The IMF was created in 1944 at the Bretton Woods conference to promote global monetary cooperation and stability after the economic issues of the early 20th century. It is governed by 185 member countries and provides surveillance, technical assistance, and financing to its members. The IMF aims to foster international trade, employment, economic growth, exchange stability, and development.

1. IMF
INTERNATIONAL MONETARY FUND
Adel Abouhana

2. THE CREATION OF THE IMF
The first part of the 20th century saw a
breakdown of cooperation among nations
 The IMF was one of the institutions set up to
avoid a repeat of that experience.
 It is a cooperative of 185 member countries
 Their objective is to promote world economic
stability and growth.
 The member countries are the shareholders of
the cooperative, providing the capital of the IMF
through quota subscriptions


3. 
The IMF is one of several autonomous
organizations designated by the United Nations
(UN) as “Specialized Agencies,”

UN has established working relationships.

The IMF is a permanent observer at the UN.

The Articles of Agreement that created the IMF
and govern its operations were adopted at the
United Nations Monetary and Financial
Conference in Bretton Woods, New Hampshire,
on July 22, 1944.

It entered into force on December 27, 1945.

4. MANDATE OF THE IMF
Promote international monetary cooperation
through a permanent institution
 Provides the machinery for consultation and
 collaboration on international monetary problems
 To facilitate the expansion and balanced growth of
international trade
 To contribute to the promotion and maintenance of
high levels of employment and real income and to
the development of the productive resources of all
members as primary objectives of economic policy
 • To promote exchange stability
 To maintain orderly exchange arrangements
among members, and to avoid competitive
exchange depreciation


5. To assist in the establishment of a multilateral
system of payments in respect of current
transactions between members and in the
elimination of foreign exchange restrictions
which hamper the growth of world trade
 To give confidence to members by making the
general resources of the IMF temporarily
available to them under adequate safeguards
 this provides them with an opportunity to correct
maladjustments in their balance of payments
without resorting to measures destructive of
national or international prosperity
 To shorten the duration and lessen the degree of
disequilibrium in the international balances of
payments of members.


6. THE FUNCTIONS OF THE IMF

Surveillance (like a doctor)
Gathering data and assessing economic policies of countries

Technical Assistance (like a teacher)
Strengthening human skills and institutional
capacity of countries

Financial Assistance (like a banker)
Lending to countries to support reforms

7. 
Surveillance

Surveillance over Members’ Economic Policies

countries agree to pursue economic policies that
are consistent with the objectives of the IMF.

The Articles of Agreement confer on the IMF the
legal authority to oversee compliance by
members with this obligation

IMF is “the only organization that has a mandate
to examine on a regular basis the economic

circumstances of virtually every country in the
world.”

8. TECHNICAL ASSISTANCE (LIKE A
TEACHER)
Strengthening human skills and institutional
capacity of countries
 Helps members in strengthening their policy
formulation and implementation, and the
legal,
 institutional, and market frameworks within
which they operate.
 It also constitutes an important complement
to IMF surveillance and lending operations in
member countries.


9. FINANCIAL ASSISTANCE (LIKE A
BANKER)

Lending to countries to support reforms

Improving financial sector surveillance.

Development of standards and codes of

good practice.

Enhancement of transparency in the IMF

and its member countries.

Involvement of the private sector in crisis
resolution

10. GOVERNANCE OF THE IMF

IMF is accountable to its member countries.

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.

11. International Monetary
and
Financial Committee
Board
of
Directors
Executive Board
Managing Directors
Joint IMF World
Bank development
committee
Independent
Evaluation Office

13. ORGANISATION OF IMF
The Board of Governors, the highest decisionmaking body of the IMF, consists of one governor
and one alternate governor for each member
country.
 The governor is appointed by the member
country and is usually the minister of finance or
the governor of the central bank.
 Board of Governors decide on major policy issues
 All powers of the IMF are vested in the Board of
Governors.
 Day-to-day decision making – Executive
Governors


14. 24 in number.
 The Managing Director is Chair person of the EB
 Meets thrice a week, more if required
 Five largest shareholders of IMF – US, japan,
Germany, UK & France along with China, Russia
and Saudi Arabia have their own seats on EB
 Other members are selected for 2 year terms by
groups of countries known as constituencies
 The Board of council may delegate to the
Executive Board all except certain reserved
powers.
 The Board of Governors normally meets once a
year.


15. 
Key policy issues relating to international
monetary system are considered twice a
year by IMFC

Development committee reports to the
Governors on development policy and other
related matters

IMF has a weighted voting system – the
larger the country’s quota (dependent on its
economic size) more votes for the country

16. QUOTAS & SUBSCRIPTIONS
Quota subscriptions generate most of the
IMF's financial resources.
 Each member country of the IMF is assigned
a quota, based broadly on its relative size in
the world economy.
 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.


17. 
A new country is assigned an initial quota in the same range
as the quotas of existing members

The quota formula is a weighted average of GDP (weight of 50
percent), openness (30 percent), economic variability (15
percent), and international reserves (5 percent )

For this purpose, GDP is measured as a blend of GDP based
on a market exchange rates (weight of 60 percent) and on PPP
exchange rates (40 percent).

Quotas are denominated in Special Drawing Rights (SDRs)

The formula also includes a “compression factor” that reduces
the dispersion in calculated quota shares across members.

18. SPECIAL DRAWING RIGHTS

The SDR is an international reserve asset, created by the
IMF in 1969 to supplement its member countries' official
reserves.

Its value is based on a basket of four key international
currencies, and SDRs can be exchanged for freely usable
currencies.

With a general SDR allocation that took effect on August 28
and a special allocation on September 9, 2009, the amount
of SDRs increased from SDR 21.4 billion to SDR 204.1
billion (currently equivalent to about $324 billion).

19. 
The value of the SDR was initially defined as
equivalent to 0.888671 grams of fine gold.

the SDR was redefined as a basket of
currencies, today consisting of the euro,
Japanese yen, pound sterling, and U.S. dollar.

The U.S. dollar-value of the SDR is posted daily
on the IMF's website.

It is calculated as the sum of specific amounts
of the four currencies valued in U.S. dollars, on
the basis of exchange rates quoted at noon
each day in the London market.

20. LENDING POLICIES
A member country may request IMF financial
assistance if it has a balance of payments
need—that is, if it cannot find sufficient
financing on affordable terms to meet its net
international payments while maintaining
adequate reserve buffers going forward.
 An IMF loan provides a cushion that eases
the adjustment policies and reforms that a
country must make to correct its balance of
payments problem and restore conditions for
strong economic growth.


21. IMF FACILITIES

the IMF has developed various loan
instruments, or “facilities,” that are tailored
to address the specific circumstances of its
diverse membership.

IMF financial policies govern the modalities
for the use of its financial resources under
existing IMF facilities.