M.A.

in Globalization and society semester II part I

Globalization and society (211601)

Name: Arati pal

Seat no. 050085

Q.1 Explain in detail meaning and different definition and characteristics of globalization.

ANS.

INTRODUCTION
Covering a wide range of distinct political, economic, and cultural trends, the term “globalization” remains
crucial to contemporary political and academic debate. In contemporary popular discourse, globalization
often functions as little more than a synonym for one or more of the following phenomena: the pursuit of
classical liberal (or “free market”) policies in the world economy (“economic liberalization”), the growing
dominance of western (or even American) forms of political, economic, and cultural life (“westernization”
or “Americanization”), a global political order built on liberal notions of international law (the “global
liberal order”), the proliferation of new information technologies (the “Internet Revolution”), as well as the
notion that humanity stands at the threshold of realizing one single unified community in which major
sources of social conflict have vanished (“global integration”). Globalization is a politically-contested
phenomenon about which there are significant disagreements and struggles, with a growing number of
nationalist and populist movements and leaders worldwide (including Turkey’s Recep Erdoğan, Poland’s
Jaroslaw Kacyzńki, Hungary’s Viktor Orbán, and US President Donald Trump) pushing back against what
they view as its unappealing features. Fortunately, recent social theory has formulated a more precise
concept of globalization than those typically offered by politicians and pundits. Although sharp differences
continue to separate participants in the ongoing debate about the term, most contemporary social
theorists endorse the view that globalization refers to fundamental changes in the spatial and temporal
contours of social existence, according to which the significance of space or territory undergoes shifts in
the face of a no less dramatic acceleration in the temporal structure of crucial forms of human activity.
Geographical distance is typically measured in time. As the time necessary to connect distinct geographical
locations is reduced, distance or space undergoes compression or “annihilation.” The human experience of
space is intimately connected to the temporal structure of those activities by means of which we
experience space. Changes in the temporality of human activity inevitably generate altered experiences of
space or territory. Theorists of globalization disagree about the precise sources of recent shifts in the
spatial and temporal contours of human life. Nonetheless, they generally agree that alterations in
humanity’s experiences of space and time are working to undermine the importance of local and even
national boundaries in many arenas of human endeavor. Since globalization contains far-reaching
implications for virtually every facet of human life, it necessarily suggests the need to rethink key
questions of normative political theory. Since the mid-1980s, social theorists have moved beyond the
relatively underdeveloped character of previous reflections on the compression or annihilation of space to
offer a rigorous conception of globalization. To be sure, major disagreements remain about the precise
nature of the causal forces behind globalization, with David Harvey (1989 1996) building directly on Marx’s
pioneering explanation of globalization, while others (Giddens 19990; Held, McGrew, Goldblatt & Perraton
1999) question the exclusive focus on economic factors characteristic of the Marxist approach.
Nonetheless, a consensus about the basic rudiments of the concept of globalization appears to be
emerging.
First, contemporary analysts associate globalization with deterritorialization, according to which a growing
variety of social activities takes place irrespective of the geographical location of participants. As Jan Aart
Scholte observes, “global events can – via telecommunication, digital computers, audiovisual media,
rocketry and the like – occur almost simultaneously anywhere and everywhere in the world” (Scholte
1996, 45). Globalization refers to increased possibilities for action between and among people in situations
where latitudinal and longitudinal location seems immaterial to the social activity at hand. Even though
geographical location remains crucial for many undertakings (for example, farming to satisfy the needs of a
local market), deterritorialization manifests itself in many social spheres. Business people on different
continents now engage in electronic commerce; television allows people situated anywhere to observe the
impact of terrible wars being waged far from the comfort of their living rooms; academics make use of the
latest video conferencing equipment to organize seminars in which participants are located at disparate
geographical locations; the Internet allows people to communicate instantaneously with each other
notwithstanding vast geographical distances separating them. Territory in the sense of a traditional sense
of a geographically identifiable location no longer constitutes the whole of “social space” in which human
activity takes places. In this initial sense of the term, globalization refers to the spread of new forms of
non-territorial social activity (Ruggie 1993; Scholte 2000).
Second, recent theorists conceive of globalization as linked to the growth of
social interconnectedness across existing geographical and political boundaries. In this view,
deterritorialization is a crucial facet of globalization. Yet an exclusive focus on it would be misleading. Since
the vast majority of human activities is still tied to a concrete geographical location, the more decisive
facet of globalization concerns the manner in which distant events and forces impact on local and regional
endeavors (Tomlinson 1999, 9). For example, this encyclopedia might be seen as an example of a
deterritorialized social space since it allows for the exchange of ideas in cyberspace. The only prerequisite
for its use is access to the Internet. Although substantial inequalities in Internet access still exist, use of the
encyclopedia is in principle unrelated to any specific geographical location. However, the reader may very
well be making use of the encyclopedia as a supplement to course work undertaken at a school or
university. That institution is not only located at a specific geographical juncture, but its location is
probably essential for understanding many of its key attributes: the level of funding may vary according to
the state or region where the university is located, or the same academic major might require different
courses and readings at a university in China, for example, than in Argentina or Norway. Globalization
refers to those processes whereby geographically distant events and decisions impact to a growing degree
on “local” university life. For example, the insistence by powerful political leaders in wealthy countries that
the International Monetary Fund (IMF) recommend to Latin and South American countries that they
commit themselves to a particular set of economic policies might result in poorly paid teachers and
researchers as well as large, understaffed lecture classes in São Paolo or Lima; the latest innovations in
information technology from a computer research laboratory in India could quickly change the classroom
experience of students in British Columbia or Tokyo. Globalization refers “to processes of change which
underpin a transformation in the organization of human affairs by linking together and expanding human
activity across regions and continents” (Held, McGrew, Goldblatt & Perraton 1999, 15). Globalization in
this sense is a matter of degree since any given social activity might influence events more or less faraway:
even though a growing number of activities seems intermeshed with events in distant continents, certain
human activities remain primarily local or regional in scope. Also, the magnitude and impact of the activity
might vary: geographically removed events could have a relatively minimal or a far more extensive
