Explain why the debt crisis and the role of the IMF in it undermined the ability of LDCs to provide merit goods such as health and education

The International Monetary Fund is (IMF) is the international organization entrusted with overseeing the spheric financial system by monitoring exchange localise and balance of payments, as well as offering proficient and financial assistance when asked. However, the loans ar given on a conditional basis. In order to receive the loan, the country has to admit certain conditions the IMF lays down. IMF lending is usually accompanied by self-abnegating and painful conditions such as structural adjustment. The IMF follows the monetarist policy and so its prime goal is to reduce inflation. The IMF argues that low inflation increases perceptual constancy in a country and economic produce is scarcely possible if there is stability. The IMF focuses on economic addition quite than development. Inflation can be reduced by naked as a jaybird down organisation expenditure in the economy as there pass on be little flow of bullion in the economy. at that placefore, if a loan is taken, the government has to reduce spending. schooling and health atomic number 18 examples of merit goods, which mean that they pose Brobdingnagian positive externalities. Usually health and training atomic number 18 provided by the public sector. This is because the social returns far exceeds the mystical eudaimonia of consuming health or bringing up and merit goods ar generally underprovided by private firms because it is assumed that private firms be acting with profit being their main motive.

If health and education facilities were provided by private firms it is likely that they will only be provided to those who can a fford it. Since the government has to reduce! spending, they cannot spend the value revenue generated on health and education. The IMF also supports a resign market place economy with little or no government discussion. There will also be less government intervention as goods/ services will be provided by private firms. The debt cycle will also stymy the... If you want to beget a full essay, order it on our website: BestEssayCheap.com

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