A restructured IMF might possess the distinctive role of: functioning as a quasi-lender of the last resort to solvent budding nations, gathering and releasing financial and economic data from representing nations and circulating the information in a time bound and systematic way and offering counseling but not stipulating conditions associated with the economic policy. The lending pattern followed by IMF must have a set of prerequisites which the budding countries must be able to fulfill to be eligible of a loan.
The prerequisites consist of (a) independence of joining and functioning for Foreign Financial Institutions – FII's. The motive of this prerequisite is to raise diversification of portfolio so as to restrict fraudulent lending by the regional banks to privileged patrons and lower threat. (b) Suitably capitalized commercial banks. The objective of this prerequisite is to “set market orderliness in the internal financial sector and safeguard the health of financial institutions. ” (c) Routine release of the maturity of pending sovereign and guaranteed debt and liabilities that are not revealed in the balance sheet.
The objective of this prerequisite is “to egg on practical actions, security and better economies. ” (d) Setting up of a better monetary strategy. The objective of this prerequisite is “to guarantee that the resources of IMF would not be utilized to maintain negligent budget strategies. ’ These prerequisites would lower dependence of loans in the coming years and the possibility of emergencies in the years ahead as they would make an atmosphere which supports the effectiveness and advantages of open market economies.
Besides, enhanced leeway is more crucial for the IMF loan compared to any other multilateral organization. The primary responsibility of IMF is to guarantee the steadiness of global financial system; this task is irrespective of national or regional confines. The major concern remains circumventing untenable inequity across the world. Our knowledge from the current account balances in case of China and the United States, worldwide inequity can grip industrialized economies, developing nations or both.
IMF latitude inside an internationalized world implies matching the country with that of the world in terms of observation. Because international happenings mature in a regular manner, so must IMF nation-centric policy recommendations and financial support. Very little improvement has been made in creating the structure for the participation of the private sector in deterrence and solving of the problems. The platform for extensive talks of financial design restructuring matters has in fact been shifted from the Bretton Woods Institutions and into the Group of Twenty.
Introductory activities is in progress, nevertheless, at the IMF on such concerns regarding functioning as the benefits of other “stalemate” requirements, the streamlining of global sovereign bonds, corporate settlements made out-of-court and the attunement of treatment among official bilateral and private creditors. In the end, as regards on quotas and the associated question of membership which is fundamental to the internal control of the IMF, there has been negligible development.
A significant progress was the proposal by the Executive Board to the Board of Governors for a temporary raise in the share of China after Hong Kong’s autonomy came under China. The share of China would go up to SDR 6369. 2 billion from SDR 4687. 2 billion which is an amount equal to that of Canada with the smallest share in the Group of Seven countries touted as G-7. There is everything regarding the World Bank and the IMF which can be altered, removed, or broadened in case the desire is present.
It can be more complaisant compared to what is appears. In case the World Bank and the IMF were to contribute positively in attaining this poverty-termination objective, their lending schemes should give the correct perks to the governments of poor nations to encourage economic development as the answer to poverty. Particularly, their programs must motivate poverty stricken nations to maintain an autonomous judiciary, to reduce taxes and unnecessary laws, to remove impediments to businesses, and to remain more answerable to their countrymen.
The restructuring must optimize their efficacies, raise the level of answerability for their lending decisions, and offer perks to the heads of poor nations to assume the task of handling the fate of their countrymen in their own hands.
Danaher, Kevin ‘50 Years Is Enough: The Case against the World Bank and the International Monetary Fund’ South End Press. Boston. 1994. Eiras, Ana Isabel, ‘Time for the International Monetary Fund and World Bank to Reconsider the Strategy for Millennium Development Goals’ in Backgrounder. No: 1880. Viewed on 16 February 2007 <http://www. heritage. org/Research/TradeandForeignAid/bg1880. cfm>