influence on events at a particular locality. Finally, we might consider the degree to which
interconnectedness across frontiers is no longer merely haphazard but instead predictable and regularized
(Held, McGrew, Goldblatt & Perraton 1999).
Third, globalization must also include reference to the speed or velocity of social activity.
Deterritorialization and interconnectedness initially seem chiefly spatial in nature. Yet it is easy to see how
these spatial shifts are directly tied to the acceleration of crucial forms of social activity. As we observed
above in our discussion of the conceptual forerunners to the present-day debate on globalization, the
proliferation of high-speed transportation, communication, and information technologies constitutes the
most immediate source for the blurring of geographical and territorial boundaries that prescient observers
have diagnosed at least since the mid-nineteenth century. The compression of space presupposes rapid-
fire forms of technology; shifts in our experiences of territory depend on concomitant changes in the
temporality of human action. High-speed technology only represents the tip of the iceberg, however. The
linking together and expanding of social activities across borders is predicated on the possibility of
relatively fast flows and movements of people, information, capital, and goods. Without these fast flows, it
is difficult to see how distant events could possibly posses the influence they now enjoy. High-speed
technology plays a pivotal role in the velocity of human affairs. But many other factors contribute to the
overall pace and speed of social activity. The organizational structure of the modern capitalist factory
offers one example; certain contemporary habits and inclinations, including the “mania for motion and
speed” described by Dewey, represent another. Deterritorialization and the expansion of
interconnectedness are intimately tied to the acceleration of social life, while social acceleration itself
takes many different forms (Eriksen 2001; Rosa 2013). Here as well, we can easily see why globalization is
always a matter of degree. The velocity or speed of flows, movements, and interchanges across borders
can vary no less than their magnitude, impact, or regularity.
Fourth, even though analysts disagree about the causal forces that generate globalization, most agree that
globalization should be conceived as a relatively long-term process. The triad of deterritorialization,
interconnectedness, and social acceleration hardly represents a sudden or recent event in contemporary
social life. Globalization is a constitutive feature of the modern world, and modern history includes many
examples of globalization (Giddens 1990). As we saw above, nineteenth-century thinkers captured at least
some of its core features; the compression of territoriality composed an important element of their lived
experience. Nonetheless, some contemporary theorists believe that globalization has taken a particularly
intense form in recent decades, as innovations in communication, transportation, and information
technologies (for example, computerization) have generated stunning new possibilities for simultaneity
and instantaneousness (Harvey 1989). In this view, present-day intellectual interest in the problem of
globalization can be linked directly to the emergence of new high-speed technologies that tend to
minimize the significance of distance and heighten possibilities for deterritorialization and social
interconnectedness. Although the intense sense of territorial compression experienced by so many of our
contemporaries is surely reminiscent of the experiences of earlier generations, some contemporary writers
nonetheless argue that it would be mistaken to obscure the countless ways in which ongoing
transformations of the spatial and temporal contours of human experience are especially far-reaching.
While our nineteenth-century predecessors understandably marveled at the railroad or the telegraph, a
comparatively vast array of social activities is now being transformed by innovations that accelerate social
activity and considerably deepen longstanding trends towards deterritorialization and social
interconnectedness. To be sure, the impact of deterritorialization, social interconnectedness, and social
acceleration are by no means universal or uniform: migrant workers engaging in traditional forms of low-
wage agricultural labor in the fields of southern California, for example, probably operate in a different
spatial and temporal context than the Internet entrepreneurs of San Francisco or Seattle. Distinct
assumptions about space and time often coexist uneasily during a specific historical juncture (Gurvitch
1964). Nonetheless, the impact of recent technological innovations is profound, and even those who do
not have a job directly affected by the new technology are shaped by it in innumerable ways as citizens
and consumers (Eriksen 2001, 16).
Fifth, globalization should be understood as a multi-pronged process, since deterritorialization, social
interconnectedness, and acceleration manifest themselves in many different (economic, political, and
cultural) arenas of social activity. Although each facet of globalization is linked to the core components of
globalization described above, each consists of a complex and relatively autonomous series of empirical
developments, requiring careful examination in order to disclose the causal mechanisms specific to it
(Held, McGrew, Goldblatt & Perraton 1999). Each manifestation of globalization also generates distinct
conflicts and dislocations. For example, there is substantial empirical evidence that cross-border flows and
exchanges (of goods, people, information, etc.), as well as the emergence of directly transnational forms of
production by means of which a single commodity is manufactured simultaneously in distant corners of
the globe, are gaining in prominence (Castells 1996). High-speed technologies and organizational
approaches are employed by transnationally operating firms, the so-called “global players,” with great
effectiveness. The emergence of “around-the-world, around-the-clock” financial markets, where major
cross-border financial transactions are made in cyberspace at the blink of an eye, represents a familiar
example of the economic face of globalization. Global financial markets also challenge traditional attempts
by liberal democratic nation-states to rein in the activities of bankers, spawning understandable anxieties
about the growing power and influence of financial markets over democratically elected representative
institutions. In political life, globalization takes a distinct form, though the general trends towards
deterritorialization, interconnectedness across borders, and the acceleration of social activity are
fundamental here as well. Transnational movements, in which activists employ rapid-fire communication
technologies to join forces across borders in combating ills that seem correspondingly transnational in
scope (for example, the depletion of the ozone layer), offer an example of political globalization. Another
would be the tendency towards ambitious supranational forms of social and economic lawmaking and
regulation, where individual nation-states cooperate to pursue regulation whose jurisdiction transcends
national borders no less than the cross-border economic processes that may undermine traditional modes
of nation state-based regulation. Political scientists typically describe the trend towards ambitious forms of
supranational organization (the European Union, for example, or North America Free Trade Association) as
important recent manifestations of political globalization. The proliferation of supranational organizations
has been no less conflict-laden than economic globalization, however. Critics insist that local, regional, and
national forms of self-government are being rapidly supplanted by insufficiently democratic forms of global
governance remote from the needs of ordinary citizens (Maus 2006), whereas their defenders describe
new forms of supranational legal and political decision as indispensable forerunners to more inclusive and
advanced forms of self-government.
DIFFERENT DEFINATION OF GLOBALIZATION

