What Steps Have Been Taken by the IMF to Undo

question 63

Essay

What steps have been taken by the IMF to undo some of the criticisms that it has been subjected to by economists?
a.Flexibility and speed: The IMF created the Flexible Credit Line (FCL), which is a fast-disbursing loan facility with low conditionality aimed at reassuring investors by injecting liquidity.Traditionally, IMF loan programs required the imposition of austerity measures such as raising interest rates that could reduce foreign investment.In the case of the FCL, countries qualified for it not on the basis of their promises, but on the basis of their history.Countries with sound macroeconomic fundamentals were eligible for drawings under the FCL.A similar program was proposed for low-income countries known as the Rapid Credit Facility, which was front-loaded and was intended to have low conditionality.
b.Cheerleading: The Fund positioned itself to be less of an adversary and more of a cheerleader to member countries.Some countries needed loans more for reassurance than reform.This enabled more domestic political and economic stability.
c.Adaptability: Instead of providing the same medicine to all countries regardless of their particular problems, the new loan facilities aided reform-minded governments by providing short-term resources to reassure investors.In this manner, they help politicians in developing countries manage the downside costs of integration.
d.Transparency: The IMF made efforts to improve its own transparency and encouraged its member countries to do so.This creates a barrier to any one or more countries that have more geopolitical influence in the organization.

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