Prague Economic Papers 2000, 9(4) | DOI: 10.18267/j.pep.90

How should the international monetary fund function in the modern world?

Mária Havrilová

The International Monetary Fund is a remarkable survivor. It was created to carry out specific functions in a world that has since vanished. Its role in the world economy still remains central. But in recent times, it has faced considerable criticism, both in terms of its role and its performance. We examine why IMF programs are often ineffective in achieving their goals, and whether there are any prospects for strengthening the IMF's role to become a genuine global monitor of financial flows and monetary issues. Then we examine the Fund's major role as lender of last resort to members who experience balance of payments problems. In particular, it will argue that the IMF's reliance on "conditionality" as a means of affecting change in the domestic policy of some of its members is misguided. Finally, a few suggestions on how the IMF could improve its procedures and brief evaluation of the IMF's intervention in the Asian financial crisis.

Keywords: International Monetary Fund, South-East Asian financial crisis, international law, developing countries, international capital flows, world economy, debt crisis, macro-economic policy

Published: January 1, 2000  Show citation