► Globalization is viewed as a long term process rather than a phenomenon that emerged in the last
decades or even century. It is an old phenomenon started since civilization began communicating and
interacting with one another via different means.
► Globalization is a commutative process since the time of maritime exploration and adventures,
salve trade colonization and exchange of labor and capital inputs, whether forced or voluntary.
► Globalization emerges from technological revolution that started near the end of previous century
which culminated into the present explosion of information technological that is-called “Brain
Industry”. The new “knowledge industry” and the interconnected dynamic webs are vital enhancing
globalization in recent years.
► Globalization is seen as an outcome of the new economic order, the end of the Cold War, growth
and prosperity as former “Central Intelligence Agency” head” George Bush” declared. The failure of
the former Soviet Union, East Germany, and order command economies encouraged proponents of
international free trade and international financial actions.
On the other hand a decade after, as multilateral agencies and international economic cooperation
organizations have permanently established free trade agreements and undertook new financial
treaties to a considerable number of individuals, non-Governmental Organizations (NGOs), and social
movements have declared the negative socioeconomic destruction by globalization, specially in the
light of last Asian and Russian currency crises.
► “Globalization is a commutative, cumulative process. This process is being institutionalized and
assisted by an international policy of “Openness” and enforced by international agreements on trade
and capital movements. So, globalization reduces governments traditional role in managing their
states”.
6- Globalization is the process of growing economic interdependence of countries in the international
economy. This occurs through increasing the volume and variety of cross-border trade in goods and
services, higher international financial flows, more rapid diffusion of technology and institutional
linkages between firms in different countries.
► Globalization is not only an economic phenomenon it comprises political, social, and cultural
aspects. An example is the global TVs networks, internet …etc. and satellites, which can end by
affecting cultural traditions.
Progress in computing and telecommunication technologies which reduced the costs of processing
and exchanging information were considered the main causes for globalization.
Characteristics of Globalisation
This concept has enabled economies of scale for companies in production and distribution. It has also
encouraged outsourcing and technology transfer among companies and countries, thus increasing their
interdependence on each other. The main characteristics of globalisation are listed below:

