The International Monetary Fund (IMF) is an organization of 189 countries that works to foster global monetary cooperation and financial stability. It aims to facilitate international trade, promote employment and economic growth, and reduce poverty. The IMF provides loans to countries experiencing temporary balance of payments issues, offers technical assistance, and monitors economic policies. It is governed by a Board of Governors and Executive Board and led by a Managing Director. The IMF also issues Special Drawing Rights to supplement global reserve assets.

1. International Monetary Fund

2. IMF
• International Monetary Fund
• “It is an organization of 189 countries ,working to
foster global monetary cooperation , secure
financial stability ,facilitate international trade
,promote high employment and sustainable
economic growth and reduce poverty” .
• The IMF is the most detailed attempt to organize
the conduct of international monetary affairs.
• Head :Kristalina Ivanova Georgieva-Kinova

3. Objectives of IMF
• To Promote International Monetary
Cooperation
• To establish a system of Multilateral Payments
• To maintain Stability in Exchange Rate
• To abolish Exchange Restrictions
• To Provide Aid to Members during Emergency
• To Reduce Disequilibrium in Balance of
Payments

4. Objectives of IMF
• To help in Profitable Investment in Capital
• To promote Balanced Economic Development
• To prevent Spreading of Financial Crisis

5. Functions of IMF
• Lending for meeting Temporary Unfavorable
Balance of Payments Position.
• Purchase & Sale of Foreign Currency
• Bank of Central Banks: As central bank holds
reserves of commercial banks, IMF hold
reserves of central banks of members.
• Technical Assistance

6. Functions of IMF
• Imparts Training
• Facilities during Emergency: IMF oppose any
sort of controls either on foreign exchange or
on foreign trade, yet member countries have
been given the right to resort to these controls
during emergency.
• Increases International Liquidity: It means
ability to pay for its imports. For liquidity new
currency in the form of SDR is created.

7. Functions of IMF
• Determining Exchange rate of every Member
Country: Now exchange rate is determined by
market forces of demand and supply, so this
function has been dropped.
• Poverty Reduction; A special fund has been set
up. In this fund developed and emerging
developing nations contribute.

8. Functions of IMF
• Research Functions: IMF has set up a
separate bureau for conducting research
regarding balance of payments, money &
banking, finance & fiscal policy, etc.

9. Functions of IMF
• Change in Exchange rate:
If any country wants to change the par value of
its currency up to 10%, no prior permission is
needed from IMF, only intimation.
If any country wants to change its exchange
rate from 11 to 20%, prior permission of IMF
is required
If more than 20%, such decision is taken with
the consent of 2/3 members.

10. Functions of IMF
• Special Lending Facilities of IMF
Compensatory & Contingency Financing
Facility (CCFF): Special financial assistance for
compensating them for shortfall in exports due to
some contingencies like flood, earthquakes, etc.
Buffer Stock Financing Facility (BSFF):
Special assistance is provided to member nations
for maintaining buffer stocks of primary products
like food grains.

11. Functions of IMF
Structural Adjustment Facility (SAF):
Concessional loans are provided to least
developed member nations for meeting deficit
in balance of payments. Rate of interest is
between 0.5% to 1% p.a.
Enhanced Structural Adjustment Facility
(ESAF): Enhanced loans are provided to least
developed members with heavy debt burdens
for making economic reforms. A member
country can take loans up to 425% of its quota.

12. Membership
 There are two types of members:
1) 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.
2) 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.

13. Resource 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 .

14. Operations of IMF
Operations
of IMF
Technical
Assistance
IMF
Surveillance
IMF
Lending

15. Operations of IMF
• IMF Surveillance: Gathering data and
assessing economic policies of countries.
• IMF Lending: Lending to countries to support
reforms
• Technical Assistance: Strengthening human
skills and institutional capacity of countries

16. Organization Structure of IMF
Board of Governors
Executive Board of
Directors
Managing Director
IMF Secretariat

17. Organization Structure of IMF
• Board of Governors: It is the decision making
organ of the Fund. It consists of one Governor
& one Alternate Governor for each member
country. It meets once a year.
• Board of Executive Directors: It consists of 24
members. 5 major members of fund are
appointed by the countries having largest
quotas i.e. USA, UK, Germany, France &
Japan.

