IMF is a forum of national economic policies,
international monetary and financial systems,
Which involves active dialogue with each member
When there is a country where has a serious finance problem, other countries
loan the money for the poor country .IMF is a kind of association among the
countries to prepare the situation when the nation bank of country is
IMF is an administrative unit that is international in nature and whose
objective is to regulate and administer the financial system of the world.
What is IMF?
“It 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
The IMF is the most detailed attempt to organize the conduct of international
IMF headquarters is in Washington D.C , U.S.A
Five largest shareholders are United States, Japan, Germany, France,
China, Russia, and Saudi Arabia have their own seats on the Board.
16 other Executive Directors are elected for two year terms by groups
of countries, known as “Constituencies”.
The International Monetary Fund (IMF) is an organization of 187
History of IMF
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
Bretton wood agreement was contracted in 1944 and
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 problems through short term
loans of cash.
There are two types of members:
ORIGINAL MEMBERS: All those countries whose representatives 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 every
member is free to resign.
Growth in membership(1945-2013)
In the beginning 29
Today, 187 member countries.
Staff of about 2800
economists in 139 countries.
MEMBERSHIP AND GOVERNANCE
Board of Governors (1 from Each State)
Executive Board (24 Members)
Weighted Voting System:
oUS Representative holds 17% of total Voting Power
o27 Countries together hold 1.4% of total Voting
oDecisions are most often made by consensus,
rather than fractious parliamentary fights.
Board of Governors: one governor from each member
country. Meets once a year.
Day to day affairs are guided by the Executive Board &
24 Executive Directors. Managing Director of IMF is
Chairman of Executive Board.
Purposes of IMF
IMF promote international monetary cooperation .
expansion and balanced growth of international
IMF promote exchange rate stability .
help establish multilateral system of payments and
eliminate foreign exchange restrictions.
IMF make resources of the Fund available to members.
Foster economic growth and high levels of
IMF can make the price of foreign money to be safe.
IMF can solve the problem of countries that doesn’t
want to allow the foreign money to make their
currency’s value higher.
Role of IMF
Focusing on its core macroeconomic and financial areas
Working in a complementary fashion with other
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
Gathering data and assessing economic policies of
Strengthening human skills and institutional capacity of
Lending to countries to support reforms
Resources of the Fund
QUOTAS AND THEIR FIXATION: The fund has general
account based on quotas allocated to its members .when
a country joins the fund, it is assigned a quota that
governs the size of its subscription, its voting power and
its drawing rights .
FUND BORROWING: It was in force from October 1962 to
December 1998 .At that time its total borrowing was
SDR 17 billion .
Main functions of the fund
DETERMINING THE RATE OF EXCHANGE
BY EVERY COUNTRY
A CENTRAL BANK’S BANK
TRAINING AND TECHNICAL ASSISTANCE
Achievements of IMF
INTERNATIONAL MONETARY CO-OPERATION
CHECKING COMPETITIVE DEPRECIATION
INCREASE IN CAPITAL RESOURCES
EXPANSION OF TRADE
Many observers comment on the fact that the IMF
has a ”one size fits all” mentality, that whatever the
situation the IMF prescribes basically the same set of
IMF does not adequately monitor the impact of its
decisions on the poor.
Some of U.S. critics say, IMF is an incredibly
wasteful organization that takes valuable funds and
pours it down the drain of developing economies
whose leaders become fabulously rich off the money
without any intention of ever helping out anyone.
the IMF has no effective authority over the
domestic economic policies of its members.
India and the IMF
India and the IMF has a positive relationship. The IMF
has provided financial assistance to India, which has
helped in boosting the country's economy.
The IMF praised the country for it was able to avoid
the Asian Financial Crisis in 1999 and was also able to
maintain the average rate of growth of its economy.
The Managing Director of International Monetary Fund
Rodrigo De Rato visited India in May 2005.
In 2005, the IMF said that the budget of India is very
positive for it points that the economy of the country
will grow at the rate of 6.7%.
International Monetary Fund said that the reasons
behind the economy growth of India are that the RBI has
been able to control inflation and has also handled its
monetary policies very skillfully.
The IMF has suggested that India can become a financial
super power by bringing in more reforms in its economic
policies that will increase its growth rate to 8%.
The relationship between the IMF and India has grown
strong over the years. In fact, the country has turned
into a creditor to the IMF. India and IMF must continue to
boost their relationship this way, as it will prove to be
advantageous for both.
The International Monetary Fund, or IMF, predicted lower
growth in India and economic contractions in the US,
Japan and euro region next year, calling for further
interest rate cuts and fiscal stimulus.
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 standards.
providing advice to members on adopting policies that can help
them prevent or resolve a financial crisis, achieve
macroeconomic stability, accelerate economic growth, and
making financing temporarily available to member countries to
help them address balance of payments problems—that is, when
they find themselves short of foreign exchange because their
payments to other countries exceed their foreign exchange
offering technical assistance and training to countries at their
request, to help them build the expertise and institutions they
need to implement sound economic policies.