1. Free Trade – Globalisation has helped improve trade volumes between nations with minimal
interference. The reason is that governments are not micromanaging every minute aspect of
business transactions. The Gross Domestic Product (GDP) of countries that have accepted
globalisation has also increased significantly, thus bringing in greater prosperity. It has also resulted
in better cooperation between governments that leads to further improvement in trade.
2. Liberalization – One of the main characteristics of globalisation is the improvement in the business
climate for corporations. It has helped entrepreneurs to set up businesses and transact both within
and outside the country. The rules and regulations for companies are relaxed significantly to allow
for more trade between nations due to globalisation. Flexibility in trade regulations pushes
governments to make further concessions to industries. Both Liberalization and Globalisation are
dependent on each other.
3. Increase in Employment – Every industry is responsible for generating both direct and indirect
jobs. And when production increases, it has a positive effect on employment. Globalisation helps
companies increase their production capacity and set up operations in different parts of the world.
It also helps boost work opportunities in countries where these corporations have set up
operations.
4. Increased connectivity between nations – Globalisation has helped countries improve trade
relations with each other. It has increased interaction between people and businesses. Better
connectivity also boosts a country’s economy and enhances the standard of living for its citizens.
5. Interdependence – With the advent of globalisation, countries have become more reliant on each
other. Businesses get the opportunity to import cheaper raw materials to produce their
commodities. They are also being allowed to export to countries that have more demand for their
finished goods. It has helped reduce trading barriers and build overall economic prosperity.
6. Cultural Exchange – Improvement in people to people contacts have encouraged the intermingling
of cultural practices and customs. It has allowed people to exchange ideas, behaviours and values
with other countries. Communities are less isolated as a result of globalisation. For example,
several American eateries have penetrated different parts of the world. Similarly, cuisine from far
off countries is now readily available in the United States.
7. Urbanization – One of the consequences of globalisation is the increase in urban centres. When
many foreign/local companies set up businesses in a particular area, it becomes a hotbed of
economic activity. The people who work in those companies need infrastructure near their
workplace in terms of housing, transport, shops and other establishments. Globalisation leads to
the building of urban centres in and around industrial areas.
8. Standard of Living – With increased economic activity and opportunities for employment, people
have more money in their pockets. They also have more options to choose from because of
improved job opportunities. It is one of the main reasons why globalisation allows more and more
people to improve their standard of living.
9. Production Cost – In a globalized world, companies are free to establish their operations in areas
where the cost of production is low. The cheap availability of land, labour and raw materials has
become very important. So it makes sense for companies to go where these resources are present
 in abundant quantities and at discounted rates. It helps them gain over their rivals by lowering
costs and improving profit margins.
10. Outsourcing – One of the characteristics of globalisation is that it allows companies to bring in third
parties from outside the country to manage specific processes. They take this step to reduce
internal costs, improve the quality of services or both. Outsourcing is a boon for several human
resource-rich countries that are looking to generate employment. Countries like India and the
Philippines have benefitted immensely as a result of this practice.

