International

The International Monetary Fund (IMF) is an international organization that provides financial support and advice to member countries. The International Monetary Fund (IMF) is the international 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. Click to edit Master subtitle style

Monetary Fund

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It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development. It also offers highly leveraged loans, mainly to poorer countries. Its headquarters are in Washington, D.C., United States.
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Organization Structure Of IMF

IMF is governed by a board of governors, board of executive directors and a managing director.

Board of governors is the highest authority. Every member country of IMF appoints one governor and an alternate governor for a period of 5 years.

The board of governors has delegated many of its powers to the board of executive directors.

There are at present 21 executive directors.

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Organization structure continued

Executive board deals regularly with a wide variety of administrative and polity matters.

Managing director is appointed by the executive board. The decisions of IMF are taken on the basis of majority. Every member country has 250 votes. Besides it, for a quota of everyone lakh dollar, there is one more vote. In this way a country having more quotas will have more votes.

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Objectives of IMF
(i)

To promote international monetary cooperation through a permanent institution of the fund which provides the machinery for Consultation and Collaboration on international monetary problems.

(ii) To facilitate the expansion and balanced growth of international trade and to contribute thereby to the promotion and maintenance of high level of employment and real income. (iii) To promote exchange stability and maintain orderly exchange arrangements among members by avoiding competitive exchange depreciation.
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Objectives continued..
(iv) To assist in the establishment of a multi-lateral system of payments in respect of current transactions between members and elimination of foreign exchange restrictions which hamper the growth of world trade. (v) To create confidence among members by making the general resources of the fund temporarily available to them and providing opportunity to correct their balance of payments without resorting to the measures destructive of national or international prosperity.
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Function of IMF

The fund functions as a short-term credit institution. It provides a machinery for the orderly adjustment of exchange rates. It is a reservoir of the currencies of all the member countries. It is a sort of lending institution in foreign exchange.

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Quota
IMFs constitution represents a departure in the formation of International Organisations. It is financed by the participating countries, with each countrys contribution fixed in terms of quota. Quotas were fixed on the following basis. 2% of national income 5%of gold and Dollar reserves 10% of average annual imports 10% of maximum variation in annual exports

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Quota continued

Quota of all countries taken together to determine the major financial resources of fund The burrowing from member countries and income from operations and investments constitutes another form of resources of fund The contributed quota of a country determines its burrowing rights and voting strengths Each member of IMF is required to subscribe its quota partly in gold and partly in its own currency A member nation must contribute gold equal to its 25% of its quota or 10% of its gold stock and US Dollar whichever is less
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SDRs (Special Drawing Rights)

SDR is an international type of monetary reserve currency, created by the IMF in 1969 It operates as a supplement to the existing reserves of member countries It is Created in response to concerns about the limitations of gold and dollars as the sole means of settling international accounts SDRs are designed to increase international liquidity by supplementing the standard reserve currencies

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SDRs Continued

SDRs could be regarded as an artificial currency used by the IMF and defined as a "basket of national currencies" The IMF uses SDRs for internal accounting purposes SDRs are allocated by the IMF to its member countries and are backed by the full faith and credit of the member countries governments

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Aims of IMF

promoting international monetary cooperation. facilitating the expansion and balanced growth of international trade. promoting exchange stability. assisting in the establishment of a multilateral system of payments, and making resources available (with adequate safeguards) to members experiencing balance of payments difficulties.

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Advantage of IMF

It promotes international monetary co-operation and global financial stability. It provides temporary financial help to countries in debt particularly those with balance-ofpayments problems. It encourages economic growth. It gives financial advice to countries about how to run their economies.

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Disadvantage of IMF

Decisions about which countries may borrow money are made by rich countries. Poor countries have little say about loans and the conditions attached to them. The IMF will only lend money to countries if they agree to certain conditions. These conditions increase poverty. The livelihoods of people in poorer countries are destroyed by unfair competition from foreign goods and services. The IMF does not give good financial advice. Countries have suffered by following it.

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Thanking you Animesh kumar

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