The global financial crisis and its effects on the international monetary funds

ABSTRACT This paper aims to analyze the innovations introduced in the functions of the International Monetary Fund in the context of the 2008 economic and financial crisis. This promoted an action that aimed to strengthen the surveillance function through the adoption of the Integrated Surveillance. Thus, alongside the traditional conditionality based on an a posteriori implementation of adequate economic policies, a criterion of ex ante conditionality in the precautionary branches was also introduced or based on the economic characteristics of the country to be financed. Concerning traditional conditionality, it will be asked whether the IMF has adopted a less extensive approach than its role.

AN EMPIRICAL EVIDENCE OF ECONOMIC RECOVERY DURING THE PANDEMIC PERIOD INTO WORLD ECONOMY

We are in the midst of an asymmetrical recovery. In some countries, COVID-19 infection rates have fallen significantly, while in others, the virus remains difficult to control. But whether governments are actively managing outbreaks or returning to normality, economic recovery is central to their forward-looking agenda without a broad-based economic expansion, it is difficult to address other challenges, such as education and healthcare.The International Monetary Fund(IMF) recently raised its projection for economic growth in 2021 to 6%, up from 5.5%, and projects 4.4% growth in 2022. The upgraded outlook is based on how well the pandemic continues to be controlled, the efficacy of fiscal policy in mitigating economic damage and global financial conditions. Although businesses are the engines of the economy, governments create the environment and structure that enable enterprise to flourish . How governments create and shape the environment for economic recovery—and the opportunities and challenges they face in doing so—will depend on two decisions they make about their approach.

Investigating the role of the International Monetary Fund in the process of resolving financial crises: case study of Greece

The economic crisis in the United States and its spread to continental Europe caused a financial crisis in European stock markets, which in turn reduced production in Europe, resulting in rising unemployment, that eventually led to protests against the current economic situation. These political unrests have prompted international and regional governments and financial institutions such as the International Monetary Fund, the World Bank and the European Central Bank to find a way to end this severe financial crisis. Greece, as one of the EU member states that has been affected by this global crisis, has made efforts to improve its economic situation. The main question of this study is to what extent the International Monetary Fund was able to help resolve the financial crisis in Greece? The hypothesis is that due to the conditionality of financial aid from the International Monetary Fund to Greece in crisis and Greeces lack of attention to the full implementation of austerity programs, such financial aid has not been able to save the Greece economy from financial crisis. One of the aims of this study is to what extent developing countries can rely on IMF recommendations to overcome the financial crisis. The aim of the research is to find out why International Monetary Fund could not adopt proper monetary and financial policy to settle the financial crisis in Greece. Moreover, the reasons behind failed attempts of Greeces policymakers to implement IMFs austerity measures in their country are sought.

Poverty, Inequality, and the International Monetary Fund: How Austerity Hurts the Poor and Widens Inequality

Among the drivers of socio-economic development, this article focuses on an important yet insufficiently understood international-level determinant: the spread of austerity policies to the developing world by the International Monetary Fund (IMF). In offering loans to developing countries in exchange for policy reforms, the IMF typically sets the fiscal parameters within which development occurs. Using an original dataset of IMF-mandated austerity targets, we examine how policy reforms prescribed in IMF programs affect inequality and poverty. Our empirical analyses span a panel of up to 79 countries for the period 2002–2018. Using instrumentation techniques, we control for the possibility that these relationships are driven by the IMF imposing harsher austerity measures precisely in countries with more problematic economies. Our findings show that stricter austerity is associated with greater income inequality for up to two years, and that this effect is driven by concentrating income to the top 10% of earners while all other deciles lose out. We also find that stricter austerity is associated with higher poverty headcounts and poverty gaps. Taken together, our findings suggest that the IMF neglects the multiple ways its own policy advice contributed to social inequity in the developing world.