Essay About Governance Of Imf Lending Policies And Economic Survey Of Its Members

The Function and Governance of Imf Lending Policies in MalawiEssay Preview: The Function and Governance of Imf Lending Policies in MalawiReport this essayThe Function and Governance of IMF Lending Policies in MalawiThe International Monetary Fund was established at the United Nations Conference held in Bretton Woods, New Hampshire, United States in July, 1994. The IMFs goal is to build a framework of cooperation between nations into hasten up post-war reconstruction, to aid political stability, and to encourage peace (Lele 154).

The IMF membership is at 188 countries. According to the organizational structure, each participant country in the organization is allocated a quota according to its contribution to IMF reserves. The IMF performs economic survey of its members in order to provide technical assistance and training to its member states to help them build strong economies. Its main objective is to safeguard the stability of the international financial system which is essentially the structure of monetary transaction between countries that enable them to interact with one another. Other functions of the organization include monitoring and preventing international financial crises as well as cooperation with the member countries to promote the development as well as to eradicate poverty.

The IMF has three areas of focus in implementing its mandate and these include, surveillance of global economies, providing technical assistance and training to member states as well as providing financial loans.

The work of the IMF includes promoting global economic growth and stability and it accomplishes this goal by insisting that member countries develop comprehensive economic and financial policies. In order to achieve this, the IMF constantly conducts surveillance and reviews international, regional as well as national level economic developments of its member states.

In order to strengthen the member states’ capacity to create and implement effective financial policies, the IMF provides essential technical assistance and training. Facilitating technical assistance ensures that vital expertise is provided in the event of lack of capacity, and this means well-crafted economic policies and programs.

National governments encountering financial difficulties with balancing their finances are given a respite with IMF loans. IMF provides the member countries with options to offset their budgetary deficits by working together and forming policy programs supported by financing. These credit agreements between the IMF and member countries are dependent on pre-contracted terms and conditions. Loan access is dependent on the country’s quota in the organization but recently, the IMF lending policies were reformed to allow low-income countries to access double of their previous loan limits while concurrently reducing interest rates. This was done to strengthen the organization’s lending capacity to avert crises especially in the aftermath of the recent global economic crisis.

IMF has introduced policies during the 2008 financial crisis for granting loans to countries. These policies require that the applicant country should first reduce fiscal deficits and inflation levels, ensure that international reserves are shielded from depletion, minimize public spending through decrease of expenditure and increase of taxation, hike interest rates and minimize increase of money supply, prevent currency devaluation and provide financial sector liquidity as required.

Malawi is ranked as one of the world’s lowest per capita economies according to a study conducted by United Nations Development Program (UNDP 2006). More than 80% of the population in Malawi lives in the rural areas of which 65.3% live in poverty, (Malawi National Economic Council 2000).

Malawi’s Economy before 1960 was mainly commodity based and laid great emphasis on goods with the potential to be exported such as agricultural produce including tea, tobacco, coffee, as well as cotton. These crops were grown by only a select few who could afford expensive inputs required while the poor were practicing noncommercial crop production. The colonial government imposed the new farming technologies on the poor indigenous farmers with disregard to the appropriateness of the practices, and this led to growing poverty among the local farmers (Moyo 202).

At the dawn of independence in 1964, Malawi began investing in food production to ensure self-reliance in terms of having enough food for the farmer as well as for the entire nation. In order to attain this goal, the government-subsidized agricultural inputs and increased availability of essential farming implements. This greatly improved the living standard of the common citizen, but the only problem was that these crops did not generate adequate returns and poverty still remained a major economic obstacle.

To help alleviate the country’s poverty and to improve the economy, Malawi adopted Structural Adjustments Policies (SAPs) in 1986 as a condition to loans given by the IMF. These SAPs involved major reforms in the economic and agricultural sector. The SAPs imposed strict rules including increased privatization and reduced protection of domestic industries, currency devaluation, increased interest rates, elimination of subsidies of common goods such as food, changing regulations as well lowering standards to attract foreign investments. The changes in the agricultural sector involved removal of subsidies in which the poor farmers depended on and agricultural market liberalization. Market liberalization meant that farmers were no longer limited to buy or sell agricultural produce to the Malawi Agricultural Development and marketing Corporation (ADMARC) which opened the market to private entities and caused changes in product prices.

The IMF and the IMF worked together to ensure that the country’s financial system would be able to meet national needs and support social modernization. The IMF used the SAPs (Sudan and Malawi Agricultural Development) and the Country Development Programme (Chapel Island) to guide the country in its transition from a capitalist land tenure system to a free market system in which all goods were produced individually. This paved the way for a more sustainable land tenure system, as well as a new system of social welfare including direct, market ownership and free provision of basic health care.

After its passage, the IMF expanded its support to countries, including Malawi, and the country’s government introduced a program of social and economic reforms in a bid to improve its economic performance.

Malawi’s economic development programs were an extension of the economic reform efforts of other African countries and allowed it to further improve its social, economic and political conditions. Under the framework of the SAD, economic development has become a major pillar of government policy, helping to push on a healthy growth and growth in its economy, contributing in a positive way to growth in real GDP and saving people’s time and money. Since the election of the new president in 2014, Malawi’s growth has continued to soar, and the country still suffers high unemployment and poverty.

By 2018, public spending will add nearly $1 trillion to GDP, helping the country pay its big bill for infrastructure, education and services that had been neglected by the 2008-09 recession, as well as create jobs across the nation. It also adds $500 billion for tourism and $500 billion for industries, and supports over 3 million families in the country.

The country’s economic development has been based on three pillars: low interest rates, limited government assistance, and the growth of renewable energy. In the next five years, the government will increase the share of revenue raised to 3% by taxing 5 billion baht a year.

The plan aims to boost economic growth by giving more cash to the national government while making greater investments in the areas of finance, education and social services. The plan also aims to boost government revenue to 3.8% by funding education and $2.3 billion for enterprises. The plan aims to support a number of sectors and investments in schools with the aim of supporting entrepreneurship and reducing the role of government and industry by improving the business environment. It includes measures to improve quality of life, improve infrastructure and build the country’s infrastructure system.

After the election of the new interim president in September 2014, Malawi’s GDP had become the top economy in the world. That is despite the fact that the government has made modest increases in the budget, and many of its investments, and in the sector of education has been financed without a tax. This has led to a downward spiral, leading to significant problems in education. The education system was not developed with sufficient resources. There were also serious problems with financial performance, which included a drop in the value of government aid given to schools, weak economic performance in public universities, and a decline in the number of secondary school graduates. Malawi has also not been able to deliver a sustainable return on its investment in infrastructure and private enterprise, as well as infrastructure rehabilitation.

In October last year, the government declared a new five-year plan to increase its revenue by $1.4 billion under the Sustainable Development Fund and by $2.3 billion to a new $100 million in 2012. That plan has also enabled the government to invest in infrastructure projects in the country of 6.4 billion baht.

The government is also investing in more rural development projects to support the economic progress and infrastructure development of the communities. It also introduced several small-holder projects and investments in rural areas. These projects are mainly based on the

IMF is among the most powerful institutions globally and is among the major sources of loans to Developing countries. As the ‘last resort’ source of emergency loans, the IMF has the leverage to impose policies as well as dictate changes in the economies of borrower countries. According to Molina-Gallart and Muchhala (2012), economic policies attached to loans given by international financial institutions are being unfairly used as tools to compel developing nations to adopt market-oriented economic policies as observed