International Monetary Fund


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International Monetary Fund

  1. 1. <ul><li>International Monetary Fund </li></ul>
  2. 2. <ul><li>The International Monetary Fund (IMF) is an organization of 186 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. </li></ul>
  3. 3. Key IMF Activities Original Aims An adapting IMF What the IMF do?
  4. 4. KEY ACTIVITIES The IMF supports its membership by providing….. policy advice to governments and central banks based on analysis of economic trends and cross-country experiences <ul><li>concessional loans to help fight poverty in developing countries; and </li></ul><ul><li>technical assistance and training to help countries improve the management of their economies. </li></ul>
  5. 5. <ul><li>More specifically, the IMF continues to </li></ul><ul><li>provide a forum for cooperation on international monetary problems </li></ul><ul><li>facilitate the growth of international trade, thus promoting job creation, economic growth, and poverty reduction; </li></ul><ul><li>promote exchange rate stability and an open system of international payments; and </li></ul><ul><li>lend countries foreign exchange when needed, on a temporary basis and under adequate safeguards, to help them address balance of payments problems. </li></ul>
  6. 7. <ul><li>The International Monetary Fund (IMF) was created in July 1944, under the Bretton Woods system which consisted of three international organizations: </li></ul><ul><li>1) The International Monetary Fund (IMF): With the purpose of creating international monetary co-operation. </li></ul><ul><li>2) The International Bank of Reconstruction and Development (IBRD): With the purpose of international development assistance and Investment </li></ul><ul><li>3) The International Trade Organization (ITO): With the Purpose of promoting international trade . </li></ul>
  7. 8. <ul><li>These three elements of the Bretton Woods system were conceived in a context of war, with the memories of high unemployment, hyperinflation, depression and fluctuating exchange rates which characterized the 1930’s. </li></ul><ul><li>However, The International Trade Organization was rejected by US Congress, and in place the General Agreement of Tariffs and Trade was developed, and enacted in 1948 in replace of the ITO. </li></ul>
  8. 9. <ul><li>Membership : 186 countries </li></ul><ul><li>Headquarters : Washington, DC </li></ul><ul><li>Executive Board : 24 Directors representing countries or groups of countries </li></ul><ul><li>Staff : approximately 2,478 from 143 countries </li></ul><ul><li>Total quotas : $325 billion (as of 3/31/09) </li></ul><ul><li>Additional pledged or committed resources : $500 billion </li></ul><ul><li>Loans committed (as of 9/1/09) : $175.5 billion, of which $124.5 billion have not been drawn </li></ul>
  9. 10. <ul><li>Biggest borrowers : Hungary, Mexico, Ukraine </li></ul><ul><li>Technical assistance : Field delivery in FY2009—173 persons during FY2009 </li></ul><ul><li>Surveillance consultations : Concluded in 2008—177 countries in 2008, of which 155 voluntarily published information on their consultation (as of 03/31/09) </li></ul><ul><li>Original aims : Article I of the Article of Agreement sets out the IMF’s main goals: </li></ul><ul><ul><li>promoting international monetary cooperation; </li></ul></ul><ul><ul><li>facilitating the expansion and balanced growth of international trade; </li></ul></ul><ul><ul><li>promoting exchange stability; </li></ul></ul><ul><ul><li>assisting in the establishment of a multilateral system of payments; and </li></ul></ul><ul><ul><li>making resources available (with adequate safeguards) to members experiencing balance of payments difficulties. </li></ul></ul>
  10. 12. International Monetary and Financial Committee Board of Governors Joint IMF-World Bank Development Committee Executive Board Independent Evaluation Office Managing Director
  11. 13. <ul><li>1) Surveillance </li></ul><ul><li>2) Conditional Financial Support </li></ul><ul><li>3) Technical Assistance </li></ul>
  12. 14. <ul><li>The appraisal of a country’s economic and structural policies and performance from an international standpoint. It is a regulatory or jurisdictional function, which historically has been focused on the assessment of the exchange arrangements, the exchange rates and balance of payments. </li></ul>
  13. 15. <ul><li>Exchange Rates, Monetary and Fiscal Policies: Remain at the centre of IMF surveillance. </li></ul><ul><li>Structural Policies: Added to IMF surveillance agenda after the 1980’s oil price shock. Concerned with the macroeconomic performance of a country, and payspecial attention to such issues as international trade and labour market issues. </li></ul><ul><li>Financial Sector: Added during the early 1990’s following a series of international banking crisis's. </li></ul><ul><li>Institutional Issues: Concerned with such issues as independence of the central bank, financial sector regulation. </li></ul><ul><li>Assesment of Risks and Vulnerability: Crises prevention </li></ul>
  14. 16. <ul><li>Provide short term loans (1 to 5 years) to countries experiencing balance of payments problems so that they can restore conditions for sustainable economic growth conditional upon policies and procedures developed by the fund to govern the access to and the use of its resource by member countries. </li></ul>
  15. 17. <ul><li>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 recover. A policy program supported by financing is designed by the national authorities in close cooperation with the IMF. </li></ul><ul><li>The IMF also provides low-income countries with loans at a concessional interest rate through the Poverty Reduction and Growth Facility (PRGF) and the Exogeneous Shocks Facility(ESF). </li></ul>
  16. 18. <ul><li>The IMF’s goal for its technical support is to contribute to the development of the productive resources of member countries by enhancing the effectiveness of economic policy and financial policy . </li></ul>
  17. 19. <ul><li>The IMF provides technical assistance and training mainly in four areas: </li></ul><ul><li>Monetary and financial policies (monetary policy instruments, banking system supervision and restructuring, foreign management and operations, clearing settlement systems for payments, and structural development of central banks) </li></ul><ul><li>Fiscal policy and management (tax and customs policies and administration, budget formulation, expenditure management, design of social safety nets, and management of domestic and foreign debt) </li></ul><ul><li>Compilation, management, dissemination, and improvement of statistical data </li></ul><ul><li>Economic and financial legislation. </li></ul>
  18. 20. <ul><li>The Special Drawing Right (SDR) is an interest-bearing international reserve asset created by the IMF in 1969 to supplement other reserve assets of member countries. </li></ul><ul><li>Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. </li></ul><ul><li>The basket composition is reviewed every five years to ensure that it reflects the relative importance of currencies in the world's trading and financial systems. </li></ul><ul><li>Countries that have larger holdings of SDRs than their allocations receive interest based on the SDR interest rate . </li></ul>
  19. 21. <ul><li>The SDR was created to support the Bretton Woods fixed exchange rate system. </li></ul><ul><li>A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies. </li></ul><ul><li>But the international supply of two key reserve assets that were gold and the U.S. dollar—proved inadequate. </li></ul><ul><li>Therefore, the international community decided to create a new international reserve asset. </li></ul><ul><li>SDR are like coupons,holders can exchange them for curriences required for making international payments in two ways:-first, through the arrangement of voluntary exchanges and second, by the IMF designating members. </li></ul>
  20. 23. <ul><li>General Allocations. </li></ul><ul><li>The first allocation was for a total amount of SDR 9.3 billion in 1970-72. </li></ul><ul><li>The second allocation, for SDR 12.1 bn in 1979–81. </li></ul><ul><li>The third general allocation was approved on August 7, 2009 for an amount of SDR 161.2 billion </li></ul><ul><li>Special Allocations. </li></ul>SDR Allocations to IMF Members