...2012 Journal of Undergraduate Research at Minnesota State University, Mankato The Role of the International Monetary Funds (IMF) in the East Asian Debt Crisis of 1997 By Yaro Sadek Tahirou Minnesota State University, Mankato 2 ABSTRACT During the East Asian Financial crisis in particular, the IMF has been criticized of promoting international cooperation because of the supervised enforcement of its rules. The purpose of this research is to find out how the IMF responded to the East Asian debt crisis and whether or not its responses were the best possible responses to this crisis. Through my research, I talked about the causes of the East Asian financial crisis, the role of the IMF in the international monetary system, and if the IMF responses to Thailand, South Korea and Indonesia were the best responses or not. After analyzing the IMF responses in this crisis, I found that the IMF policies need to be reformed in order to monitor and prevent future financial crises spill-over effects at the global and regional levels. I will analyzed 5 scholarly journals on the financial crisis in East Asia, 3 scholarly articles on the role of IMF in the East Asia financial crisis, and 1 novel called POLITICS IN SOUTHEAST ASIA DEMOCRACY OR LESS by William Case. INTRODUCTION Several financial crises have occurred in the world economy through the last decades. Some examples include the East Asian financial Crisis of 1997, the Latin American debt crisis of 1994-95, the Russian crisis...
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...part of the alcohol group and all contain an OH group. 2. The IMFs that are present in the molecular series 4 include only LDFs because they are part of the alkaline group and are hydrocarbons that contain only carbon(C) and hydrogen (H) single bonds. 3. A. The factor that is affecting IMF strength from one molecule to the next is London Dispersion Forces. B. As we go from methanol→ ethanol→1-propanol→ 1-butanol, the dispersion force increases. C.. As we see on the attached Evaporative Cooling Data chart on Appendix A1, the ∆T increases in the following order, from methanol→ethanol→ 1-propanol, and finally to 1-butanol having the highest ∆T. The strength of IMF is affected by ∆T, thus, the greater the negative ∆T is, the weaker the intermolecular force will be and the less negative ∆T will result in a stronger intermolecular force. D. If we look at the Spartan Data on Table 4 on pg. L119, we can see that the surface area of each molecule is increasing from methanol→ ethanol→ 1-propanol, and finally to 1-butanol. Increasing molecular surface area will increase dispersion forces. Finally, if we go back to Appendix A1, we see that the molar mass is increasing from methanol, to ethanol→ 1-propanol→1-butanol. When the molar mass in a molecule is increased, it leads to an increase in the number of electrons in the molecule, which increases dispersion forces. E. Hypothesis: I think the reason that the IMFs increase from methanol→ ethanol→ 1-propanol→1-butanol is that they...
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...The IMF at a Glance The IMF, also known as the “Fund,” was conceived at a United Nations conference convened in Bretton Woods, New Hampshire, United States, in July 1944. The 44 governments represented at that conference sought to build a framework for economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s. The IMF’s responsibilities: The IMF's primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with one other. This system is essential for promoting sustainable economic growth, increasing living standards, and reducing poverty. Following the recent global crisis, the Fund has been clarifying and updating its mandate to cover the full range of macroeconomic and financial sector issues that bear on global stability Fast Facts on the IMF * Membership: 187 countries * Headquarters: Washington, D.C. * Executive Board: 24 Directors representing countries or groups of countries * Staff: Approximately 2,470 from 141 countries * Total quotas: US$383 billion (as of 8/18/11) * Additional pledged or committed resources: US$600 billion * Loans committed (as of 8/18/11): US$282 billion, of which US$213 billion have not been drawn (see table) * Biggest borrowers (amount agreed as of 8/18/11): Greece, Portugal...
