The Struggle for Stability in Developing Countries

Several developing countries are sunk in debt and poverty because of the arrangements of global establishments, for example, the International Monetary Fund (IMF) and the World Bank. Their projects have been vigorously reprimanded for a long time and have been constantly blamed for poverty. Moreover, developing countries have been in constant expanded reliance on the wealthier countries, despite the IMF and World Bank's claim that their main goal is to fight poverty (Shah, 2013). During recent decades, the poorest nations on the planet have needed to swing progressively to the World Bank and IMF for money related help, because their impoverishment has made it unthinkable for them to acquire somewhere else. The World Bank and IMF connect strict

Developing countries face many issues that developed countries don’t have to worry about. From structural problems within the government, to issues with feeding their citizens these countries struggle with what appears to be basic survival issues. In comparison to developed countries, citizens of developing countries life expectancy is shorter, This doesn’t mean that they lack the resources needed to succeed, a majority of these countries just lack the ability to manage their resources efficiently. Corruption, exploitation and lack of a stable economy prevent these developing countries from transitioning from developing to a developed nation .

The World Bank advances loans to member countries primarily to help them lay down the foundation of sound economic growth. The loans made by the Bank either directly or through guarantees are intended for certain specific projects of reconstruction and development in the member countries.

Due to capital limitations, most governments, particularly in the developing nations borrow funds from their bilateral friends and organizations such as World Bank and International Monetary Fund (IMF) in earnest to enable them pursue development projects, and sometimes to correct balance-of-payment deficits. Nevertheless, such governments must adhere to some outlined conditions that are spelt out in the article of agreement in order for them to secure the loans; otherwise, the loans are withheld (White, 2012). Equally, a healthy population significantly contributes to economic development of

The International Monetary Fund (IMF) was created in the mid-1940s as a direct result of the chaos created by the individual central banks before and during the Great Depression. With the advent of economic globalization, it became clear that the uncoordinated policies of individual central banks was becoming a hindrance to global growth and financial stability. In December 1944, the IMF formally came into existence with 29 members, each agreeing to cooperate on the international stage to stabilize exchange rates and

The IMF's primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with one other. This system is essential for promoting sustainable economic growth, increasing living standards, and reducing poverty. The Fund’s mandate has recently been clarified and updated to cover the full range of macroeconomic and financial sector issues that bear on global stability.

participants in this conference created three organizations to help regulate the international economy. The first is the International Monetary Fund (IMF) which was established with the idea of regulating monetary policy. One of the benchmarks of the IMF is the stabilization of exchange rates and the loaning of money to help stabilize countries with balance of payments deficits. The second organization established was the General Agreement on Tariffs and Trade (GATT) whose main focus was on a liberal trading order.

The Bretton Woods Conference set out six goals for the IMF in its Articles of Agreement. Those goals, as shown:

abatement of outside debt through depreciation by official donors. It was made to help the poorest of nations though some criticize it is only offering aid to rich countries with decline in aid to truly needy ones. The IMF or International Monetary Fund was set up as a last resort means of aiding struggling countries. "The International Monetary Fund, based in Washington, D.C., is the global economy's lender of last resort to countries in crisis. " (The New York Times 2012). These two oganizations, one created by the other, can produce a lot of good in terms of providing financial stability through working together for a common goal.

First, the cutting of social spending and the national budget affect the domestic economies and social policies in quite a few ways. Cutting social spending has a very obvious affect on the social policies by taking money away from health care, education, military, ect.. The national debt, on the other hand, allows the IMF and World Bank to reduce the amount of money in the domestic economy, which in turn forces countries to have to take out loans from these groups. These loans that are taken are often too hard to repay. This in a way creates a paradox between these organizations and the people they are trying to help. They make it so that poorer nations need to take receive help from the IMF, but by taking their help they inevitably put themselves in more debt and economic turmoil.

When the surplus units save their money at financial institutions in the shape of interest, they will be rewarded. The higher amount of savings; the higher interest rate will be getting. Because the needy have low income, they making loans and were forced to pay extra. This makes them or the borrowers less opportunity for saving more and getting interest income from the savings to make wealth. So their wealth will never sprout and will continue to be pressed and depressed because of the debt. Meanwhile for the poor countries, foreign loans play a crucial role in their economic development. However, a loan with the high rate of interest taken by the poor countries will make them difficult to repay the installments of the debt. It is not help the poor countries at all, but increase the burden and make them fall

It is not the loans themselves that have been shown to increase poverty and inequality (see Table 1) but instead the macroeconomic conditions attached to them (Crisp & Kelly, 1999). For example, in order for a country to receive aid from the WB they are required to do several of the following: raise food prices to cut the burden of subsidies, privatize all or part of state-owned enterprises (Peabody, 1996), raise the price of public services (Creese, 1991), cut public sector budgets, reduce tax on foreign investment, devalue local currency, and cut wages (Pfeiffer & Chapman, 2010). These conditions are a way for the WB to establish accountability and to ensure that the loans they are giving to countries are being used for policies that the WB sees as part of good development. In theory, the concept of SAPs is perceived as being necessary and important, but in practise it has not showed the aspired results.

The three major international economic institutions are the International Monetary Fund (IMF), the World Bank and the World Trade Organization; this book mainly focuses on the IMF and the World Bank, due to the author’s first-hand experience with both institutions. The IMF, a public institution built as a guiding hand for economic stability around the world, has brought false

The world bank and the IMF they are both an integral part of the world economy and very crucial to the development of the development of the world economy at large. Well they are both owned and directed by the government of member nations involved in coming together in creating an avenue in that strengthening and broadening the growth of each member state which is the of the upper most. Their primary responsibility is to assist member nations to achieve or attain a good economic development which is part of their goal as a body to promote economic and social progress in developing countries by helping to their productivity which help their member in return to live a better and fuller life. Their major goal is ensure that there is stable growth of the world economy, providing technical assistance to poorer countries and ensuring that have a good technical assistance.

1.The international financial institutions (IFIs) are central pillars and the architects of the global economy. The world bank and IMF were founded and funded by the United states after the second world war to build shattered world economy after the war and great depression of the 1930s (socialist alternative,). The creation of the IFIs was to bring about a global economy after the “isolation economy” which some argue brought about the Second World War. The IFIs were to help the economy of the less developing countries (LDCs) to bring about growth and development, a phenomenon known as globalization.