The IMF works to foster global economic growth and stability by managing exchange rates and providing short-term financing to countries with balance of payments issues. It negotiates lending conditions and offers concessional loans to low-income countries. However, IMF policies are often criticized for prioritizing budget balance over economic growth, increasing unemployment, and compelling countries to accept conditions they would not normally. One proposed reform is for the IMF to partner more closely with other international organizations focused on issues like education, agriculture, and development.

1. Shehroz Ahmed Adil – 10833
Syed Hasan Mehdi - 13468

2. Functions
• The IMF works to foster global growth and
economic stability.
• Manage their exchange rates
• Such market imperfections, together with
balance of payments financing, provide the
justification for official financing.
• The IMF can provide other sources of
financing to countries in need that would
not be available in the absence of an
economic stabilization program supported
by the Fund.
• To provide short-term capital to aid balance-
of-payments.

3. • IMF negotiates conditions on lending and loans
under their policy of conditionality.
• Low-income countries can borrow on
concessional terms, which means there is a
period of time with no interest rates, through the
Extended Credit Facility (ECF).

4. • IMF conditions are often criticised for their bias
against economic growth and reduce
government services, thus increasing
unemployment.
• A country may also be compelled to accept
conditions it would not normally accept had
they not been in a financial crisis in need of
assistance.
• The IMF sometimes advocates “austerity
Programs,” cutting public spending and
increasing taxes even when the economy is
weak, to bring budgets closer to a balance, thus
reducing budget deficits.

5. The IMF is only one of many international
organizations and it is a generalist institution
for macroeconomic issues only, it’s core areas
of concern in developing countries are very
narrow. One proposed reform is a movement
towards close partnership with other
specialist agencies to better productivity. The
IMF has little to no communication with other
international organizations such as UN
specialist agencies like UNICEF, the Food and
Agriculture Organization (FAO), and the United
Nations Development Program (UNDP).

6. • Policies needed for national, global stability.
• Growing international experience provides
valuable lessons.
• IMF will help countries devise effective crisis-
prevention tools.
• Detect and contain risks before they turn into
a crisis.

7. IMF Quotas subscriptions generate most of the
IMF’s financial resources.
Each member country of the IMF is assigned a
quota based on its relative size in the world
economy.
For each country, the quota determines:
•It’s financial contribution to the IMF.
•The amount of financing it can obtain from the
IMF.
•It’s voting power.

8. IMF anti-inflation policies and the World Bank, which is
bound by them, are making it impossible for Third World
governments to make much progress either in achieving
MDG ( Millennium Development Goals) targets or in
promoting democratic institutions.
The MDGs include achieving universal primary education,
cutting hunger and poverty in half, and sharply reducing
maternal and infant mortality by 2015.
"Contradicting Commitments: How the Achievement of
Education for All is Being Undermined by the International
Monetary Fund", argues that the MDG target of providing
universal primary education by the year 2015 is also
threatened by the IMF's imposition of budget targets.

9. To meet the MDG target, according to the report, poor countries must
sharply increase their investment in building schools, training and
employing teachers, and in making education more accessible to poor
and other disadvantaged children by, for example, eliminating school
fees.
But in most cases, they cannot do so without exceeding spending
limits imposed by the IMF, thus making it effectively impossible for
them to meet their MDG commitments and the demands of their
electorates.
The historical record indicates that Latin American in the 1950s and
1960s and East Asia in the 1960s and 1970s experienced very high
economic growth rates despite inflation levels that averaged 20
percent per year, the report asserted.
Meanwhile, the fact that the elected governments were effectively
boxed in by the IMF is doing nothing to promote confidence in
democratic institutions throughout the developing world, according to
the AAI.
"What this all comes down to is that the IMF acts like a school bully,
taking power away from publicly elected officials, particularly in the
poorest and weakest countries," said David Archer, the group's director
for education. "This is not a recipe for working democracy; instead, it
could spell democracy's death knell."