International Monetary Fund


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International Monetary Fund

  2. 2. INTRODUCTION As a result of the World War II, most of the economies of Europe were badly shattered. The major economists of the 1940s, particularly John Maynard Keynes, were greatly affected by the economic crisis that engulfed the world and sought to reconstruct the world economy after the end of World War II. Thus, under the intellectual leadership Keynes, 44 nations of the world gathered in 1944 at Bretton Woods, New Hampshire, Where it was agreed to organize the world economy around three corner stonesInternational Monetary Fund (IMF) International bank For Reconstruction and Development (IBRD) International Trade Organization (ITO)
  4. 4. INTERNATIONAL MONETARY FUND(IMF)      Established on December 27, 1945 with 29 countries. Began financial operations on March 1, 1947. Headquarters in Washington D.C. The IMF has a membership of 185 countries. All members of the United Nations Organization, except the former USSR, are members of the IMF. The IMF provides financial assistance to members to help them to correct balance of payments problems in a manner that promotes sustained growth.
  5. 5. OBJECTIVE      Promote international monetary cooperation. Shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members. Facilitate the expansion and balanced growth of international trade. Promote Exchange stability and maintain orderly exchange arrangements among members. Assist in establishing a multilateral system of payments.
  6. 6. MANAGEMENT OF IMF BOARD OF GOVERNORS EXECUTIVE BOARD MANAGING DIRECTOR STAFF OF INTERNATIONAL CIVIL SERVANTS ADVISORY BODIES: 1. International monetary And Financial Committee of the Board of Governors. 2. The Development committee.
  7. 7. RESOURCES OF IMF 1. QUOTAS AND SUBSCRIPTION BY MEMBERS: A members total subscription is equal to its quota. The quota of each member is payable in the following manner: (I) 15% of the quota or 10 % of its gold and Dollar holdings payable in gold or Dollars. (II) The rest in members own currency. 2. BORROWINGS: The IMF is authorized under its articles of agreement to supplement its ordinary resources by borrowing. The fund may seek the amount it needs in any currency and from any source. Two sources of supplementary financing now exist: (I) General Arrangements to Borrow (GAB) (II) New Arrangements to Borrow (NAB)
  8. 8. FUNCTIONS OF IMF      It serves as a short term credit institution. The fund provides a mechanism for improving short term balance of payments position. The fund provides machinery for international consultations. It provides a reservoir of the currencies of the members countries and enables members to borrow one another’s currency. It promotes orderly adjustment of exchange rates to promote exchange stability.
  9. 9. EFFECT OF IMF ON INDIA India is the founder member of IMF and has played an important role in the formulation of fund policies .India has stood for liberalization of fund’s lending and has criticized fund’s scale of charge in respect of drawing. Drawls from IMF Date Facility SDR (million) July-Sept. 1990 Rt 487 23.01.91 FCT 552 23.01.91 CCFF 717 22.07.91 CCFF 166 16.09.91 CCFF 469 15.11.91 UCT 85 02.01.92 UCT 185 02.07.92 UCT 462 09.12.92 UCT 462 FEB.93 UCT 231 MAY.93 UCT 231 –
  10. 10. BENEFITS TO INDIA  Freedom to Rupee  Membership  Importance  Technical of the World bank of India in international field advice and training
  11. 11. WORLD BANK
  12. 12. WORLD BANK     IBRD or World Bank was established in July 1944. With an authorized capital of $10 billion, divided into 100,000 shares of $100,000 each. 183 member Countries Every member of the IMF is also a member of the world bank. It is concerned with assisting its member countries to achieve sustained economic growth. It functions as an intermediary for the transfer of financial resources from the more developed to the less developed countries.
  13. 13. OBJECTIVES  To assist in the reconstruction and development of the territories of the members by facilitating the investment of capital for productive purposes.  To promote private foreign investment by means of guarantees or participations in loans and other investments made by private investors and to supplement private investment when private capital is not available on reasonable terms.  To promote the long range balanced growth of international trade and maintenance of equilibrium in the balance of payments.  To encourage loans made or guaranteed so that the more useful and urgent projects will be dealt with first.  To conduct its operations so as to bring about a smooth transference from a war-time to peace-time economy.
  14. 14. FUNCTIONS OF WORLD BANK  It grants long term and medium term loans.  The bank gives loans to member governments.  The bank gives technical advice to the borrowers and for this purpose engages experts.  Economic and social research.  The bank promotes foreign investments by guaranteeing loans made by other organizations.  Setting up a number of subsidiary organizations for further finance e.g.., IDA, IFC
  15. 15. MANAGEMENT  The World Bank is managed in the same way as the IMF, except the Head Officer of the Bank is called the President. The Governors and the Executive Directors of the two organization are frequently the same men and women.
  16. 16. RESOURCES    Each member of the world bank has capital subscription that is similar to its quota in the Fund. The member countries subscribed to it in accordance with there economic position and the size of the quota in the IMF. A member’s total subscription in the capital of the Bank was originally divided into three parts: (i) 2% of the subscription to be paid in gold or US dollars (ii) 18 % of the subscription to be paid in member’s own currency and the remaining 80% subject to call as and when required to meet the Bank’s obligations.
  17. 17. ASSISTANCE TO INDIA   Largest beneficiary of the IBRD-IDA assistance. Although the World Bank assistance to India is very large in absolute terms, the per capita assistance has been low.
  19. 19. PREVIEW      WTO, the first and the most powerful world trade regulating agency. Before the WTO came into existence international trade in merchandise was guided by the rules and provisions of the GATT. The GATT rules, however, could not absorb the complexities of world trade, which has been growing steadily since the Bretton Woods days, both in terms of commodity coverage and the nature of regulators applied by the regional trade blocs. GATT was biased in the favor of developed countries and was appropriately called the “rich men’s club”. In the Uruguay round of negotiations, WTO was proposed and the proposal became a reality on Jan 1st, 1995.
