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 global financial system by monitoring exchange locate and balance of payments, as well as offering honest and financial assistance when asked. However, the loans ar given on a conditional basis. In order to receive the loan, the country has to accommodate certain conditions the IMF lays down. IMF lending is usually accompanied by blue(prenominal) 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 offset is scarcely possible if there is stability. The IMF focuses on economic ingathering quite than development. Inflation can be reduced by naked as a jaybird down governance expenditure in the economy as there volition be slight 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 devolve Brobdingnagian positive externalities. Usually health and training ar provided by the public sector. This is because the social returns far exceeds the mystical good of consuming health or teaching and merit goods be generally underprovided by private firms because it is assumed that private firms are 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 afford it. Since the government has to reduce spending, they cannot s pend the tax revenue revenue generated on ! health and education. The IMF also supports a supererogatory 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 blockade the... If you want to beget a full essay, order it on our website: OrderEssay.net

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