The role of the IMF in helping poor and debt-troubled countries Case Study - 5

The role of the IMF in helping poor and debt-troubled countries - Case Study Example International Monetary Fund is financial institution that amasses its funds through contributions from countries using quota systems. These resources are however, availed to developing countries to boost their economic growth, reduce poverty, reduce unemployment, and provide enabling environment for political stability. Poor and debt-troubled countries need financial support and International Monetary Fund plays instrumental role in ensuring availability of favorable exchange rates and money that is used to improve infrastructure, boost education, and run day-to-day activities of the government. Despite the help, International Monetary Fund levies high charges on countries, which borrow money thus rendering them slaves of the developed countries because they cannot pay the debts within the agreed time. Poor countries continue being poor because the International Monetary Fund regulates the policies that govern the rates and value of money ( Copelovitch, 2010). Financial assistance from IMF is advanced to countries facing financial problems for instances, balance of payment deficit, and unfavorable terms of trade. In this regard, actual and potential countries in financial difficulties are assisted. Actual borrowers are countries, which need financial support to run their routine activities and this includes states that have borrowed money at one instance. Potential borrowers are countries that are vulnerable for instance, under civil war, gained independence, and facing economic recession. Furthermore, borrowing countries have to be member states of IMF and have to abide by the rules and regulations laid down by the organization. The countries have to be aware of the penalties and processes to be followed before receiving funding. Abiding by the strategies, visions, and missions of the organization aids in reducing default rate. On the other hand, the projects and programs which the money is borrowed for must be