IMF

CURRENCY CRISIS AND IMF CONDITIONALITY : CASE STUDIES OF NIGERIA AND GHANA (2007

INTRODUCTION

The International Monetary Fund (IMF , including other international organization as the World Bank (otherwise referred to as International Bank for Reconstruction and Development , are formidable and significant global institution that are established to see that their members are economically vibrant and have solidify infrastructures and the right public policies and reform measures geared towards economic growth and development . The Bretton Institution as these global institutions are collectively referred to , from time to time give economic admonitions

and recommendations to ailing economies in form of conditionality Conditionality is aimed to make member nation under the economy surveillance of the IMF to be serious with the implementation of recommended medicine to the country 's ailing economy . A depressed economy normally experiences currency crises . In such scenario , the currency of such country losses its value , where large amount would be utilized in pushing limited and all amount of goods in the society

In the past IMF have come up with conditionality that is perceived by critics of IMF recommendation for developing economies as being lopsided and double standard . In this sense , the IMF is accused of recommending different economic recovery and solution to currency crisis , different from what it recommends for developed economies . For instance , while it is a noticeable fact that conditional set for economic recovery for developing countries include , inter alia , the removal of government subsidies on utility goods , and privatization of public enterprises , in country like United States the citizen still enjoys massive subsidies on agricultural farming and other public utility goods . On this basis , the recommendations and conditionality of the IMF , and other institutions in the Bretton Woods Institution , are conceived by critics as a process aimed at further building a trade ground and opportunities for developed economies like the United States and the Western European states . The IMF was created as an institution to safeguard the stability of the international financial system . The Fund is the agent of the advanced industrial countries that provide the majority of its resources , and these countries have a strong interest in guaranteeing financial stability and encouraging policies that lead to conservative fiscal management , privatization , and trade liberalization in the developing world (Stone , 2004 . Now the question that need be answered is that has IMF medicine being effective enough in curing the ailing economies of member countries ? How sincere is the institution towards its recommendations ? Are they really aimed at safeguarding the interest of developed economies as that of the United States ? These questions and more need to be addressed . Dunning (2004 ) argues , What is the impact of foreign aid on democracy and regime type in recipient countries ? This question has become an important research with significant policy implications , yet the effect of aid on local political institutions remains widely debated . While some analysts suggest that aid `conditionality ' may further the adoption of democratic reforms in recipient countries others claim that aid creates a `moral hazard ' for authoritarian local...