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Abstract

IMF is largely failing in its mission to address economic stability. However, the Commission unanimously supported a proposal maintaining that the IMF continues to restrict short-term crises assistance. Why limit IMF assistance? Since the IMF provides funds to countries in need, the expectation of such assistance creates moral hazard or incentives that encourage reckless behavior and bad policies for countries. In other words, countries may not make necessary economic reforms because they believe that the IMF will bail them out during difficult times, especially if there is an important strategic interest in preventing a country from economic crisis. good economic policy is sacrificed when the political cost is too great. In the remainder of my essay, I lay out strategies for effective IMF reform that were largely ignored in the past and conclude with possible reasons why such reform was not made.

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