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1. The International Monetary Fund (IMF)
Presentation on
Prepared By
Md. Arif Hossen
Faculty of Agricultural Economics And
Business Studies
Sylhet Agricultural University, Sylhet-3100

2. The International Monetary Fund (IMF)
Definition: The International Monetary Fund (IMF) is the central institution embodying the international
monetary system and promotes balanced expansion of world trade, reduced trade restrictions, stable
exchange rates, minimal trade imbalances, avoidance of currency devaluations, and the correction of
balance-of-payment problems
The IMF's goal is to prevent and remedy international financial crises by encouraging countries to
maintain sound economic policies.
The IMF is headquartered in Washington, D.C., but has offices in Paris, Tokyo, New York, and
Geneva.
IMF advice generally focuses on macroeconomic, financial-sector regulation, and structural policies.
To do this, the IMF engages in three types of surveillance: country surveillance, global surveillance,
and regional surveillance

3. The International Monetary Fund (IMF)
During country surveillance, which occurs annually, a team of economists visits a member country to
collect data, examine policies, and meet with government and bank officials.
The team submits its findings to the IMF executive board, which makes recommendations to the
country.
The IMF's global surveillance functions center around the publication of the World Economic
Outlook and Global Financial Stability reports, which are issued twice a year.
Regional surveillance usually occurs within a series of internal IMF discussions about developments
in certain regions or within groups of countries
The IMF is an international agency which tries to promote trade and improve economic conditions in
poorer countries, sometimes by lending them money.

4. Economic integration
Economic integration is the unification of economic policies between different states, through the partial or
full abolition of tariff and non-tariff restrictions on trade.
The trade-stimulation effects intended by means of economic integration are part of the contemporary
economic Theory of the Second Best: where, in theory, the best option is free trade, with free competition
and no trade barriers whatsoever. Free trade is treated as an idealistic option, and although realized within
certain developed states, economic integration has been thought of as the "second best" option for global
trade where barriers to full free trade exist.
Economic integration is meant in turn to lead to lower prices for distributors and consumers with the goal of
increasing the level of welfare, while leading to an increase of economic productivity of the states

5. "How IMF is related with economic integration"
The International Monetary Fund (IMF) is an international organization of 189 member countries that works to
ensure the stability of the international monetary and financial system. The IMF's mandate includes facilitating
the expansion and balanced growth of international trade, promoting exchange stability, and providing the
opportunity for the orderly correction of countries' balance of payments problems. The IMF was established in
1945.
Economic integration in all its forms aims to ensure peace and security among member countries, while
protecting their shared interests from external threats. At the same time, it facilitates the exchange of goods
and increases labour mobility.
As part of its mandate, the IMF undertakes regular surveillance of its member countries exchange rate, monetary and
fiscal policies. IMF surveillance missions may also discuss or advise on economic integration. Most IMF member
countries are on an annual surveillance cycle, i.e., they have one consultation (approximately) every year; the rest are
on a biennial cycle. Each Article IV consultation is documented in a staff report that sets out the economic situation of
the country, describes the discussions between the IMF mission and the country authorities, and provides a staff
appraisal. Staff reports are therefore a natural starting point for our investigation into a consistent underlying
economic rationale for the IMF's coverage of economic integration issues during surveillan.

6. Objectives of IMF:
1. International Monetary Co-operation:
The foremost objective of the Fund was to establish monetary co-operation amongst the various member countries.
IMF provides the machinery for consultation and collaboration on international monetary problems. During the
Second World War, IMF had played a vital role to promote monetary co-operation amongst the different countries of
the World.
2. To Promote Exchange Stability:
Before the Second World War, great instability was prevailing in the foreign exchange rates of different countries
which had adversely affected the international trade. Thus, IMF has the objective to promote exchange stability and
to avoid the bad effects of depreciation on exchange rates.
3. To Eliminate Exchange Control:
Another significant objective of IMF is to eliminate the control over foreign exchange. During war period, almost every
country has fixed the exchange rate at a particular level. This has adversely affected the international trade. Hence, it
becomes inevitable to remove the control over exchange rate by boosting international trade

7. Objectives of IMF:
4. Establishment of Multilateral Trade and Payment:
IMF aimed at establishing and multilateral trade and payment system in place of old bilateral trade by the elimination
of exchange restrictions which hampers the growth of smooth trade relations in the world trade.
5. Growth of International Trade:
IMF is useful to promote international trade by removing all obstacles and bottlenecks which had created
unnecessarily restrictions. In this way, a significant role has been assigned to it so as to accelerate the growth of
international trade by maintaining equilibrium in the balance of payment.
6. Balanced Economic Growth:
IMF helps the member countries to achieve the balanced economic growth. It facilitates the expansion of balanced
growth by the promotion and maintenance of high level of employment as the primary objective of economic policy.
For this purpose, IMF helps to exploit natural resources and to put into productive channel.
7. To remove the Disequilibrium in the Balance of Payment:
IMF helps the member nations to eliminate the disequilibrium in the balance of payment by selling or lending foreign
currencies to the member countries. With its financial assistance and guidance, International Monetary Fund helps
to lessen the degree of disequilibrium in the balance of payment of its member nations.
8. Expansion of Capital Investment in Under-develop Countries:
IMF provides assistance to import capital from the rich countries to the poor countries so that the poor or
underdeveloped country get a chance to expand their capital investment on productive activities or social overheads
which in turn helps to raise standard of living and to achieve prosperity among member countries