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...© 2014 International Monetary Fund IMF POLICY PAPER FY2015 – FY2017 MEDIUM - TERM BUDGET IMF staff regularly produces papers proposing new IMF policies, exploring options for reform, or reviewing existing IMF policies and operations. The following document(s) have been released and are included in this package: The Staff Report on the Medium - Term Budget was prepared by IMF staff and completed on March 31, 2014 for the Executive Board's consideration on April 28, 2014. A Press Release summarizing the views of the Executive Board as expressed during its April 28, 2014 consideration of the staff report. The policy of publication of staff reports and other documents allows for the deletion of market - sensitive information. Electronic copies of IMF Policy Papers are available to the public from http://www.imf.org/external/pp/ppindex.aspx International Monetary Fund Washington, D.C. Mars 31, 2014 FY2015–FY2017 MEDIUM-TERM BUDGET EXECUTIVE SUMMARY The proposed FY 15–17 Medium-Term Budget (M TB) was formulated within the Fund’s strategic planning framework to align allo cation of resources to the delivery of institutional priorities. For the net administrative budget , the FY 15–17 MTB proposal includes: In FY 15, an unchanged budget envelope in real terms, for the third year in a row. New demands are met once again throug h better utilization and reallocation of existing resources, including a sm all reduction...
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...ternational Monetary Fund (Imf) Introduction The IMF is an intergovernmental institution established by an international treaty in 1945 to create a framework for international economic cooperation focusing on balance of payment problems and the stability of currencies. IMF headquarters is in Washington D.C, U.S.A History / establishment of IMF: IMF was founded on 27th December, 1945. During the closing years of world war second, different countries realized that there must be a common International Forum for achieving economy cooperation, promoting International Trade and providing help to needy nations during emergency. So IMF was formed for this purpose. World War Second has its adverse effect on global economy. To remedy the situation, an international monetary conference was convened in 1944, at Bretton Woods in America. It was attended by the representatives of 44 countries. It was decided in this Conference to set up IMF for the economic development of all countries. Problems: Three main problems are: ▪ Economic order and piece ▪ Reconstruction of economies ▪ Stable world piece Role: The IMF was intended to play two major roles in the Bretton Woods System: o The fund should discourage aggressive exchange rate behavior by members and help them manage their balance of payments efficiently; o The fund was given resources to lend international reserves to countries with balance of payments difficulties. Purposes/...
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...IMF and Pakistan Current IMF-Supported Program 34-month, US$11.3 billion Stand-By Arrangement (SBA), originally approved by the IMF's Executive Board on November 24, 2008, augmented on August 7, 2009, and extended by nine months in December 2010. The Board completed the fourth review of the program on May 14, 2010. In addition, on September 15, 2010, the Board approved US$451 million disbursement under the Emergency Natural Disaster Assistance framework to help Pakistan manage the immediate effects of the floods. Background Until the economic crisis of 2008, Pakistan had enjoyed a relatively robust economic performance since 2001. Warning signs emerged in 2007 and early 2008, as inflation began to rise and external imbalances expanded. Conditions deteriorated in mid-2008 with the sharp increase in international food and fuel prices and worsening of the domestic security situation. The fiscal deficit widened, due in large part to rising energy subsidies, financed by credit from the central bank. As a result, the rupee depreciated and foreign currency reserves fell sharply. Inflation reached 25 percent in late-2008, causing harm to vulnerable social groups. Role of the IMF The current SBA program aims to: • restore macroeconomic stability through a tightening of fiscal and monetary policies to bring down inflation and strengthen foreign currency reserves; • protect the poor by strengthening the social safety net—this is a key element of the government’s...
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...The International Monetary Fund and Argentina The International Monetary Fund is there to prevent local economic problems from becoming global crisis. If a specific country is having issues the IMF will then offer their services of loaning them money in return for policies in order to stop the crisis from getting out of hand. Their goal it to help on the global economy and not just a local economy, when dealing with the local economies they do what is best globally economic wise. It helps resolve crises, and works with its member countries to promote growth and alleviate poverty. Argentina was the prime example for the free market, conservative economic policies pushed by the International Monetary Fund. The Buenos Aires government privatized state enterprises, liberalized foreign trade and investment, and tightened government fiscal and monetary policy. During the 1990s the country’s economy seemed to do well. It now turns out, however, that things were going to make a turn for the worst, as they did not build a very strong foundation. Economic growth in that period, while substantial, appears to have been in large part the result of an increasing accumulation of international debt, fortuitous expansion of foreign markets, and short term injections of government revenues from the sales of state enterprises. Coming to the end of that decade, things for Argentina starting going downwards. By mid-2001 Argentina was into its third year of recession, and its financial problems...
