to better
administer tax collection.

28. IMF’s support for health
The IMF is part of a broad
international effort to improve health
and living standards, particularly in
the world's poorest countries
Through its policy advice and
technical assistance, the IMF aims to
make a contribution to strengthening
health services—an essential step in
raising income and standards of living

29. IMF warns Mongolia of dangers of
public spending
 IMF warned that large government spending
result in higher inflation and surging imports.
 Such high inflation will have an especially hard
impact on the poor by pushing the staple food
items' prices even higher.

30. CONCLUSION
• So far it has been proved that IMF provides loans to
countries in financial distress at a relatively low interest
rate.
• In other words, IMF is a source of Finance which is
given to help the developing countries to improve their
position in the world.
• It has been concluded that the fund is potentially of
great significance to developing countries, and
particularly in the current world economic
environment, and that its activities should be extended.
•