What The Role Of The IMF: World Economy Helped Because Of This

What the Role of the IMF (Unsplash)

YOGYAKARTA - Organizations between governments or Intergovernmental organizations (IGO) always play a very important role in the global economy.

These groups are generally made through the enactment of an agreement and consist of a group of member countries.

The objectives of individual IGOs depend on their functions and membership.

Some of the most common and widely known NGOs include the United Nations, the World Bank, and the International Monetary Fund (IMF). This article looks closely at the role of the IMF.

The International Monetary Fund (IMF) is an international organization aimed at achieving a number of different goals. This includes reducing global poverty, encouraging international trade, and promoting financial stability and economic growth.

This organization was founded in 1945 and is based in Washington, DC. There are a total of 190 member states, each represented on the group council.

This representation is based on how important its financial position is in the world, so that stronger and stronger countries have greater votes in organizations than countries that are much weaker.

IMF functions in three main fields:

Monitoring the Economics of Member States

The main task of the International Monetary Fund is to promote stability in the global monetary system. So, the first function is to monitor the economy of its 190 member countries.

This activity, known as economic surveillance, occurs both at the national and global levels. Through economic supervision, the IMF monitors developments that affect the members' economy as a whole.

Member states must agree to pursue economic policies that are in line with the IMF's goals.

By monitoring macroeconomic and financial policies of its member countries, the IMF looks at the risk of stability and provides advice on possible adjustments.

loan

The IMF lends money to maintain the economies of member states with the issue of balance payments instead of lending to fund individual projects.

The aid could replenish international reserves, stabilize currencies, and strengthen economic growth conditions. The IMF expects countries to repay loans, and countries should start a structural adjustment policy monitored by the IMF.

Loans through the IMF take two forms. The first is with non-concessional interest rates, while the other comes with soft terms.

The latter was advanced to countries with low income, and were subject to very low interest rates or no interest rates at all.

Technical assistance

The IMF's third major function is through so-called capacity building by providing assistance, policy advice, and training through its various programs.

The group provides technical assistance to member states in the following areas:

This organization aims to strengthen human and institutional capacity. This is very important for countries with previous policy failures, weak institutions, or scarce resources.

Through capacity development, member countries can help strengthen and increase their economic growth and create jobs.

So after knowing what the IMF's role is, watch other interesting news on VOI, it's time to revolutionize news!