This document discusses the International Monetary Fund (IMF) and its role and activities. The IMF works with 186 member countries to foster global economic growth, financial stability, reduce poverty, and facilitate international trade. It provides policy advice, financing, research, and technical assistance to help countries manage their economies and overcome economic difficulties. The IMF supports its members by providing policy advice, economic analysis, loans, concessional loans to developing countries, and technical training.

1. P.N.Anudeep
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2.  The International Monetary Fund (IMF) is an
organization of 186 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.
 The IMF works to foster global growth and
economic stability. It provides policy advice and
financing to members in economic difficulties
and also works with developing nations to help
them achieve macroeconomic stability and
reduce poverty.

3. The IMF supports its membership by providing:
I. policy advice to governments and central banks
based on analysis of economic trends and cross-
country experiences;
II. research, statistics, forecasts, and analysis based on
tracking of global, regional, and individual economies
and markets;
III. loans to help countries overcome economic
difficulties;
IV. concessional loans to help fight poverty in developing
countries; and
V. technical assistance and training to help countries
improve the management of their economies.

4.  The International Monetary Fund (IMF or Fund) has
an important role in triggering private capital
flows to countries that participate in an adjustment
programme. Fund-supported programmes are
intended to pave the way towards a return to
balance of payments viability and sustainable
growth.

5.  Our findings shed new light on this empirical
rejection of Fund catalysis of private capital
flows. In line with theory, we show that IMF
programmes do stimulate private capital
flows to countries that do not restructure
their debt. Thus, our main contribution is to
show empirically the importance of focusing
on non-defaulting countries when examining
the catalytic effect of IMF programmes

6.  Effective catalysis of Fund programmes
hinges on IMF lending being a complement to
private lending and on the ability of the IMF
to induce the debtor country to implement
the necessary adjustment policies.
 Crucially, IMF intervention must not weaken
a government’s incentive to implement
desirable but costly policies. The literature
suggests that the extent to which such debtor
moral hazard can be avoided depends on the
country’s economic fundamentals.

7.  This section briefly reviews the recent
empirical literature on the catalytic effect of
IMF programmes
 IMF programmes reduce bond spreads when
a country’s reserves cover between 4 and 12
months of imports or the debt-to-GNP ratio
is between 36 per cent and 54 per cent
 Fund presence raises the frequency of bond
issuance in a comparable ‘intermediate’
range of debt or reserves.

8. In this article
Due to the lack of overseas financial
regulation and inappropriate actions by
international organizations, such as the IMF
and World Bank there was a crisis

9.  The first story was inspired by the Latin
American currency crisis in the late 1960s
and early 1970s- it is so-called “first
generation models”.
 Since market agents start doubting the ability
of the central bank to control the fixed
exchange rates system.The reserves fall to a
critical threshold, the rational agentsinitiate
speculative attacks on the foreign exchange
leading to the collapse of the exchange rate

10.  The last story about crisis, the so-called third
generation model of currency crisis, has
been developed rapidly soon after the Asian
crisis. This crisis could not be explained by
previous theoretical models and moved
attentions to micro fundamentals of an
economy and Velasco. The third generation
models consider three micro fundamentals of
an economy as reasons of the currency crisis
,fragility of banking system

11.  Generally, there are two main lines among
second generation models: the self-fulfilling
currency crisis models and the pure
speculative models. The main difference
between these two lines of models is that
self- fulfilling models effects a crisis as a
result of rational market respond to
persistently conflicting internal and external
macroeconomic targets.

12.  The contagion and hedging effects is considered
as the part of the second generation models
instead of being the special category of third
generation models such as financial market in
efficiencies
 The twin banking-currency crisis model relies on
the Diamond and Dybvig‘s dilemma . There are
two possible outcomes of the market agents:
first, agents have confidence in the solvency of
financial intermediaries, and second there is a
lack of confidence which leads to a run. Both
equilibrium involve selffulfilling expectations
because banks fail.

13. The activities of the IMF on the issue of
environmental protection can be divided into
three periods. The IMF’s turn to the
environment has started at the beginning of
the 1990s, after its executive board had
decided that the Fund should pay greater
attention to environmental issues

15.  The staff started to integrate environmental
aspects in the policy dialogue with the member
countries and also incorporated environmental
measures in the IMF’s structural adjustment
programs. Nevertheless, the staff tried to keep
the environmental requirement at arm’s length
and was only willing to consider environmental
aspects when they were consistent with the
Fund’s basic tasks. It was conducive for
integrating the environment when a win-win
situation seemed to be in reach as it was the case
with the IMF’s request to cut subsidies for
chemicals that harm the environment

16.  That the executive board got active on the issue
of environmental protection can be partly
explained with the raising public concern. But
most of all, an IMF review from 1990 had shown
that national environmental problems could
“erode trade and budget balances and retard
economic growth” Hence, the executive board
wanted to ensure that the IMF promotes
sustainable development and avoids
recommending policies that could have negative
consequences for the environment.

17.  In 2001, the IMF set up an environmental
team composed of staff from its fiscal affairs
department—to “act as a resource for the
IMF’s area departments”. The task of the
environmental team is to track the issues that
arise in IMF consultations with the member
states. Thus, it develops country
environmental fact sheets to identify the links
between the macro economy and the
environment in these countries.

18.  Therewith, the environmental team wants to make
sure that the IMF country desks understand the
links between IMF programs and the environmental
situation in the particular countries .
 The environmental team also addresses how the
IMF seeks to promote sustainable development in
its fiscal policy advice. For example, the
environmental team argues that “in relation to the
environment and natural resources, tax and
spending policies have a role incorrecting what
would otherwise be inappropriate incentives for
overconsumption” .
 Thus, the environmental team looks for
mechanisms to avoid that the IMF-supported
reform programs intensify resource degradation in

19.  However, both the World Bank and the IMF did not resist the
external demands and did not claim that, e.g., their economic
orientations and activities should remain untouched, because
they are convinced of the relevance of their theories of action
and because they regard environmental integration as an
obstacle for their organizational goals.
 We assume that non-compliant learning could be observed
in particular in the beginning of a policy implementation
process if external pressure is rather low or if principals are
unable to force international organizations to implement
external demands. In our case studies we might find non-
compliant learning if we further differentiate the
administration into units and analyze organizational learning
at the unit level.

20. Final conclusion
Regardless of the policies pursued by the IMF and
World Bank. While it is true that they have often been too driven by
U.S. foreign policy concerns, in the end the influence of both
institutions has been widely overstated. And despite their mistakes
during the past half century, they have rarely been given credit for
many of the little things they do well.
While neither the IMF nor the World Bank has met the
lofty goals of their founders or wielded the nefarious influence
charged by their critics, they have and should continue to play a
small but important role in promoting prosperity and economic
stability worldwide.