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...1. The most commonly accepted goal of the MNC is: a. to maximize revenues b. to maximize shareholder wealth c. to maximize profitability of the firm d. both a and b 2. Agency costs are normally larger for MNCs than for purely domestic firms. Which of the following is not a reason for this larger agency cost? a. Monitoring managers of distant subsidiaries in foreign countries is more difficult. b. Managers from different cultures may not follow uniform goals. c. U.S. managers tend to downplay the short-term effects of decisions. d. Sheer size of the larger MNCs can create larger agency problems. 3. Several constraints confront the MNC in its attempt to maximize shareholder wealth. Which of the following is probablynot a constraint? a. competitive b. ethical c. regulatory d. environmental 4. Part of the growth of multinational business over time is due to the realization that specialization by countries can increase production efficiency, making trade essential when a country focuses on the products it produces best. This is an example of which theory of international business? a. product cycle theory b. competitive advantage theory c. imperfect markets theory d. comparative advantage theory 5. According to the ___________, firms become first established in the home market as a result of some perceived advantage they would have over existing competitors, such as a need by the market for at least one more supplier of the product...
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...investment have made the countries’ economies more interdependent. With this said, the IMF position is very important to the stability of the World’s economy, ensuring that the various economies prosper and thus promoting a strong global financial system. The IMF keeps track of the global economy and assists those countries in need. IMF reduces vulnerabilities to crisis, by educating countries on financial and economic policies, thus promoting growth and stability. I believe to some extent the IMF helps many nations get back on their feet, by providing loans to troubled economies. This in other words, by investing in one’s economy, that country has the financial means to produce and be a more competitive market. However by receiving these loans, countries are subject to severe austerity measures that might not be in the best interest. Let’s take the example of one biggest borrower: Greece. Greece had over 32 billion Euros in emergency loans from the IMF, and yet it struggled to stay afloat, and more importantly it was the first country to fail to pay back its’ IMF loan. Greece was getting money however it was being mismanaged creating a crisis and a bigger hole for Greece. IMF has the potential to promote economic growth and reduce poverty however it’s up to each country to make use of that money wisely. Greece didn’t and IMF failed on surveillance letting Greece get to a state of desperation. IMF loans are subject to the scrutiny of the international community, and should be...
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...The initial idea to form the International Monetary Fund originated in the year 1944, when members of 45 countries gathered for a meeting in the town of Bretton Woods in New Hampshire in the United States. The objective of this meeting was to agree on a structure for economic cooperation between countries after the Second World War in order to avoid the negative impacts caused by the economic policies in the past which resulted in the Great depression of the 1930s.The International Monetary Fund was formally established in December in the year 1945 with 29 countries signing an agreement. Its membership gradually increased during the 1950s and 1960s with most of the African countries joining the International Monetary Fund after gaining independence. Currently, the International Monetary Fund has evolved to become an organization which consists of 188 member countries working with common objectives of promoting worldwide monetary cooperation, providing financial strength to countries, promoting international trade between countries, reducing unemployment and poverty in the world. The new countries who became members of the International Monetary Fund between the years 1945 and 1971 gave their consent to keep their respective exchange rates fixed at rates that can only be changed to revise a significant inequality in the balance of payments, and could only be done so with the consent of the International Monetary Fund. This system was referred to as the par value system or the...
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...I chose Jamaica to do this assignment because I think it is a very clear case of IMF bad practices. The country got independence on 1962, during the time when the world's oil prices were rising and being a major flaw for countries all over the world. In 1973, after fighting with the economy because of the independence they got ten years before, the economy stability disappeared, and here is where the International Monetary Fund comes to the scene. "The International Monetary Fund (IMF) is an international organization created for the purpose of standardizing global financial relations and exchange rates. The IMF generally monitors the world economy, and its core goal is to economically strengthen its member countries." ("Investopedia", 2003) Would the IMF help Jamaica to solve the economic crisis? There were some economists in Jamaica that designed a plan to address the country economy, with a long-term loan hoping that solution would help the economy grow slowly. However, the IMF rejected that proposal and they provided a short-term load and, as usual, they enforced some political and economic conditions to grant that loan. The IMF required reductions in pensions and benefits and cuts to public-sector. It was unfavorable treatment because it will allow the IMF to know whether the country could recover from the crisis without taking risks, but was disastrous for Jamaica. (Hilaire, 2000) This agreement had two terrible consequences for the country. First, the loan had...
