This presentation explains Financial Resources available to IMF and its Lending facilities provided to world countries, Role of IMF in Inida

1. FINANCIAL RESOURCES
&
LENDING OPERATIONS
OF IMF

2. HOW IS IMF FINANCED?
1. It is financed by member countries who
contribute funds on joining or from existing
members
2. It stands at $360 billion financed from its 189
member countries
3. The U.S. deposited the largest amount.
4. Quota subscriptions generate most of the IMF's
financial resources. (Each member country of the
IMF is assigned a quota, based on its relative size in the
world economy)

3. HOW IS IMF FINANCED?
5. A member's quota determines its
maximum financial commitment to the
IMF and its voting power, and has a
bearing on its access to IMF financing.
6. A new country is assigned an initial
quota in the same range as the quotas of
existing members

4. Imf quota system and voting
power
 U.S. : 16.52%
 JAPAN : 6.15%
 GERMANY : 5.32%
 FRANCE : 4.03%
 U.K. : 4.03%

5. IMF LENDING FACILITIES
 Stand-By-Arrangements as designed to deal with
short term BOP problems
 The IMF introduced the Extended Fund Facility to
help countries address BOP difficulties related partly
to structural problems that may take longer to correct
than macroeconomic imbalance
 Under its Poverty Reduction and Growth
Facility, the IMF provides concessional loans –
loans with an annual interest rate of 0.5 percent and a
maturity of 10 years - to its poorest member countries.

6. IMF LENDING FACILITIES
 The IMF provides Emergency Assistance
to countries coping with BOP problems
caused by natural disasters or military
conflicts. The interest rates are subsidized for
low-income countries.
 The Trade Integration Mechanism allows
the IMF to provide loans under one of its
facilities to a developing country
whose BOP suffers.

7. HOW DOES THE IMFHELP POORCOUNTRIES
The quota allotted by the IMF to each member country has to
be deposited partly in the member’s own currency and the
remainder in the form of foreign exchange.
IMF's loans to low-income countries are made on concessional
terms, under the Poverty Reduction and Growth Facility.
IMF introduced in 2005—the Policy Support Instrument,
countries can request that the IMF regularly and frequently
review their economic programs to ensure that they are on
track.
The IMF also participates in debt relief efforts for poor
countries that are unable to reduce their debt to a sustainable
level even after benefiting from aid, concessional loans, and
the sound policies.

8. # # #

9. ROLE OF IMF IN INDIA

10. ROLE OF IMF IN INDIA
•Joined IMF on 27 DEC, 1945
•India borrowed SDR 3.9 billion (1981-82) & SDR 2.2 billion
(1991-93).
• In recent years, the fund provided to India was in
government securities, foreign exchange market, public
expenditure management & tax & custom
administrations.
Current scenario
 SDR (Net cumulative allocation)- 681.17 m
 Holdings - 6.78 m
 Outstanding purchases & loans - None

11. ROLE OF IMF IN INDIA CONT.….
• •By James Gordon (Washington based multilateral institution's
• representative)―India does not need any financing from
IMF considering that the country had crossed $103
billion of FOREX reserves
Emerging market economy Feb 13, 2004 Acc to IndiaTimes
- India borrowed from IMF in crisis of 1990’s & fully
repaid its loan.
So now India has that potential to be include into
IMF financial transactions plan (40 countries)
By P Uaidynathan Iyer in New Delhi Jan 19, 2004

12. IMF & INDIA

13. IMF & INDIA
India’s current quota in
IMF is SDR 4158.2
million in the total quota
of SDR 213 billion, giving
it a shareholding of 1.95
per cent.
India’s relative position based on
quota is 13th.
However, based on voting share,
India (together with its constituent
countries, viz., Bangladesh,
Bhutan and Sri Lanka) is ranked
21st in the list.

14. • IMF has played an important role in Indian economy.
• IMF has provided economic assistance from time to
time to India and has also provided appropriate
consultancy in determination of various policies in the
country.
• Till 1970, India was among the first five nations
having the highest quota with IMF
• IMF and due to this status India was allotted a
permanent place in Executive Board of
Directors.
• In July 2004, India and IMF joint training programme
at the National Institute of Bank Management, Pune
was established.

15. INDIA’S RELATIONSHIP WITH IMF
IMF suggests
that India can
become a
financial
superpower
by bringing
in reforms in
the economic
policies.
Provides
financial
assistance
to boost our
economy
India has
become a
creditor
and stopped
taking loans
from it.