Conclusion
Globalisation has helped nations integrate their economy with the rest of the world, and it has reduced
barriers to trade and increased economic activity manifold. It has also led to cultural, social and
technological exchanges that have helped governments tackle internal and external challenges with
greater efficiency.
Q.2 INTERNATION MONETARY FUND

ANS.

INTRODUCTION

The International Monetary Fund (IMF) is an agency of the United Nations, and an international financial
institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working
to foster global monetary cooperation, secure financial stability, facilitate international trade, promote
high employment and sustainable economic growth, and reduce poverty around the world." Formed in
1944, started on 27 December 1945,[9] at the Bretton Woods Conference primarily by the ideas of Harry
Dexter White and John Maynard Keynes,[10] it came into formal existence in 1945 with 29 member
countries and the goal of reconstructing the international monetary system. It now plays a central role in
the management of balance of payments difficulties and international financial crises. Countries
contribute funds to a pool through a quota system from which countries experiencing balance of payments
problems can borrow money. As of 2016, the fund had XDR 477 billion (about US$667 billion). Through the
fund and other activities such as the gathering of statistics and analysis, surveillance of its members'
economies, and the demand for particular policies,[12] the IMF works to improve the economies of its
member countries. The organization's objectives stated in the Articles of Agreement are: to promote
international monetary co-operation, international trade, high employment, exchange-rate stability,
sustainable economic growth, and making resources available to member countries in financial difficulty.
IMF funds come from two major sources: quotas and loans. Quotas, which are pooled funds of member
nations, generate most IMF funds. The size of a member's quota depends on its economic and financial
importance in the world. Nations with greater economic significance have larger quotas. The quotas are
increased periodically as a means of boosting the IMF's resources in the form of special drawing rights.

The current managing director (MD) and Chairwoman of the IMF is Bulgarian economist Kristalina
Georgieva, who has held the post since October 1, 2019. Indian-American economist Gita Gopinath, who
previously served as Chief Economist, was appointed as First Deputy Managing Director, effective January
21, 2022. Pierre-Olivier Gourinchas replaced Gopinath as Chief Economist on January 24, 2022.

HISTORY
20th century

Plaque Commemorating the Formation of the IMF in July 1944 at the Bretton Woods Conference
IMF "Headquarters 1" in Washington, D.C., designed by Moshe Safdie

The Gold Room within the Mount Washington Hotel where the Bretton Woods Conference attendees
signed the agreements creating the IMF and World Bank

First page of the Articles of Agreement of the International Monetary Fund, 1 March 1946. Finnish Ministry
of Foreign Affairs archives

The IMF was originally laid out as a part of the Bretton Woods system exchange agreement in 1944.[37]
During the Great Depression, countries sharply raised barriers to trade in an attempt to improve their
failing economies. This led to the devaluation of national currencies and a decline in world trade.[38]

This breakdown in international monetary cooperation created a need for oversight. The representatives
of 45 governments met at the Bretton Woods Conference in the Mount Washington Hotel in Bretton
Woods, New Hampshire, in the United States, to discuss a framework for postwar international economic
cooperation and how to rebuild Europe.

