This November, the International Monetary Fund will be requesting a spending budget increase to $ 1 trillion. The Group of 20 Summit in South Korea will consider this request. By increasing its ability to give emergency cash advance loans money to countries in trouble, the IMF hopes to improve their response to financial crisis.
The ability of the IMF to lend
The IMF presently has a lending capacity of about $ 750 billion. Struggling countries get advance loans from the IMF when they need help. The money is typically used to help stabilize banks and financial systems, take on system-wide reforms, and purchase upgrades for infrastructure. It’s unusual for a first-world rated country to be given a loan through the IMF. Though they’re technically able to take the money, numerous first-world countries aren’t taking the cash until payday loan in order to avoid appearance of instability.
Getting more money to lend
A group of countries both govern and fund the IMF. Most of these countries can be attending the G-20 summit in November. These G-20 countries will be the ones to foot the bill if they grant the IMF an extra $ 250 billion. While the IMF doesn’t have a bank account with $ 750 billion sitting in it, the countries that make up the IMF are responsible for providing the money.
Limitations on IMF money
When the IMF provides a instant loans, it comes with several strings attached. Reforms within the country are required to be taken on if a country takes an IMF loan. The reforms required by the IMF are the jumping-off point for some significant controversy. Some individuals say that the fast loans from the IMF end up doing more harm than good in the recipient countries. More money for lending would mean more loans and conditions from the IMF. The jury is out, though, on if this is a good thing for the world economy.
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