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Its Impact On India: Sunil Kumar Agrawal
Its Impact On India: Sunil Kumar Agrawal
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CREATION
The IMF was formally organised on December 27, 1945. The
International Monetary Fund was created with a goal to stabilize
exchange rates and assist the reconstruction of the world's
international payment system. Countries contributed to a pool
which could be borrowed from, on a temporary basis, by countries
with payment imbalances.
The IMF describes itself as "an organization of 186 countries
(Kosovo being the 186th, as of June 29, 2009).
With the exception of Taiwan (expelled in 1980), North Korea, Cuba
(left in 1964), Andorra, Monaco, Liechtenstein, Tuvalu and Nauru, all
UN member states participate directly in the IMF.
Most are represented by other member states on a 24-member
Executive Board but all member countries belong to the IMF's
Board of Governors.
OBJECTIVES
According to Articles of Association of the IMF, its main objectives are:
CAPITAL RESOURCES
The main source of IMF resources is the quotas allotted to member
countries.
Till 1971, all the amounts of quotas and the assistance provided were
denominated in USD, but since December 1971 all the the quotas and
transactions of IMF are expressed in SDRs (Special Drawing Rights),
also known as the Paper Gold.
In 1971, The value of the SDR was initially defined as equivalent to
0.888671 grams of fine gold which, at the time, was also equivalent
to one U.S. dollar but due to the subsequent decline in dollar value, 1
SDR became equivalent to USD 1.585 by the end of April 1995.
Since November 2005, the value fo SDR is being determined by the
basket of 4 major currencies. These are USD, Euro, Yen, and Pound
Sterling.
The currency value of SDR is determined each day by summarizing the values
in US dollars, based on the market exchange rates of a basket of currencies.
The IMF finacial year is from 1 May to 30th April.
IMF lends to various member countries in the form of various facilities
(Extended Fund Facility, Standby Facility, Contingent Credit Lines,
Compensatory Facility etc.) designed to serve specific purpose, but essentially
aimed at balance of payments stabilization or meeting the emergent foreign
exchange needs.