Impact of IMF Policies on Economic Growth of Developing Countries

Abstract

IMF was created in the light of the Bretton Woods agreement in nineteen hundred and forty-six. The initial mandate of the fund was to manage international trading through the correction of the balance of payment problems of member countries. Later on, the fund diversified its mandate and included economic growth also as one of its targets. Recently the fund has been actively engaged in developing countries through its programmes of structural enhancement and enhanced structural adjustment programmes. It was realized that funds policies had failed most of developing countries.  In order to highlight this issue, we have used data from nine developing economies and checked the effect of IMF policies on the growth of their economies. OLS results showed that trade openness, interest rate, and education affected positively the growth of these economies during this time period. The study suggested more free trade among economies for having high economic growth. IMF should avoid making rigid tax policies for recipient countries Finally, funds’ allocation and proper utilization should be ensured among these countries.