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IMF Ineffective.
The IMF continues to remain ineffective. The international economy has changed dramatically since World War II.
IMF lending is more likely to create long-term dependency than to act as short-term assistance, IMF lending was supposed to be short-term. However, most nations have actually become long-term users of IMF loans. Past review of IMF lending activities reveal an increasing dependence on the IMF by less developed countries. This means that the IMF is extending loans to more nations in greater frequency than it has in the past, thereby involving greater amounts of assistance than in the past. This has created long-term dependence by these countries; not what the IMF wanted to have happen.
IMF fails to encourage economic growth policies. One of the original goals of the IMF was to encourage countries to adopt certain economic policies that would promote growth. The IMF was supposed to recommend specific policies that the nations would follow. These requirements, however, can prevent less developed nations from achieving long-term economic reform. Many countries to qualify for loans from the IMF, a country may be required to reduce its budget deficit. The country may try to comply with these requirements by raising taxes and tariffs to increase revenue, thereby causing inflation. These policies almost never result in a lower budget deficit or reduction of the international debt. Instead, it drives these countries's economies into further stagnation. .
The IMF fails to enforce the requirements it imposes. When the IMF is specific and recommends economic policies to encourage long-term growth, it is ineffective in holding countries accountable when they violate these agreements. The IMF has continued to enter into agreements with countries that continue to violate these agreements. When the IMF does recognize a country is violating its agreement, the IMF will often negotiate with the same country for a new agreement, so that those loans can continue.