The role of the IMF in helping poor and debt-troubled countries Essay

The role of the IMF in helping poor and debt-troubled countries - Essay Example ionality, the reasons why the IMF indulges itself into helping poor and debt troubled countries, the ethical issues involves, and the effects of IMF loans on a country’s economy. The IMF seeks to help poor and debt troubled countries so to stabilize the countries’ recovery from balance of payment deficits, and to stabilize exchange rates. The IMF also performs evaluation and compilation of its member countries’ economies, and in the case of financial crisis, the IMF intervenes by providing loans on conditions for restructuring economies to avoid future crisis. The IMF lends itself to developing countries so to ensure the â€Å"revolving character† of the Fund whereby, the funds given to a certain country can be made available to another country in need. The policies’ structure and corrective measures are designed in such a manner that ensures the funds will be repaid, and availed to other members of the Fund in future. According to the IMF, conditionality refers to the policies that a member country should follow in order to gain access to the Fund. That is the conditions that the members are supposed to abide by, so to access the financial resources of the International Monetary Fund. Some of the conditions that the IMF implements is that a country must change its financial policies to get support; the bigger the country, the bigger the financial need, therefore, the more stringent the policy formulations. In a loan approved for Niger in 2005, the fund asked for an â€Å"extension in VAT on processed foods including; sugar, milk, wheat, flour†, a reduction in tax exemption on necessities such as water and electricity, and an increase in excise tax on sodas and other soft drinks. The IMF closely monitors how these funds are used in a bid to ensure that the funds are used as agreed, and not for any other purpose. 1. The member country is the national owner of its political and other resources; therefore should partake in the formulation of policies for the