INTERNATIONAL MONETARY FUND.

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What Is IMF?
International Monetary Fund (IMF) is an organization working to foster global monetary cooperation, of 186 countries to :

Secure financial stability,

Facilitate international trade,

Promote high employment and

Sustainable economic growth,

and Reduce poverty around the world.

It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development

Current information
Headquarters : Washington, D.C., USA Managing Director : Dominique Strauss-Kahn

History

NEED TO CREATE IMF

The IMF was conceived in July 1944, when representatives of 45 governments meeting in the town of Bretton Woods, New Hampshire, in the north-eastern United States, agreed on a framework for international economic cooperation. They believed that such a framework was necessary to avoid a repetition of the disastrous economic policies.

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During that decade, attempts by countries to shore up their failing economiesby limiting imports, devaluing their currencies to compete against each other for export markets, and curtailing their citizens' freedom to buy goods abroad and to hold foreign exchangeproved to be self-defeating. World trade declined sharply, and employment and living standards plummeted in many countries.

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Seeking to restore order to international monetary relations, the IMF's founders charged the new institution with overseeing the international monetary system to ensure exchange rate stability and encouraging member countries to eliminate exchange restrictions that hindered trade. The IMF came into existence in December 27th,1945.

Member Countries

186 Countries

To become a member, a country must apply and then be accepted by a majority of the existing members.

In June 2009, the former Yugoslav republic of Kosovo joined the IMF.

Objectives Of IMF
To

strengthen the economies of member countries by making fund's resources available to them. To promote exchange stability and to facilitate the expansion and balanced growth of International trade. To lessen the chances of disequilibrium in the international BOP(balance of payment) of member countries. To reduce the poverty in member countries and to promote high employment by facilitating sustainable economic growth.

Organization structure
Board of Governors
The Board of Governors is the highest decision-making body of the IMF. It consists of one governor and one alternate governor for each member country. The governor is appointed by the member country and is usually the minister of finance or the head of the central bank.

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Ministerial Committees
The IMF Board of Governors is advised by two ministerial committees, the International Monetary and Financial Committee (IMFC) and the Development Committee. The IMFC has 24 members, drawn from the pool of 186 governors.

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The Executive Board
The IMF's 24-member Executive Board takes care of the daily business of the IMF.
Together, these 24 board members represent all 186 countries.

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Board of governors
Advisory role

The Executive Board

Functional Departments Of IMF

Finance Department
Statistics Department

Fiscal Affairs Department

Monetary and Capital Markets Department

Research Department

Strategy, Policy, and Review Department

Legal Department

Functional Departments Of IMF

Finance Department: Mobilizes, manages, and safeguards the IMF's financial resources. Fiscal Affairs Department: Provides policy and technical advice on public finance issues to member countries.

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Monetary

and Capital Markets Department: Monitors financial

sectors and capital markets, and arrangements, and operations. Prepares the GLOBAL FINANCIAL STABILITY REPORT.

Legal

Department. Advises management, the Executive Board, and the staff on the applicable rules of law. Prepares decisions and other legal instruments and provides technical assistance to member countries.

CONTD
Strategy, Policy, and Review Department: Designs, implements, and

evaluates IMF policies on surveillance and the use of its financial resources.

Research Department: Monitors the global

economy and the economies and policies of member countries and undertakes research on issues relevant to the IMF. Prepares the World Economic Outlook.

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Statistics Department: Develops internationally
accepted methodologies and standards. Provides technical assistance and training to promote best practices in the dissemination of economic and financial statistics.

IMF Institute: Provides training in macroeconomic

analysis and policy for officials of member countries and IMF staff.

Key Activities Of IMF

Policy advice to governments and central banks. Research, statistics, forecasts, and analysis. Loans to help countries overcome economic difficulties.
Concessional loans to help fight poverty in developing countries.
Technical assistance and training to help countries improve the management of their economies.

How IMF Help Member Countries

Research and data

Surveillance

Lending

Technical assistance and training

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Surveillance
The IMF promotes economic stability and global growth by encouraging countries to adopt sound economic and financial policies. This process of monitoring and discussing countries economic and financial policies is known as bilateral surveillance.

CONTD
When

a country joins the IMF, it agrees to subject its economic and financial policies to the FUND. makes commitment to pursue policies that are Conducive to economic growth. Ensures reasonable price stability.

It It

also agrees to provide data about its economy to IMF.

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IMF offers technical assistance and training to help member countries strengthen their capacity to design and implement effective policies.

Technical assistance and training

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Lending :
In the event that member countries experience difficulties financing their balance of payments, the IMF is also a fund that can be tapped to facilitate recovery.

1. The changing nature of lending

2. Conditions for lending
State of economic crisis. International reserves depleted. Economic activity stagnant or falling. Large number of firms going bankrupt.

CONTD
Research and data :
Supporting all three of these activities is the IMF's economic and financial research and statistics.

Financing Facilities
Reserve tranche policies

Credit tranche policies

Debt and debt service reduction

Emergency assistance

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Poverty reduction and growth facilities Compensatory financing facility

Contingent Credit lines

Special drawing rights

PROCESS OF IMF LENDING

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INDIA AND THE IMF

India signed the agreement for original membership with an initial subscription of US $300 million and became a full fledged member when the fund began its operations in March 1947. Several times India has been able to obtain financial facilities from the IMF.

The first being a loan of US $100 million during 1948-49.

Tiding over temporary balance of payment difficulties. Financing economic development.

Availing of expert of advice on various aspects of the economy from the experts of the Fund.

HELP TO HAITI
Provided US$100 million to Haiti to assist it in dealing with the aftermath of the massive and devastating earthquake.

In June 2008, an augmentation of about US$25.4 million was approved to help Haiti cope with the impact of high international food and fuel prices.
US$38.1 million was approved by the Executive Board in February 2009 to help mitigate the negative effects of a series of hurricanes in 2008, as well as the global downturn.

Special Drawing Rights

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves.

The amount of SDRs increased from SDR 21.4 billion to SDR 204.1 billion.

SDR Allocation To members

Under its ARTICLES OF AGREEMENT , the IMF may allocate SDRs to members in proportion to their IMF quotas. 1.GENERAL ALLOCATION 2. SPECIAL ALLOCATION

SDR Valuation

The currency value of the SDR is determined by summing the values in U.S. dollars, based on market exchange rates, of a basket of major currencies.

The SDR currency value is calculated daily and the valuation basket is reviewed and adjusted every five years.

What happens to the SDRs once they are allocated?

The IMF's SDR Department keeps records of members' SDR allocations and holdings; the SDR Department is also the channel through which all transactions and operations involving SDRs are conducted. allocated, members can hold their SDRs as part of their international reserves or sell part or all of their SDR allocations.

Once

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IMF

members can also use SDRs in operations and transactions involving the IMF, such as the payment of interest and repayment of loans, or payment for future quota increases.