“Imf Programs: Who Is Chosen and What Are the Effects?”

Topics: Economics, World Bank, International Monetary Fund Pages: 4 (1463 words) Published: December 8, 2012
The current article “IMF programs: Who is chosen and what are the effects?” by Robert J. Barro, Jong-Wha Lee talks about the lending policies and practices of IMF which responds to economic conditions but are also sensitive to political-economy variables. Paper says that all developing countries have received IMF financial support at least once since 1970 with few exceptions including Botswana, Iraq, Malaysia, and Kuwait (Robert J. Barro, Jong-Wha, 2005) but the real question is why so many countries are sorting out financial assistance from IMF? and are these loans are really helpful for their economy? It further explains the determination and effects of IMF program on the country’s economic growth because it invokes a controversy among the claim of IMF which is to contribute the sustainable growth in the economy of its member countries and the calculations made from the current data of 130 countries which show that a higher loan participation reduces the economic growth plus a little indirect effects on other economic and political variables like investment, inflation, government consumption, international openness, the rule of law and democracy(Robert J. Barro, Jong-Wha,2005) which will lead us to investigate the importance of institutional and geopolitical influences in IMF program, approval and participation. From the results of this research paper we can say that IMF lending may be bad for the economy but good for the governments and individual politicians who arrange the lending. Second, the IMF lending may lower real GDP but raise a country’s income, which is augmented by the subsidy element of an IMF program. Third, IMF lending may lower growth in the short run but raise growth in the long run (Robert J. Barro, Jong-Wha, 2005).


IMF has now become a universal financial institution who gives loans to the developing countries to help them for the balance of payments and for several other reasons. It has certain rules to...
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