8. Objectives of IMF:
9. Generating of Higher Employment and Income:
IMF helps to expand the trade with the significant measures of multilateral trade and balanced economic growth. This
in turn generate employment and income.
10. To Develop Confidence:
Another objective was assigned to the IMF to create confidence among member countries by coming up to their
rescue at the time of any crisis by providing temporary monetary help. This will provide them an opportunity to
correct disequilibrium in the balance of payments.
11. Help during Emergency:
The fund will provide short-term monetary help to its member countries during any type of emergency.
12. Shorten the Duration and Lessen the Degree:
In accordance with the above, it shortens the duration and lessen the degree of disequilibrium in the international
balance of payment of member countries

9. Some of the main functions of International Monetary Fund are as follows:
1. Exchange Stability:
The first important function of IMF is to maintain exchange stability and thereby to discourage any fluctuations in the
rate of exchange. The Found ensures such stability by making necessary arrangements like—enforcing declaration of
par value of currency of all members in terms of gold or US dollar, enforcing devaluation criteria, up to 10 per cent or
more by more information or by taking permission from IMF respectively, forbidding members to go in for multiple
exchange rates and also to buy or sell gold at prices other than declared par value.
2. Eliminating BOP Disequilibrium:
The Fund is helping the member countries in eliminating or minimizing the short-period equilibrium of balance of
payments either by selling or lending foreign currencies to the members. The Fund also helps its members towards
removing the long period disequilibrium in their balance of payments. In case of fundamental changes in the
economies of its members, the Fund can advise its members to change the par values of its currencies.
3. Determination of Par Value:
IMF enforces the system of determination of par values of the currencies of the members countries. As per the
Original Articles of Agreement of the IMF every member country must declare the par value of its currency in terms of
gold or US dollars. Under the revised Articles, the members are given autonomy to float or change exchange rates as
per demand supply conditions in the exchange market and also at par with internal price levels.
As per this article, IMF is exercising surveillance to ensure proper working and balance in the international monetary
system, i.e., by avoiding manipulation in the exchange rates and by adopting intervention policy to counter short-term
movements in the exchange value of the currency.

10. Some of the main functions of International Monetary Fund are as follows:
5. Credit Facilities:
IMF is maintaining various borrowing and credit facilities so as to help the member countries in correcting
disequilibrium in their balance of payments. These credit facilities include-basic credit facility, extended fund facility
for a period of 3 years, compensatory financing facility, lociffer stock facility for helping the primary producing
countries, supplementary financing facility, special oil facility, trust fund, structural adjustment facility etc. The Fund
also charges interest from the borrowing countries on their credit.
6. Maintaining Balance Between Demand and Supply of Currencies:
IMF is also entrusted with important function to maintain balance between demand and supply of various currencies.
Accordingly, the fund can declare a currency as scarce currency which is in great demand and can increase its supply
by borrowing it from the country concerned or by purchasing the same currency in exchange of gold.
7. Maintenance of Liquidity
To maintain liquidity of its resources is another important function of IMF. Accordingly, there is provision for the
member countries to borrow from IMF by surrendering their own currencies in exchange. Again, for according
accumulation of less demand currencies with the Fund, the borrowing countries are directed to repurchase their own
currencies by repaying its loans in convertible currencies.

11. Some of the main functions of International Monetary Fund are as follows:
8. Technical Assistance:
The IMF is also performing a useful function to provide technical assistance to the member countries. Such technical
assistance in given in two ways, i.e., firstly by granting the members countries the services of its specialists and
experts and secondly by sending the outside experts.
Moreover, the Fund has also set up two specialized new departments:
(a) Central Banking Services Department and
(b) Fiscal Affairs Department for sending specialists to member countries so as to manage its central banks and also
on fiscal management.
9. Reducing Tariffs:
The Fund also aims at reducing tariffs and other restrictions imposed on international trade by the member countries
so as to cease restrictions of remittance of funds or to avoid discriminating practices.
10. General Watch:
The IMF is also keeping a general watch on the monetary and fiscal policies followed by the member countries to
ensure no flouting of the provisions of the charter.

12. Conclusion
The IMF works to foster global growth and economic stability. It provides policy advice and financing to members in
economic difficulties and also works with developing nations to help them achieve macroeconomic stability and
reduce poverty. The rationale for this is that private international capital markets function imperfectly and many
countries have limited access to financial markets. Such market imperfections, together with balance of payment
financing, without which many countries could only correct large external payment imbalance through measures with
adverse effects on both national and international economic prosperity. The IMF can provide other source of financing
to countries in need that would not be available in the absence of an economic stabilization program supported by
the fund.

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