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...The responsibilities and functions of the IMF centre on its key purpose: to deal with 'international monetary problems' by acting as the forum for its members to 'consult' and 'collaborate' with it so as to 'facilitate' and 'promote' 'international monetary co-operation', 'growth of international trade' and 'exchange rate stability' to achieve financial and economic stability. The IMF seeks to achieve these broad purposes through its core functions: surveillance, financial assistance and technical assistance to ensure its members continuously adhere to its underlying purposes. The traditional objective of surveillance is ensuring orderly exchange arrangements' among members. The IMF, in 'consultation' with its members by both bilateral and multilateral means, assesses individual members' economic and monetary policies against its purposes to ascertain whether they pose a risk to the stability of the international monetary system. It seeks to provide financial assistance to members experiencing balance of payment problems, on the basis that the individual member complies with the conditions set for such assistance so the IMF can be assured the money will be repaid. This invariably requires the member country to adjust its economic and monetary policies, giving rise to a considerable level of coercive and unfettered leverage by the IMF to ensure changes are indeed made. The final function of the IMF is to provide technical assistance to its members, but without the same degree...
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...assessing the IMF via the Liberal, Economic Nationalist, and Marxist frameworks. For backdrop, the IMF was established in July 1944 during the Bretton Woods Summit wherein over 700 delegates from over 40 countries gathered to agree on a new economic order, rules and institutions aimed at promoting worldwide economic development and global free trade. To begin with, the Extreme Liberals would contend that the IMF should not exist at all. This is because the very existence of the IMF represents a form of intervention by the state, or collection of states, that the extreme liberals see as unnecessary. The liberal view is founded on the basic concept “laissez fair” which basically means “hands-off” or “allow to happen”. This doctrine was introduced by Adam Smith in his book, The Wealth of Nations, published in 1776. The basic idea is that commerce or trade should be allowed to occur without intervention by the state. It promotes the idea of primacy of markets and companies over the state and contends that internal trade is a “positive sum game” wherein results will work out positively and harmoniously for all involved. Their view is that the main player in global economics should be private entities and that market forces should apply in all respects. For extreme liberals, maybe the most egregious aspect of the IMF is the idea of moral hazard, whereby individual countries will take unreasonable risks on the belief that if they fail, they will be bailed out by the IMF. Such a practice...
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...situation was scaring away the investors. Financial analysts were predicting Pakistan teetering on the edge of solvency, terming the situation as a natural consequence of Pakistan’s support to US-led war on terrorism. It was a tough time for a new PPP government. With begging bowl, Pakistan was imploring before Saudi Arabia and China to escape the impending default, but it could get nothing substantial. Finding no other option the desperate Pakistan decided to knock the IMF door. Despite strong opposition from many in Pakistan, the government finally entered into $7.6 billion Stand By Arrangement (SBA) loan with the Fund in November 08. A recent report by The Economist (April 23rd 2009) “Full Fear and Credit: Pakistan’s Political instability brings macroeconomic calm” claims that Pakistan has unique exemption from ill effects of the global contraction and under IMF program it has only to do one thing; to narrow its fiscal deficit to $ 7 billion, 4.3 % of GDP. The report gives impression that thanks to IMF leniency, Pakistan is getting economic stability. This is otherwise untrue. As a long list of conditionalities is there to follow. For example the Stand By Arrangement (SBA) also calls for eliminating fuel and electricity subsidies, doing away with exemptions on income...
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...|IMF AND WORLD BANK | |Gokhan AKDUGAN | |MKT-5340/Fall Semester | |December 3, 2014 | TABLE OF CONTENTS LIST OF FIGURES 3 ABSTRACT 4 1. INTRODUCTION 5 2. LITERATURE REVIEW 8 3. CURRENT ISSUES AND ANALYSIS 11 4. CONCLUSION 16 5. REFERENCES 17 LIST OF FIGURES Chart A.1: The breakdown of IMF structural economic conditions 5 Figure 1: Voting rights between USA and BRICS countries 6 Chart A.2: The relationship between economic freedom and income per capita 8 Chart A.3: Economic countries of property rights and per capita GDP 9 Table 1.A: Cumulative amount received from the World Bank and the GDP per capita 11 Abstract I analyzed the positive and negative aspects of IMF and World Bank referring to recent...
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