Define advocates of the international monetary fund argue, Business Economics

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Define advocates of the International Monetary Fund argue.

Advocates of the International Monetary Fund (IMF) argue

• Competitive devaluations were a characteristic of the inter war era and a major factor into the long recession of the 1930 year. The International Monetary Fund has had complete success while avoiding competitive devaluations from its inception.

• IMF short-term loans assist stabilise exchange rates and also the Balance of payments for a country into crisis for now. This intervention has no impact upon the underlying purposes for crisis. Unless action is done to resolve the economic factors which caused the Balance of payments shortage and exchange rate crisis, in that case future IMF intervention may be needed. For that IMF loans are conditional onto SAPs/PRS. Structural Adjustment Programmes enable a country to go by a painful adjustment process and by reform achieve a stable exchange rate as well as Balance of payments position and independence. An analysis has to be considered as to whether the costs of transition are worth the ultimate gains.


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