There were two views on the role the IMF should assume as a global economic institution. American
delegate Harry Dexter White foresaw an IMF that functioned more like a bank, making sure that borrowing
states could repay their debts on time. Most of White's plan was incorporated into the final acts adopted
at Bretton Woods. British economist John Maynard Keynes, on the other hand, imagined that the IMF
would be a cooperative fund upon which member states could draw to maintain economic activity and
employment through periodic crises. This view suggested an IMF that helped governments and to act as
the United States government had during the New Deal to the great recession of the 1930s.

The IMF formally came into existence on 27 December 1945, when the first 29 countries ratified its Articles
of Agreement. By the end of 1946 the IMF had grown to 39 members. On 1 March 1947, the IMF began its
financial operations, and on 8 May France became the first country to borrow from it.

The IMF was one of the key organizations of the international economic system; its design allowed the
system to balance the rebuilding of international capitalism with the maximization of national economic
sovereignty and human welfare, also known as embedded liberalism.[23] The IMF's influence in the global
economy steadily increased as it accumulated more members. The increase reflected, in particular, the
attainment of political independence by many African countries and more recently the 1991 dissolution of
the Soviet Union because most countries in the Soviet sphere of influence did not join the IMF.

The Bretton Woods exchange rate system prevailed until 1971 when the United States government
suspended the convertibility of the US$ (and dollar reserves held by other governments) into gold. This is
known as the Nixon Shock. The changes to the IMF articles of agreement reflecting these changes were
ratified in 1976 by the Jamaica Accords. Later in the 1970s, large commercial banks began lending to states
because they were awash in cash deposited by oil exporters. The lending of the so-called money center
banks led to the IMF changing its role in the 1980s after a world recession provoked a crisis that brought
the IMF back into global financial governance.

21st century

The IMF provided two major lending packages in the early 2000s to Argentina (during the 1998–2002
Argentine great depression) and Uruguay (after the 2002 Uruguay banking crisis). However, by the mid-
2000s, IMF lending was at its lowest share of world GDP since the 1970s.

In May 2010, the IMF participated, in 3:11 proportion, in the first Greek bailout that totaled €110 billion, to
address the great accumulation of public debt, caused by continuing large public sector deficits. As part of
the bailout, the Greek government agreed to adopt austerity measures that would reduce the deficit from
11% in 2009 to "well below 3%" in 2014. The bailout did not include debt restructuring measures such as a
haircut, to the chagrin of the Swiss, Brazilian, Indian, Russian, and Argentinian Directors of the IMF, with
the Greek authorities themselves (at the time, PM George Papandreou and Finance Minister Giorgos
Papakonstantinou) ruling out a haircut.

A second bailout package of more than €100 billion was agreed over the course of a few months from
October 2011, during which time Papandreou was forced from office. The so-called Troika, of which the
IMF is part, are joint managers of this programme, which was approved by the executive directors of the
IMF on 15 March 2012 for XDR 23.8 billion[48] and saw private bondholders take a haircut of upwards of
50%. In the interval between May 2010 and February 2012 the private banks of Holland, France and
Germany reduced exposure to Greek debt from €122 billion to €66 billion.

As of January 2012, the largest borrowers from the IMF in order were Greece, Portugal, Ireland, Romania,
and Ukraine.

On 25 March 2013, a €10 billion international bailout of Cyprus was agreed by the Troika, at the cost to the
Cypriots of its agreement: to close the country's second-largest bank; to impose a one-time bank deposit
levy on Bank of Cyprus uninsured deposits. No insured deposit of €100k or less were to be affected under
the terms of a novel bail-in scheme.The topic of sovereign debt restructuring was taken up by the IMF in
April 2013 for the first time since 2005, in a report entitled "Sovereign Debt Restructuring: Recent
Developments and Implications for the Fund's Legal and Policy Framework". The paper, which was
discussed by the board on 20 May, summarised the recent experiences in Greece, St Kitts and Nevis,
Belize, and Jamaica. An explanatory interview with Deputy Director Hugh Bredenkamp was published a
few days later, as was a deconstruction by Matina Stevis of The Wall Street Journal.

In the October 2013 Fiscal Monitor publication, the IMF suggested that a capital levy capable of reducing
Euro-area government debt ratios to "end-2007 levels" would require a very high tax rate of about 10%.

