A reformed World Bank could implement enough developmental policies that the impacts of contractionary policies of the fund are offset. A reformed World Bank would not be helping countries repay debts, but rather funding projects, schools, and businesses all of which will promote long run growth. Many criticize the size of the packages the IMF gives countries in crisis situations. The argument is that larger packages increase the moral hazard problem. If investors believe that they will be paid back, whether by the country or by another institution, they will not be as likely to consider the risks of investing in a particular country.
Investors invest in a country with the knowledge that they are taking a risk.
If the IMF continues to pay back investors for the countries that can not repay their debt, they give the illusion that investment does not have a certain amount of risk. Perhaps an institution could be set up which offers insurance for risky investments so that investors are forced to acknowledge the risk they are taking. The United States pays twenty percent of the funds the IMF has and, because of the structure of the IMF, has a number of votes that is great enough to have veto power over any decision the fund makes. There needs to be an international financial institution free of political influences so economic situations can be evaluated purely on an economic level. If this institution is to be the IMF, then the voting procedure needs to be reformed so that no country can have veto power.