Internation

al Monetary
Fund
by:
SHRUTI CHAHAL
20/2263
 International Monetary Fund

IMF is the intergovernmental  

organization that  oversees  
the global financial system by
following the macroeconomic
policies of its member countries, 
in particular those with an impact 
on exchange rate and the balance 
of payments.
o It is an organization formed with a stated objective of stabilizing international
exchange rates and facilitating development through the enforcement of liber-
alizing economic policies on other countries as a condition for loans, restruc-
turing or aid.

o IMF is a forum of national economic policies, international monetary and

financial systems, which involves active dialogue with each member country.
o Total quotas of $312 billion; outstanding loans of  $71 billion to 82 countries
(According to the report of August 31, 2005).

o Five largest shareholders: United States, Japan, Germany, France, United

Kingdom.

o The IMF was created to support orderly international currency exchanges and
to help nations having balance of payment   problems through short term
loans of cash.
o IMF headquarters is in Washington, DC .
 History
 IMF was created  in 1946. 

 IMF started to make service with

IBRD (International Bank of
Reconstruction and Development)
in 1947.

 The IMF was created to support

orderly international currency
exchanges and to help nations
having balance of payment prob-
lem through short term loans of
cash.
 The International Monetary Fund Was created in 1944, at the
Bretton Woods conference to prevent the kinds of chain reaction
in the economic system that caused world currencies to collapse
like in the Great Depression of the 1930s.

  Bretton wood agreement was contracted in 1944.

Who runs the IMF
 Membership
There are two types of members:

 ORIGINAL MEMBERS: All those countries whose representa-

tives took part in BRETTONWOODS CONFERENCE and who
agreed to be the members of the fund prior to 31st December,1945.
 ORDINARY MEMBERS: All those who became its members
subsequently.

BANK has the authority to suspend any member and similarly

member is free to resign.
 Purposes of the IMF
o Promote international monetary cooperation.
o Expansion and balanced growth of international trade.
o Promote exchange rate stability.

o The elimination of restrictions on the international flow of capi-

tal.

o Help establish multilateral system of payments and eliminate

foreign exchange restrictions.
o Make resources of the Fund available to members.

o Shorten the duration and lessen the degree of disequilibrium in

international balances of payments.

o Promote international monetary cooperation, exchange stability,

and orderly exchange arrangements.

o Foster economic growth and high levels of employment.

o Temporary financial assistance to countries to help the balance of

payments adjustments
 ROLE OF IMF
 Focusing on its core macroeconomic and financial areas of responsibility.

 Working in a complementary fashion with other institutions established.

 Collection and allocation of reserves. Rendering advice to member

countries on their international monetary affairs.

 Promoting research in various areas of international economics and

monetary economics.

 Providing a forum for discussion and consultation among member

countries. Being in the center of competence .
 Functions of IMF

• Surveillance (like a doctor) Gathering

data and assessing economic policies
of countries.

• Technical Assistance (like a teacher)

Strengthening human skills and
institutional capacity of countries.
• Financial Assistance (like a banker) Lending to countries
to support reforms.
 Operations
 Monitoring economic and financial developments and policies, in member countries and
at the global level, giving policy advance to its members based on its more than fifty
years of experience.

 Lending to member countries with balance of payments problems, supporting adjustment

and reform policies aimed at correcting the underlying problems.

 Providing the governments and central banks of its member countries with technical
assistance and training in its areas of expertise.

 IMF looks at the performance of the economy as a whole (macroeconomic performance)

 Focuses also on the financial sector policies.

ex: regulation and supervision of banks and other financial institutions.
 Where does the IMF get it’s Money from?

• Most loans are provided by member countries, determined by

their quota, which is calculated based upon a country’s relative
size in the world economy.

• For a closer look at the Member Quotas we can reference the

IMF website.

• Upon joining, the 25% of the quota is paid in some major cur-
rency US Dollar, British Pound, Yen while the remaining 75%
is paid in their own currency.
 How does the IMF serve its member
countries?

 Monitoring national, global, and regional economic and fi-

nancial developments and advising member countries on
their economic policies (“surveillance”).

 Lending members hard currencies to support policy

programs designed to correct balance of payments problems.

 Offering technical assistance in its areas of expertise, as well

as training for government and central bank officials.
 When is a country in need ?

• A country that had not taken in enough foreign currency to pay

the other countries for what they have bought`
– spends more money than it takes in.

• IMF will lend foreign exchange to that member

– hoping to stabilize its currency which will strengthen its trade.
 How much money a member can
borrow from the IMF

• 25% of the country’s quota may be used.

• If this is not sufficient, then members can borrow up to 3 times

the amount of its quota
– present plans for reform to Executive Directors

• If these plans are sufficient for the Executive Directors, the

IMF grants the member a loan.
 Conclusion
The IMF’s primary purpose is to safeguard the stability of the
international monetary system—the system of exchange rates and
international payments that enables countries (and their citizens) to
buy goods and services from each other. This is essential for
achieving sustainable economic growth and raising living stan-
dards.

Providing advice to members on adopting policies that can help

them prevent or resolve a financial crisis, achieve macroeconomic
stability, accelerate economic growth, and alleviate poverty.
THANK
YOU