INTERNATIONAL MONETARY FUND

(IMF)
 OVERVIEW
The International Monetary Fund (IMF) is an organization of 190 countries, working to
facilitate global monetary cooperation, secure financial stability, facilitate international
trade, promote high employment, sustainable economic growth, and reduce poverty
around the world.

The IMF works to foster global growth and economic stability. It provides policy advice
and financing to members in economic difficulties and also works with developing nations
to help them achieve macroeconomic stability and reduce poverty.
 Contd.
o Created in 1945,
o The IMF is governed by and accountable to the 190 countries
that make up its near-global membership.
o Nauru is the 189th country to join IMF in 2016.
o Principality of Andorra becomes 190th member of IMF in 2020.
o India joined the IMF in 1945 (when it was created).
o Theresources for IMF loans are member countries themselves.
o IMF collects funds from member countries.
 FACTS ABOUT IMF
 Membership: 190 countries.
 Headquarters: Washington, D.C.
 Executive Board: 24 Directors each representing a single country or a group of
countries.
 Staff: Approximately 2,700 from 148 countries.
 Total quotas: US$675 billion.
 WHY IMF WAS CREATED
 The IMF, also known as the Fund, was conceived at a UN conference in Bretton
Woods, New Hampshire, United States, in July 1944.

 The 44 countries at that conference sought to build a framework for economic

cooperation to avoid a repetition of the competitive devaluations that had contributed
to the Great Depression of the 1930s.
 OBJECTIVES OF IMF
 International Monetary Co-Operation:
 The most important objective of the Fund is to establish international monetary co-
operation amongst the various member countries through a permanent institution that
provides the machinery for consultation and collaborations in various international
monetary problems and issues.

 Ensure Exchange Stability:

 Another important objective of the Fund is to ensure stability in the foreign exchange
rates by maintaining orderly exchange arrangement among members and also to rule
out unnecessary competitive exchange depreciations.
 Contd.
 Balanced Growth of Trade:
 IMF has also another important objective to promote international trade so as to
achieve its required expansion and balanced growth. This would ensure development
of production resources and thereby promote and maintain high levels of income and
employment among all its member countries.
 Correction of BOP Maladjustments:
 IMF also helps the member countries in eliminating or reducing the disequilibrium or
maladjustments in balance of payments. Accordingly, it gives confidence to members
by selling or lending Fund’s foreign currency resources to the member nations.
 STRUCTURE
It has three tiered system of functioning:
 Board of directors
 All nations(190)
 Finance minister/Central Bank governor
 Annual meetings
 Executive Board:
 They look after daily work.
 They have 24 members.
 5 seats are reserved : USA, UK, JAPAN,GERMANY,FRANCE
 Managing Director
 Appointed for 5 years
 Can be reappointed
HISTORY OF IMF
 1.Cooperation and reconstruction (1944–71):
• The breakdown of international monetary cooperation during the Great Depression of
the1930s & WW2 led the IMF's founders to plan an institution charged with overseeing
the international monetary .The new global entity would ensure exchange rate stability
• The countries that joined the IMF between 1945 and 1971 agreed to keep their
exchange rates (the value of their currencies in terms of the U.S. dollar and, in the case
of the United States, the value of the dollar in terms of gold) pegged at rates that could
be adjusted only to correct a "fundamental disequilibrium" in the balance of payments,
and only with the IMF's agreement.
• This par value system—also known as the Bretton Woods system—prevailed until
1971, when the U.S. government suspended the convertibility of the dollar (and
dollar reserves held by other governments) into gold.
 2.The end of the Bretton Woods System(1972-81):
 By the early 1960s, the U.S. dollar's fixed value against gold, under the Bretton
Woods system of fixed exchange rates, was seen as overvalued. The system
dissolved between 1968 and 1973.
 Since the collapse of the Bretton Woods system, IMF members have been free to
choose any form of exchange arrangement they wish.
 Many feared that the collapse of the Bretton Woods system would bring the period of
rapid growth to an end. In fact, the transition to floating exchange rates was relatively
smooth, and it was certainly timely: flexible exchange rates made it easier for
economies to adjust to more expensive oil, when the price suddenly started going up
in October 1973. Floating rates have facilitated adjustments to external shocks ever
since.
 3.Debt and painful reforms (1982–89):
 The oil shocks of the 1970s, which forced many oil-importing countries to borrow from
commercial banks, and the interest rate increases in industrial countries trying to
control inflation led to an international debt crisis.
 when interest rates began to soar in 1979, the floating rates on developing countries'
loans also shot up. Higher interest payments are estimated to have cost the non-oil-
producing developing countries at least $22 billion during 1978–81. At the same time,
the price of commodities from developing countries slumped because of the recession
brought about by monetary policies.
 The IMF's initiatives calmed the initial panic and defused its explosive potential.
 IMF & INDIA
• Date of Membership: December 27, 1945
• Latest Country Assessment/Country Report: February 22, 2017
• Special Drawing Rights (SDR): 1062.76 million
• Quota (SDR): 13114.4 million
• Number of Arrangements since membership: 7
• In 1981-82, India borrowed SDR 3.9 billion under an Extended Fund Facility, the largest
arrangement in IMF history at the time.
• In 1991-93, India borrowed a total of SDR 2.2 billion under two stand by arrangements.
• In 1991 it borrowed SDR 1.4 billion under the Compensatory Financing Facility.
 Publications of IMF
1. World Economic Outlook
2. Global Financial Stability Report.
3. Fiscal Monitor
THANK YOU.