If we want to understand the world, then we have to analyze it at the economic, political and social level, only then we will be able to understand, the purpose of writing any of our articles is not only to pass any exam, to see any information but it from all points of view. Have to understand
That’s why we are going to explain this to you about the International Monetary Fund from this point of view, only you will not accept the knowledge by rote. That is why all our articles are written from this point of view, so that our understanding remains logical to understand any topic.
To know about the “International Monetary Fund” we will first try to know its background and try to understand how much benefit this institution has brought to the world by neutral role, or there was some different purpose behind it. From the inception of this institution till today, whether the purpose of this institution has been successful or not, you will understand.
International Monetary Fund –
International Monetary Fund This organization helps member countries globally in their objection on low interest of currency amount. At the time of its establishment, its aim was to improve the economy of different countries of the world by helping them. When there is an economic crisis in a country, with some conditions, this institution gives financial assistance to that country.
As of today, the member number of this institution is 189, who has to keep some amount in the institution for membership, in return for which he gets the right in the decision process to be done by the institution. The members whose membership amount is more, they have more authority in the decision process.
America’s membership amount is the highest, ie with a 17% membership amount, America has dominated since the establishment of the institution on what policy to make in the “International Monetary Fund”. We will see further what is the benefit of getting more rights in the decision process, but after America, Japan has the highest vote and then China.
History of the International Monetary Fund –
The International Monetary Fund was established in the United States of America in “New Hampshire” in July – 1944 at the Britain Woods Conference, at that time its membership was 44. That was the period of the Second World War, which lasted from 1939 to 1945 and due to this, the economic system of all the countries that had participated in this world war was completely destroyed.
Before the Second World War, Britain had been the economic superpower of the world, after the end of this war, America took over the reins and emerged as a new economic superpower of the world. At the same time of the World War, the International Monetary Fund was established under the leadership of America, whose purpose was to take care of the countries which were scattered by this world war.
Before the World War, the entire international economy was run through the European vassalism, whose transformation after the Second World War the economy was changed to the international economic market and all the countries that were under these European vassalism were made independent, but its effect on trade Many provisions were made by the United Nations Organization for this to not be the result, one of which was the International Monetary Fund.
International Monetary Fund Objective –
Objectives of the International Monetary Fund The recession that the whole world saw in 1930, at the time of World War II, the economic situation had deteriorated significantly. In which the most damage was done to the developed countries of Europe because Europe has been the main focus of the world war, the rest of the countries of the world were colonies of these European countries.
Due to which those countries joined this world war, for example India ,which had been a part of British India, due to which it became a part of this war. The World Bank and the International Monetary Fund were established in the Britain Woods conference, in which the main objective of the IMF was to provide financial assistance to developing or poor countries whose economies are in crisis.
In return, implementing the policies of international trade in these countries so that international trade can be promoted. Originally it was a capitalist economic model of economy. This was the period where there were changes in power in many countries and there was a need to take care of the economic structure, at that time this institution was established.
Functions of International Monetary Fund –
The basic objective of the International Monetary Fund is to provide economic and financial knowledge to all the countries of the world so that their economic condition improves and people can help in increasing the standard of living. Therefore, the Finance Minister of every country and the officials of the Central Bank of that country work in association with this institution.
To provide financial assistance at low interest to the countries whose economic condition is not good, it is the first priority of this institution. To improve the economic condition of that country, to implement the plan of financial and economic policy while giving financial aid in that country and to open the market for international companies through free market.
This organization monitors the economic and financial activities of all the member countries and tries to make changes if some flaws are seen. For this, this system is run by the member representatives in all the countries, whose main economic fund is given from all the countries and accordingly there is the right to vote in the decision process.
International Monetary Fund and World Bank –
The International Monetary Fund and the World Bank were established at the same time, and the objectives of both were kept separate. As the situation of economic crisis was created in India in 1991, at that time we had taken financial help from this institution, in return of which the International Monetary Fund had suggested some economic reforms in our economy.
The scope and purpose of the World Bank is very different from that of the International Monetary Fund.
Loans from the World Bank are provided to the member countries for development, it usually consists of project base loans, while the loans given by the IMF are of long duration and are given keeping in mind the entire economy. The rules for the loan given by the IMF are very strict, for which the economic policy is given.