  20. 20. WORLD TRADE ORGANISATION Formation – 1 January 1995  Headquarters - Geneva, Switzerland  Membership - 151 member states  Official languages- English, French ,Spanish  Director general- Pascal Lamy  Budget 175 million Swiss francs  Staff 625 The WTO is the umbrella organization responsible for overseeing the implementation of all agreements that have been negotiated just before it came into existence. It is responsible for the settlement of disputes among its members.
  22. 22. OBJECTIVES  Raising standard of living and incomes, promoting full employment, expanding production and trade, and optimum utilization of world’s resources.  Introduce sustainable development- A concept which envisages that development and environment can go together.  Taking positive steps to ensure that developing countries, specially the least developed ones, secure a better share of growth in world trade.
  23. 23. FUNCTIONS  The WTO shall facilitate the implementation, administration and operation and further the objectives of the Multilateral trade agreements.  The WTO shall provide the forum for negotiations among its members concerning them multilateral trade relations in matters dealt with under the agreements.  The WTO shall administer the ‘ Understanding on Rules and Procedures governing the settlement of disputes’ .  The WTO shall administer the ‘ Trade Review Mechanism’.  Technical assistance and Training For developing countries.
  24. 24. INDIA AND WTO        INDIA”S COMMITMENT TO WTO:Tariff lines Quantitative Restrictions (QR) Trade Related Intellectual Property Rights Trade Related Investment Measures General agreement On Trade in Services. Customs Valuation Rules.
  25. 25. INDIA AND WTO       BENEFITS TO INDIA:Benefits from reduction of tariffs on the products of exports of interest to India. Improved prospects for agricultural exports as a result of likely increase in th world prices of agricultural products due to reduction in domestic subsidies and barriers to trade . Increase in the export of textiles and clothing due to the phasing out of the MFA (Multi Fiber Arrangement) since 2005. Advantages from greater security and predictability of the international trading system due to the revamped dispute settlement procedures and the agreements on safeguard, subsidies and anti-dumping measures. Compulsion imposed on us to be competitive in the world market.
  26. 26. INDIA AND WTO  DISADVANTAGES TO INDIA:-  It is to be noted that TRIPs Agreement goes against the Patent Act Of India, 1970 in almost all important areas.  Increased outflow of foreign exchange due to commitments undertaken in the field of TRIMs and Services.  Tariff reductions on goods of exports of interest to India are very small.  Meagre prospects of increase in agricultural exports due to the very limited extent of agricultural liberalization.  India will be the under the tremendous pressure to liberalize her services industries.
  27. 27. UNCTAD
  28. 28. UNCTAD  Established in 1964 as the permanent organ of the UN General assembly.  The Conference, which is a plenary body of large number of countries, meets normally at intervals of 4 years. The UNCTAD was designed to serve as a forum in which trade related development issues could be discussed and analyzed to lead to the negotiations of international understanding on issues that were in disputes .
  29. 29. PRINCIPLES  Every country has the sovereign rights freely to dispose of natural resources i the interest of the economic development and well-being of its own people and freely to trade with other countries.  Economic relations between countries including trade relations shall be based on respect for the principles of sovereign of states, self-determination of people, and non-interference in the internal affairs of other countries.  There shall be no discrimination on the basis of differences in socio-economic systems and the adoption of trading methods and the policies.
  30. 30. FUNCTIONS     To promote international trade with a view to accelerate the economic development. To formulate principles of and policies on international trade and related problems of economic developments. To negotiate multinational trade agreements. To make proposals for putting its principles and policies into effect. The major activities of UNCTAD includes research and support of negotiations for commodity agreements technical elaboration of new trade activities designed to assist developing countries in the areas of trade and capital.
  31. 31.  During its eleven rounds so far, the UNCTAD has made vital recommendations. Prominent among them are stabilization of exports earnings, specially of primary goods exporting countries, improvement in the market access for the goods of the developing countries, increase in the flow of development finance, preferential treatment for least developed countries, and framing of code of conduct for international shipping.
  32. 32. INTERNATINOL FINANCE CORPORATION    Established in 1956, affiliated to World Bank. Membership in World Bank is prerequisite for membership in IFC. The corporation has its own operating and legal staff, but draws upon the bank for administrative and other services. The mission of IFC is to contribute to the world Bank group’s overall purpose of reducing poverty and improving living standard by playing a leading role in the development of a sustainable private sector.
  33. 33. OBJECTIVES      To assist in the economic development of less developed country by promoting growth in private sector. To stimulate the flow of private capital into productive private, mixed private/ public private enterprise. To act as catalyst bringing together entrepreneurship, investment capital and production. To provide the provision for essential infrastructural development to attract investment flows. To encourage the growth of productive private investment and saving.
  34. 34. PRINCIPLES      The IFC makes its investments in partnership with private investors from the capital exporting country or from the country in which the enterprise is located. It is envisaged that the Corporation’s investments will never be more than half of the capital requirements of the enterprise. The minimum investment IFC will make in an enterprise is fixed at US $ 1,00,000 or its equivalent, but no upper limit is fixed. The enterprises eligible for loans from the Corporation should be predominantly industrial and contribute to the economic development of the country. Rate of interest in each case would be matter of negotiation depending on the risks and other investments.
  35. 35. IFC AND INDIA        The IFC has assisted a number of projects in India. The Corporation has identified five priority areas in India where it plans to beef up its activities. Capital markets Development Direct foreign investment Access to foreign markets Equity Investments in new and expanding companies Finance capital investments and infrastructure.