Imf for ib

Imf for ib

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  International Monetary Fund (IMF)
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  INTRODUCTION  IMF is aforum of national economic policies, international monetary and financial systems, Which involves active dialogue with each member Country.  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 bankrupted.  IMF is an administrative unit that is international in nature and whose objective is to regulate and administer the financial system of the world.
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  What is IMF?  “Itis 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 poverty” .  The IMF is the most detailed attempt to organize the conduct of international monetary affairs.
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   IMF headquarters isin Washington D.C , U.S.A  Five largest shareholders are United States, Japan, Germany, France, United Kingdom.  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 countries.
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  History of IMF TheInternational 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 1930s.  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.
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  Who runs theIMF
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  Membership There are twotypes 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.
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  Growth in membership(1945-2013) Inthe beginning 29 member countries Today, 187 member countries. Staff of about 2800 persons. Two-thirds are economists in 139 countries. Headquarters in Washington, D.C.
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  MEMBERSHIP AND GOVERNANCE Boardof Governors (1 from Each State) Managing Director Executive Board (24 Members) Weighted Voting System: oUS Representative holds 17% of total Voting Power o27 Countries together hold 1.4% of total Voting Power 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.
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  Purposes of IMF IMFpromote international monetary cooperation . expansion and balanced growth of international trade. 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 employment. 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.
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  Role of IMF Focusing on its core macroeconomic and financial areas of responsibility. Working in a complementary fashion with other institutions established.  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.
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  Functions of IMF Surveillance Gatheringdata and assessing economic policies of countries. Technical Assistance Strengthening human skills and institutional capacity of countries. Financial Assistance Lending to countries to support reforms
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  Resources of theFund 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 .
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  Main functions ofthe fund  DETERMINING THE RATE OF EXCHANGE BY EVERY COUNTRY  FUND LENDING  CREDIT TRANCHES  A CENTRAL BANK’S BANK  TRAINING AND TECHNICAL ASSISTANCE  CONSULTANCY ROLE
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  Achievements of IMF  INTERNATIONALMONETARY CO-OPERATION  EXCHANGE STABILITY  CHECKING COMPETITIVE DEPRECIATION  INCREASED ASSISTANCE  INCREASE IN CAPITAL RESOURCES  EXPANSION OF TRADE  GURANTEE DEVALUATION AGAINST COMPETITIVE
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  Criticism Many observers commenton the fact that the IMF has a ”one size fits all” mentality, that whatever the situation the IMF prescribes basically the same set of policies. 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.
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  India and theIMF 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%.
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  International Monetary Fundsaid 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.
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  Conclusion The IMF’s primarypurpose 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 alleviate poverty;  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 earnings; and  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.
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  Thank You..