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Asian Crisis and the Role of IMF

            The Asian crisis started in year 1997. There are different factors that lead to the Asian crisis. Insufficient supervision of financial sector, poor assessment, and mismanagement of financial risk are the biggest impact that led to the Asian crisis. But these factors would have done if there is a good form of governance within the countries affected by the crisis. The governments’ issues of every country may have affected the crisis in Asia. Developments in the advanced economies, such as weak growth in Europe and Japan that left a shortage of attractive investment opportunities and kept interest rates low in those economies, also contributed to the buildup of the crisis.[1] Aside from the internal problems of every country, there are certain contributions from different countries because each country depends from one another to boost their economic development.

            Japan implementing its planned fiscal stimulus and bank restructuring– the affected Asian economies could begin to recover in the course of 1999.[2] Japan would become a big help for other Asian countries to help their economy back into better status. Being one of the most powerful economic stability many countries in the world would have become dependent to Japan for the hope

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that it would help them in restoring their economy. That is why Japan implemented its planned fiscal stimulus in order to make its co-region better. However, it was also Japan’s way to insulate from the regional crisis.

            IMF plays a big role when it comes to economic crisis of different countries around the world because it will be the bridge in order to make the country stand. The role of IMF in this crisis was to help restore confidence to the economies affected by the crisis.[3] This role of IMF made a difference to the affected countries but it was not totally a big change. IMF put back the buoyancy of those countries to maintain their economic status and develop.

            IMF makes some points to boost the confidence of those countries that are affected by the crisis. A temporary tightening of monetary policy to stem exchange rate depreciation; concerted action to correct the weaknesses in the financial system, which contributed significantly to the crisis.[4] became one of the basic patterns and ways on how to make the affected countries became more capable of handling their economy. With this patterns or models that have been done by the IMF, it was being said that the crisis continue to lessen through and through. IMF also started to communicate with the representatives of the affected countries for their update on how does their country improved from these rules. IMF makes an effort to promulgate these practices so that Asian crisis would be lessening if it would not be healed.

Based on the results, the ‘immediate effort’ of IMF lessened the crisis. However, there are still some problems that were encountered while doing these practices. Therefore, I would say that maybe IMF was also alarmed by the crisis that is why immediate response to this crisis was not polished but despite of these things, its good to know that IMF made an effort to lessen the probability of bigger crisis that can be experience by Asia. But through it all, it was not all be the responsibility of IMF, those countries who have been affected by the crisis should also act for their recovery from the crisis because it was the countries fault if their economy have come down.

Sources:

The IMF’s Response to the Asian Crisis. http://www.imf.org/External/np/exr/facts/asia.HTM 1999

Wudunn, Sheryl and Kristof, Nicholas. Japan Seems Paralyzed by Asian Crisis. http://partners.nytimes.com/library/financial/121797asia-japan.html 1997

[1] The IMF’s Response to the Asian Crisis. http://www.imf.org/External/np/exr/facts/asia.HTM 1999
[2] The IMF’s Response to the Asian Crisis. http://www.imf.org/External/np/exr/facts/asia.HTM 1999
[3] The IMF’s Response to the Asian Crisis. http://www.imf.org/External/np/exr/facts/asia.HTM 1999
[4] The IMF’s Response to the Asian Crisis. http://www.imf.org/External/np/exr/facts/asia.HTM 1999

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