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IMF and its role in economic crises Introduction The International Monetary Fund IMF is an international organization that provides financial assistance and advice to member countries It has become an institution integral to the creation of financial markets worldwide and to the growth of developing countries The IMF is responsible for the creation and maintenance of the international monetary system the system by which international payments among countries take place It thus strives to provide a systematic mechanism for foreign exchange transactions in order to foster investment and promote balanced global economic trade What is a crisis Balance of payments difficulties in a country--that is a situation where sufficient financing on affordable terms cannot be obtained to meet net international payments The countrys currency may be forced to depreciate to a level that seriously damages its domestic economy and the problems may spread to other countries Weak domestic financial systems large and persistent fiscal deficits high levels of external debt exchange rates fixed at inappropriate levels natural disasters or armed conflicts IMFs measures Lending IMF Lending aims to solve balance of payments problems and restore conditions for strong economic growth Before a member country can receive a loan the countrys authorities must agree to the IMFs conditionality In recent years the largest number of loans has been made through the Poverty Reduction and Growth Facility PRGF which provides funds to low-income countries at below-market interest rates and over relatively long time horizons or by Stand By Agreements SBA The IMF provides other types of loans as well including Emergency Assistance to countries that have experienced a natural disaster or are emerging from armed conflict Facts on IMF Lending as of December 31 2003 Loanable funds - 85 billion Of which concessional loans - 4 billion Loans outstanding - 107 billion to 87 countries Of which loans on
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