International Monetary Fund and United Nations –
The International Monetary Fund was established before the establishment of the United Nations, but after the end of World War II, political and social changes were seen in the world. Therefore, to maintain peace in the world after the First World War, the League of Nations was established under the leadership of Britain, which failed.
After the end of World War II, the United Nations was established, under which all international organizations were taken, including the IMF. When the world war started when the World Bank and IMF were established and no one knew what the consequences would be, therefore these two institutions were established to keep economic and financial control.
As the United Nations was established under the leadership of America and America has more power in the International Monetary Fund, so it was later controlled under the United Nations. Although it has been given independent status, but indirectly the influence of the United Nations is on the decision process of the IMF.
International Monetary Fund & India –
In the 1990s, there were many changes in world politics and Russia declared the end of the Cold War, due to which many countries made changes in their economic and financial policies. In which India was the largest country in the world, which changed the model of socialist democracy and accepted the capitalist policy.
In the 1990s, there was a lot of instability in the politics under India, in which Mandal and Kamandal politics was at its peak, which wanted social and political change. In the same period, the Narasimha Rao government approached the IMF due to economic problems and tried to solve the problem of India’s international currency with them.
America’s influence on the IMF is more and it has the most decision-making powers, due to which the policy which is made is capitalist. In which open economy and reducing the government’s control over the economy, under which from 1990 till today, under the policy, privatization of government companies and incentives to foreign companies started being given.
Features of IMF –
- The International Monetary Fund was established at the Britain Woods conference with the World Bank.
- Seeing the economic recession of 1930 in front of the world, it was done to help the developing and poor countries financially.
- The countries which are caught in economic and financial crisis, IMF gives new economic and financial policy with loans through expert officers.
- The World Bank also gives loans, but it is for the development of the country.
- IMF loans are long-term loans and are implemented with very strict conditions, which are done during the economic crisis of a country.
- When the IMF was established, it was only 44 countries, which is now 189 members.
- IMF gives loans to member countries and the country which demands this loan is considered to be in economic crisis.
- To run the IMF, the member country gives some amount (in the form of gold) in the form of membership in the institution from which the institution is run and the countries have the right to give the winning amount, the same right is in the decision process.
- All the countries give so much importance to come in the decision process, because of which the policy is made at the time of giving loan, that country sees its own benefit in exports.
- America’s influence in the policy process of this institution is visible due to the US having 13% voting rights in the decision-making process of the IMF.
- An important feature of IMF policies has been an open economy, reduction of social spending and less government intervention.
Critical Analysis of IMF –
- Economic and financial struggle is seen in the world, it is basically the struggle of two sections of the society in which socialism and capitalism is the struggle of ideology.
- After the Second World War, vassalism ended and a new world order was created, which capitalism wanted to control.
- Cold War It has been indirectly a clash of two economic democracies models of the world.
- From the capitalist economic model, it is said that economic inequality has increased.
- The aim of the IMF has been that the world should be a model of capitalist democracy.
- The conditions for taking loans from the IMF are very strict and it is believed that it interferes in the matters within that country.
- We have to determine how right it is to make the economy dependent on demand and supply by closing social welfare.
- Any very empty policies become a cause of bad consequences in the society, therefore the policies of this institution should be considered, such intellectuals believe.
- Foreign investors withdraw their money from the country which demands loan from IMF.
- Because of America’s unlimited control over the IMF, with economic force, they take advantage of the natural wealth of poor and developing countries, such allegations are made.
In this way we have seen how the International Monetary Fund works and what is their purpose. If we analyze it from its inception in 1945 till today, then America has got the most economic and financial benefits. The US economy has grown the fastest since World War II.
All the countries that participated in World War II were in an economic crisis for several days, in which Britain had to give up its position of being a superpower. Due to the most control over the IMF, Russia and China implement their economic and financial strategy separately in a secret way, due to which only small countries or developing countries like India have to face its consequences.
Poor countries get some benefits by IMF, but under corruption and lack of social facilities, it has discredited these policies a lot. Natural resource wealth, the western country and America have achieved maximum wealth and now they are trying to save it, this huge discrepancy is seen.
In this way, we have tried to give more information about the International Monetary Fund in less words.