International Monetary Fund (IMF) final

International Monetary Fund
(IMF)
MAYUR PANCHAL
[AIO]
LAW OF INTERNATIONAL ORGANIZATIONS

History
• The IMF, also known as the Fund, was conceived at a United Nations conference convened in
Bretton Woods, New Hampshire, United States, in July 1944.
• IMF established in 1944 with a vision to improve as well as stabilize world economy.
• Keeping in mind the economic crisis that the world has experienced during the Great Depression
and World War II, the representatives of 45 countries assembled in Bretton Woods, New Hampshire
in the United States to create a new economic framework to avoid such crisis in future.
 The International Monetary Fund was established by an international treaty in 1945 to help
promote the health of the world economy. Headquartered in Washington, D.C., it is governed by its
almost global membership of 188 countries.
 The IMF is the central institution of the international monetary system- the system of international
payments ands exchange rates among national currencies that enable business to take place
between countries.

 The International Monetary Fund (IMF) promotes international financial stability and
monetary cooperation. It also seeks to facilitate international trade, promote high
employment and sustainable economic growth, and reduce poverty around the world.
OBJECTIVES OF IMF (PURPOSES) Article I
 promote international monetary cooperation;
 facilitate the expansion and balanced growth of international trade;
 promote exchange stability;
 assist in the establishment of a multilateral system of payments; and
 make resources available (with adequate safeguards) to members experiencing balance of
payments difficulties.

Organization of IMF
 The IMF is accountable to its member countries, and this accountability is essential to
its effectiveness.
 The day-to-day work of the IMF is carried out by an Executive board, representing the
IMF’s 188 members, and an internationally recruited staff under the leadership of a
Managing Director and three Deputy Managing Directors – each member of this
management team being drawn from a different region of the world.
 The powers of the Executive Board to conduct the business of the IMF are delegated to
it by the Board of Governors. Powers stated in articles of agreement

5
IMF Organization Chart
International Monetary
and Financial Committee
Board of Governors Joint IMF-World Bank
Development Committee
Executive Board
Independent
Evaluation Office
Managing Director
Deputy Managing Directors

INTERNATIONAL MONETARY FUND ORGANISATION
CHART
International
Monetary and
Financial
Committee
Board of
Governors
Executive
Board
MANAGING
DIRECTOR
Deputy
Managing
Directors
Joint IMF-World Bank
Development
Committee
Independent
Evaluation Office
Investment
Office-Staff
Retirement Plan
Office of
Budget &
Planning
Office of
Internal Audit
and Inspection

Article XII: Organization and Management
Section 1. Structure of the Fund
 The Fund shall have a Board of Governors, an Executive Board, a Managing
Director, and a staff.
 1. Board of Governors
 2. Executive Board
 3. Managing Director and staff

Board of Governors
 The Board of Governors, the highest decision-making 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.
 All powers of the IMF are vested in the Board of Governors. The Board of Governors may
delegate to the Executive Board all except certain reserved powers. The Board of Governors
normally meets once a year.
 Governors elect one of the governors as chairman
 Not in continuous session; meets once a year—Annual Meetings
 May establish committees (e.g., International Monetary and Financial
Committee (IMFC), joint World Bank-IMF Development Committee)

Section 3. Executive Board
 (a) The Executive Board shall be responsible for conducting the business of the Fund, and for this purpose
shall exercise all the powers delegated to it by the Board of Governors, Sits in continuous session, meeting
as often as the business of the IMF may require
 (b) The Executive Board shall consist of Executive Directors with the Managing Director as chairman. Of the
Executive Directors:
 Five shall be appointed by the five members having the largest quotas; and
 Nineteen shall be elected by the other members.
 Board of Governors, by an 85 percent majority of the total voting power, may increase or decrease the
number of Executive Directors in the second category
 Each director shall appoint an alternate director
 The Board usually meets several times each week. It carries out its work largely on the basis of papers
prepared by IMF management and staff.
 Weighted voting structure - each Executive Director casts the number of votes allotted to members that he
or she represents. Most decisions of the Executive Board require only a simple majority of the votes cast;
some require either 70% or 85% of the total voting power
 Voting is rare - most decisions are taken by consensus.

