Fundamentalists want the IMF to lend to crisis-stricken countries on condition that they undertake fundamental structural reforms in banking Joseph Stiglitz however thinks it is______________?
Correct answer: B. impractical for the IMF to loan short term as reforms can only be effective in the middle to long run
- A. unrealistic for IMF to intervene in the financial markets of poor countries during the crisis
- B. impractical for the IMF to loan short term as reforms can only be effective in the middle to long run
- C. crucial that the IMF intervene in the reform of fiscal policy of the country and not the monetary policy
- D. None of the statements above is correct
Explanation
Stiglitz argued that short-term IMF lending is poorly suited to structural banking reforms, since such reforms require time to design and implement and produce results mainly over the medium or long term. Thus, the concern is the mismatch between short-term loans and long-term reform.
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