The Fiscal Affairs department of the IMF, headed at the time by Acting Director Sanjeev Gupta, produced a
January 2014 report entitled "Fiscal Policy and Income Inequality" that stated that "Some taxes levied on
wealth, especially on immovable property, are also an option for economies seeking more progressive
taxation ... Property taxes are equitable and efficient, but underutilized in many economies ... There is
considerable scope to exploit this tax more fully, both as a revenue source and as a redistributive
instrument."

At the end of March 2014, the IMF secured an $18 billion bailout fund for the provisional government of
Ukraine in the aftermath of the Revolution of Dignity.

Response and analysis of coronavirus

In late 2019, the IMF estimated global growth in 2020 to reach 3.4%, but due to the coronavirus, in
November 2020, it expected the global economy to shrink by 4.4%.

In March 2020, Kristalina Georgieva announced that the IMF stood ready to mobilize $1 trillion as its
response to the COVID-19 pandemic.[65] This was in addition to the $50 billion fund it had announced two
weeks earlier, of which $5 billion had already been requested by Iran. One day earlier on 11 March, the
UK called to pledge £150 million to the IMF catastrophe relief fund. It came to light on 27 March that
"more than 80 poor and middle-income countries" had sought a bailout due to the coronavirus. On 13
April 2020, the IMF said that it "would provide immediate debt relief to 25 member countries under its
Catastrophe Containment and Relief Trust (CCRT)" programme. In November 2020, the Fund warned the
economic recovery may be losing momentum as COVID-19 infections rise again and that more economic
help would be needed.

FUNCTIONS OF IMF
According to the IMF itself, it works to foster global growth and economic stability by providing policy
advice and financing the members by working with developing countries to help them achieve
macroeconomic stability and reduce poverty. The rationale for this is that private international capital
markets function imperfectly and many countries have limited access to financial markets. Such market
imperfections, together with balance-of-payments financing, provide the justification for official financing,
without which many countries could only correct large external payment imbalances through measures
with adverse economic consequences. The IMF provides alternate sources of financing such as the Poverty
Reduction and Growth Facility.

Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate
arrangements between countries, thus helping national governments manage their exchange rates and
allowing these governments to prioritize economic growth,[23] and to provide short-term capital to aid
the balance of payments. This assistance was meant to prevent the spread of international economic
crises. The IMF was also intended to help mend the pieces of the international economy after the Great
Depression and World War II[failed verification] as well as to provide capital investments for economic
growth and projects such as infrastructure.[citation needed]The IMF's role was fundamentally altered by
the floating exchange rates post-1971. It shifted to examining the economic policies of countries with IMF
loan agreements to determine if a shortage of capital was due to economic fluctuations or economic
policy. The IMF also researched what types of government policy would ensure economic recovery.[22] A
particular concern of the IMF was to prevent financial crises such as those in Mexico in 1982, Brazil in
1987, East Asia in 1997–98, and Russia in 1998, from spreading and threatening the entire global financial
and currency system. The challenge was to promote and implement a policy that reduced the frequency of
crises among the emerging market countries, especially the middle-income countries which are vulnerable
to massive capital outflows. Rather than maintaining a position of oversight of only exchange rates, their
function became one of surveillance of the overall macroeconomic performance of member countries.
Their role became a lot more active because the IMF now manages economic policy rather than just
exchange rates.

In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality, which
was established in the 1950s. Low-income countries can borrow on concessional terms, which means
there is a period of time with no interest rates, through the Extended Credit Facility (ECF), the Standby
Credit Facility (SCF) and the Rapid Credit Facility (RCF). Non-concessional loans, which include interest
rates, are provided mainly through the Stand-By Arrangements (SBA), the Flexible Credit Line (FCL), the
Precautionary and Liquidity Line (PLL), and the Extended Fund Facility. The IMF provides emergency
assistance via the Rapid Financing Instrument (RFI) to members facing urgent balance-of-payments needs.