 Chairman of the Executive Board and chief of the operating staff
 Selected by the Executive Board
May not be selected from among the governors or the Executive Directors
Term of 5 years, but shall cease to hold office when so decided by the Executive Board
 Conducts ordinary business of the IMF under the direction of the Executive Board
Subject to general control of the Executive Board, responsible for organization,
appointment and dismissal of staff
 Staff of the IMF are International civil servants
 Independent Evaluation Office (IEO). Conducts objective and independent evaluations on
issues relevant to the Fund’s mandate.
 The IMF’s employees come from all over the world; they are responsible to the IMF and
not to the authorities of the countries of which they are citizens. The IMF staff is organized
mainly into area; functional; and information, liaison, and support responsibilities.
The Managing Director, Staff, Independent Evaluation
Office

Our Work
The IMF's fundamental mission is to help ensure stability in the international system. It does so in three
ways: keeping track of the global economy and the economies of member countries; lending to countries
with balance of payments difficulties; and giving practical help to members.

1. Surveillance
The IMF oversees the international monetary system and monitors the financial and economic policies
of its members. It keeps track of economic developments on a national, regional, and global basis,
consulting regularly with member countries and providing them with macroeconomic and financial
policy advice.
2. Technical Assistance:
To assist mainly low- and middle-income countries in effectively managing their economies, the IMF
provides practical guidance and training on how to upgrade institutions, and design appropriate
macroeconomic, financial, and structural policies.
3. Lending:
The IMF provides loans to countries that have trouble meeting their international payments and
cannot otherwise find sufficient financing on affordable terms. This financial assistance is designed to
help countries restore macroeconomic stability by rebuilding their international reserves, stabilizing
their currencies, and paying for imports—all necessary conditions for Re-launching growth. The IMF
also provides concessional loans to low-income countries to help them develop their economies and
reduce poverty.

Quotas play several key roles in the IMF
A member's quota determines that country’s financial and organizational relationship with the IMF,
including:
 Subscriptions. A member's quota subscription determines the maximum amount of financial
resources the member is obliged to provide to the IMF. A member must pay its subscription in
full upon joining the Fund: up to 25 percent must be paid in SDRs or widely accepted currencies
(such as the U.S. dollar, the euro, the yen, or the pound sterling), while the rest is paid in the
member's own currency.
 Voting power. The quota largely determines a member's voting power in IMF decisions. Each
IMF member’s votes are comprised of basic votes plus one additional vote for each SDR 100,000
of quota.
 Access to financing. The amount of financing a member can obtain from the IMF (its access
limit) is based on its quota. For example, under Stand-By and Extended Arrangements, a
member can borrow up to 200 percent of its quota annually and 600 percent cumulatively.
However, access may be higher in exceptional circumstances.

Special Drawing Rights (SDR’s)
 The Special Drawing Right (SDR) is an international reserve asset, created by the IMF in
1969 to supplement the existing official reserves of member countries.
 The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on
the freely usable currencies of IMF members. Holders of SDRs can obtain these
currencies in exchange for their SDRs in two ways:
First, through the arrangement of voluntary exchanges between members; and second, by
the IMF designating members with strong external positions to purchase SDRs from
members with weak external positions.
In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account
of the IMF.

Role of IMF in serving its Members
 Advice in Policies and Global oversight: The IMF’s Articles of Agreement calls for it to oversee the
international monetary system, including by exercising firm “surveillance” – that is , overlooking
– over its member countries’ exchange rate policies. It conducts three ways:
(a) Country surveillance
(b) Global surveillance
(c) Regional surveillance
 Lending to Help Countries in Difficulty: The IMF lends foreign exchange to countries with balance
of payment problems.
 Technical Assistance and Training: The IMF shares its expertise with member countries on a
regular basis by providing technical assistance and training in a wide range of areas.
 Reducing Debt Burdens: In 1996, the world bank and the IMF unveiled the HIPC initiative to
reduce the debt burdens of the world’s poorest countries. {Heavily Indebted Poor
Countries (HIPC)}

Thank you so much for your attention!!!
• https://www.imf.org/external/about.htm -Website of IMF
• https://www.imf.org/external/pubs/ft/aa/ - Articles of Agreement
• http://eprints.lse.ac.uk/648/1/ANOR109Leech.pdf - voting powers in the
governance of IMF
• http://www.ieo-imf.org/ieo/files/completedevaluations/05212008BP08_01.pdf -
The Formal Governance Structure of the International Monetary Fund

International Monetary Fund (IMF) final

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