18. Organization Structure of IMF
• Managing Director: Executive Director elect
the Managing Director. The Managing
Director is a non- voting chairman of the
Board & head of the Fund staff.
• IMF Secretariat: IMF Secretariat helps
managing director in carrying out the
activities.

19. Special Drawing Rights (SDR)
• For increasing international liquidity, IMF
created a scheme called Special Drawing
Rights (SDRs). It is also known as paper gold.
• SDRs are like coupons which can be exchanged
for currencies required by holder of SDRs for
making international payment.

20. Special Drawing Rights (SDR)
• Each member country was allocated a quota
of SDR. This quota is fixed on the basis of
contribution of member country to the capital
of IMF.
• SDR quotas of member countries are revised
after every 5 years.
• These quotas can be increased with consent
of at least 85% members.

21. Benefits of SDRs
• Dependence on gold for making international
payments has reduced.
• International liquidity has increased.
• It has benefitted the member countries having
unfavorable balance of payments.
• SDRs are costless to produce as it is paper
currency, whereas gold involved huge cost. There
is no fear of SDR being stolen.
• Payment through SDR is easier and more flexible.

22. Criticism of SDRs
• More quota for rich countries.
• There is no difference in interest rates charged
from developed and developing countries.
• Quotas of SDRs were not fixed according to
the development need for finance of member
countries.
• Earlier interest payable on use of SDRs was
1.5% p.a. but now it is charged at market rate
of interest prevailing in 5 major countries.

23. Achievements of IMF
• International Monetary Cooperation
• Reconstruction of European Countries: Rich
countries like America gave liberal assistance
for reconstruction otherwise they could not
have been rehabilitated.
• Multilateral system of Foreign Payments: IMF
provides for conversion of currency of
different countries & it urges members to
remove all sorts of exchange controls.

24. Achievements of IMF
• Increase in International Liquidity
• Increase in International Trade
• Special Aid to Developing Countries
• Providing Statistical Data & Information:
Separate statistical bureau has been set up for
conducting research regarding balance of
payments, money & banking, etc. It also
publishes report of such research work.

25. Achievements of IMF
• Helpful in Times of Difficulties
• Easiness & Flexibility in Making
International Payments
• Special Lending to Crisis Hit Nations

26. Failures of IMF
• Lack of stability in exchange rate
• Lack of stability in price of Gold
• Inability to remove restrictions on Foreign
Trade
• Rich Nations Club
• No help for Development Projects
• No solution of Problem of International
Liquidity

27. Failures of IMF
• Interference in Domestic Economies
• Inability to Tackle the Monetary Crisis of
1971: A global monetary crisis triggered off
when America not only devalued dollar but
also stopped its convertibility into gold. The
IMF failed to resolve the crisis
• Less Aid for Developing Countries
• High Rate of interest(6.5%)

28. Advantages of IMF to India
• Facility of Foreign Exchange: Enabled India to
get foreign currencies from IMF as per its
requirements.
• Freedom from British Pound-Sterling: Prior to
IMF, Indian rupee was convertible into other
currencies through the medium of U.K. pound-
sterling.
• Membership of World Bank: By virtue of its
membership of Fund, India has also become
member of World Bank.

29. Advantages of IMF to India
• Importance of India in International Sector:
India was among those six nations who were
permanent members of Board of Directors. By
virtue of its status, India used to play
significant role in policy-making of the fund.
• Economic Consultation: Fund has given
valuable advice to govt. of India in financial
management of Five year plans.

30. Advantages of IMF to India
• Help during Emergency
• Financial Help for Five Year plans
• Special Drawing Rights: India’s quota of SDR
has been raised from time to time.
• India-IMF Joint Training Institute(PUNE)

31. Some Indian facts regarding IMF
• 8th India
• 13,114.4 – QUOTA IN MILLION SDR
• 2.76 – QUOTA PERCENTSGE OF TOTAL VOTES
• Nirmala Sitharaman
• Shaktikanta Das
• 132,609 – NO.OF VOTES
• 2.64 – PERCENTAGE OUT OF TOTAL VOTES
• 1 SDR= 1.398$