Surveillance of the global economy

The IMF is mandated to oversee the international monetary and financial system and monitor the
economic and financial policies of its member countries. This activity is known as surveillance and
facilitates international co-operation. Since the demise of the Bretton Woods system of fixed exchange
rates in the early 1970s, surveillance has evolved largely by way of changes in procedures rather than
through the adoption of new obligations. The responsibilities changed from those of guardians to those of
overseers of members' policies.

The Fund typically analyses the appropriateness of each member country's economic and financial policies
for achieving orderly economic growth, and assesses the consequences of these policies for other
countries and for the global economy. For instance, The IMF played a significant role in individual
countries, such as Armenia and Belarus, in providing financial support to achieve stabilization financing
from 2009 to 2019. The maximum sustainable debt level of a polity, which is watched closely by the IMF,
was defined in 2011 by IMF economists to be 120%. Indeed, it was at this number that the Greek economy
melted down in 2010.

In 1995 the International Monetary Fund began to work on data dissemination standards with the view of
guiding IMF member countries to disseminate their economic and financial data to the public. The
International Monetary and Financial Committee (IMFC) endorsed the guidelines for the dissemination
standards and they were split into two tiers: The General Data Dissemination System (GDDS) and the
Special Data Dissemination Standard (SDDS).The executive board approved the SDDS and GDDS in 1996
and 1997 respectively, and subsequent amendments were published in a revised Guide to the General
Data Dissemination System. The system is aimed primarily at statisticians and aims to improve many
aspects of statistical systems in a country. It is also part of the World Bank Millennium Development Goals
(MDG) and Poverty Reduction Strategic Papers (PRSPs).The primary objective of the GDDS is to encourage
member countries to build a framework to improve data quality and statistical capacity building to
evaluate statistical needs, set priorities in improving the timeliness, transparency, reliability, and
accessibility of financial and economic data. Some countries initially used the GDDS, but later upgraded to
SDDS.A 2021 study found that the IMF's surveillance activities have "a substantial impact on sovereign
debt with much greater impacts in emerging than high income economies."

Conditionality of loans

IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial
resources. The IMF does require collateral from countries for loans but also requires the government
seeking assistance to correct its macroeconomic imbalances in the form of policy reform. If the conditions
are not met, the funds are withheld. The concept of conditionality was introduced in a 1952 executive
board decision and later incorporated into the Articles of Agreement.

Conditionality is associated with economic theory as well as an enforcement mechanism for repayment.
Stemming primarily from the work of Jacques Polak, the theoretical underpinning of conditionality was the
"monetary approach to the balance of payments".

Structural adjustment

Some of the conditions for structural adjustment can include: Cutting expenditures or raising revenues,
also known as austerity. Focusing economic output on direct export and resource extraction, Devaluation
of currencies, Trade liberalisation, or lifting import and export restrictions, Increasing the stability of
investment (by supplementing foreign direct investment with the opening of facilities for the domestic
market), Balancing budgets and not overspending, Removing price controls and state subsidies,
Privatization, or divestiture of all or part of state-owned enterprises, Enhancing the rights of foreign
investors vis-a-vis national laws, Improving governance and fighting corruption, These conditions are
known as the Washington Consensus.

Benefits

These loan conditions ensure that the borrowing country will be able to repay the IMF and that the
country will not attempt to solve their balance-of-payment problems in a way that would negatively
impact the international economy. The incentive problem of moral hazard—when economic agents
maximise their own utility to the detriment of others because they do not bear the full consequences of
their actions—is mitigated through conditions rather than providing collateral; countries in need of IMF
loans do not generally possess internationally valuable collateral anyway.

Conditionality also reassures the IMF that the funds lent to them will be used for the purposes defined by
the Articles of Agreement and provides safeguards that country will be able to rectify its macroeconomic
and structural imbalances. In the judgment of the IMF, the adoption by the member of certain corrective
measures or policies will allow it to repay the IMF, thereby ensuring that the resources will be available to
support other members.

As of 2004, borrowing countries have had a good track record for repaying credit extended under the
IMF's regular lending facilities with full interest over the duration of the loan. This indicates that IMF
lending does not impose a burden on creditor countries, as lending countries receive market-rate interest
on most of their quota subscription, plus any of their own-currency subscriptions that are loaned out by
the IMF, plus all of the reserve assets that they provide the IMF.