INTERNATIONAL ECONOMIC INSTITUTIONS(IMF,WORLD BANK,WTO)

INTERNATIONAL MONETARY FUND: ESTABLISHED IN THE YEAR 1944 BY 44 NATIONS UNDER THE BRETTON WOODS AGREEMENT ESTABLISHED TO PROMOTE ECONOMIC AND FINANCIAL OPERATIONS AMONG ITS MEMBERS THE IMF STARTED ITS WORKING FROM MARCH 1,1947 AT THE END OF JUNE 1996,THE FUND HAD 181 MEMBERS

OBJECTIVES OF IMF

TO PROMOTE INTERNATIONAL MONETARY COOPERATION THROUGH CONSULTATION, COLLABORATION ON MONETARY PROBLEMS TO FACILITATE EXPANSION AND BALANCED GROWTH OF INTERNATIONAL TRADE TO PROMOTE EXCHANGE STABILITY AND AVOID COMPETITIVE EXCHANGE PRACTICES TO ESTABLISH MULTILATERAL SYSTEM OF PAYMENTS AND ELIMINATION OF FOREIGN EXCHANGE RESTRICTIONS TO EXTEND THE FUNDS RESOURCES TO THE MEMBERS UNDER ADEQUATE SAFEGUARDS IT ASSISTS IN SHORTENING THE DURATION AND LESSENING THE DEGREE OF DISEQUILIBRIUM IN THE INTERNATIONAL BOP OF MEMBERS

STRUCTURE OF IMF

BOARD OF GOVERNOR(ALSO AN ALTERNATE GOVERNOR APPOINTED BY THE RESPECTIVE GOVT) THE BOARD OF GOVERNORS IS COMPOSED INPRACTICE OF FINANCE MINISTERS OF MEMBER COUNTRIES THEY WOULD NORMALLY MEET ONLY ANNUALLY AND DELEGATE ALL BUT THE MOST IMPT DECISIONS TO EXECUTIVE DIRECTORS THE EXECUTIVE DIRECTORS WOULD BE APPOINTED BY MEMBER COUNTRIES ONLY THE FIVE COUNTRIES WITH LARGEST VOTING POWER WOULD HAVE THEIR OWN EXECUTIVE DIRECTOR

VOTING POWERS OF IMF MEMBERS

WEIGHTED VOTING PRACTICED RATHER THAN ONE COUNTRY ONE VOTE PROCEDURE THIS GAVE THE UNITED STATES AND BRITAN THE JOINT DOMINANATING VOICE IN DECISIONS VOTING POWER ON THE BOARD OF GOVERNORS AND THE DIRECTORATE IS ACCORDING TO THE SIZE OF MEMBERS QUOTA THE RELATIVE VOTING STRENGTH OF MEMBERS FAVOURS THE LARGE AND RICH COUNTRIES THUS IT IS EVIDENT THAT MANAGEMENT OF FUNDS WAS POLITICAL RATHER THAN TECHNICAL

EXCHANGE TRANSACTIONS OF IMF

WHEN A MEMBER COUNTRY ACQUIRES CURRENCIES FROM THE FUND IT IS CALLED AS EXCHANGE OPERATION WHEN A MEMBER ACQUIRES CURRENCIES IT IS CALLED DRAWINGS FROM THE FUND WHEN IT RETURNS THESE CURRENCIES IT IS CALLED REPURCHASE OF ITS CURRENCIES A MEMBER COUNTRY IS TO CONTRIBUTE TO THE QUOTA OF THE FUND QUOTAS CONSTITUTE SUBSCRIPTIONS OF THE MEMBER COUNTRIES TO THE CAPITAL FUND IN THE FORM OF GOLD AND CURRENCIES OF THE RESPECTIVE COUNTRIES THE STATUTE OF IMF HAS BROAD LIMITS TO THE AMOUNT OF LON A MEMBER COUNTRY CAN BORROW

EXCHANGE TRANSACTION OF IMF(CONTD..)

A MEMBER SHOULD NOT BORROW MORE THAN 25% OF ITS QUOTA IN ANY 12 MONTHS PERIOD THERE IS A LIMIT TO THE OVERALL CREDIT A MEMBER CAN RECEIVE FROM THE FUND THIS LIMIT IS 125% OF THE QUOTA TO HANDLE THE ABOVE LIMITATION THE FUND HAS DEVELOPED MANY OUTLETS FOR LENDING THE OUTLETS ARE KNOWN AS FACILITIES

FACILITIES

GOLD TRANCHE FIRST CREDIT TRANCHE SECOND CREDIT TRANCHE THIRD CREDIT TRANCHE FOURTH CREDIT TRANCHE STAND-BY ARRANGEMENTS COMPENSATING FINANCING FACILITY OIL FACILITY EXTENDED FACILITY TRUST FUND LOAN FACILITY

SPECIAL DRAWINGS RIGHTS(SDRS)

CREATED IN 1968 AS A SUPPLEMENT TO GOLD AND DOLLARS WITH THE ESTABLISHMENT OF SDRS THE IMF ARE DIVIDED INTO 2 CATOGORIES THESE ARE GENERAL ACCOUNT AND SPECIAL DRAWING ACCOUNT EVERY MEMBER HAS A RIGHT TO PARTICIPATE IN SDR FACILITYAND NO NATION IS COMPELLED TO JOIN THE SDRS IS OPERATED ON THE BASIS OF THE QUOTA OF THE COUNTRY IF THE COUNTRY QUOTA IN THE IMF IS 25%,THEN IT WILL RECEIVE 25% OF SDR ALLOCATION

INDIA AND IMF

INDIA IS ONE OF THE FOUNDER MEMBER OF IMF IT SIGNED FUND AGREEMENT ON 27 DEC 1945 INDIAS QUOTA STOOD AT 3.O5 BILLION ON JAN1993 INDIA HAS BEEN ONE OF THE MAJOR BENEFICIARIES OF THE FUND BETWEEN 1947 AND 1955 BORROWED $100 MILLION TWICE TO TIDE OVER BOP PROBLEMS IT ALSO RECEIVED 529.01 MILLION IN 1981 UNDER IMF TRUST FUND IN 1991 IT APPROACHED THE IMF UNDERCOMPENSATORY AND CONTINGENCY FINANCING FACILITY(CCFF) TO GET $0.79BILLION AS THE FIRST CREDIT TRANCHE FOR 3 MONTHS INDIAS QUOTA IN THE FUND IS $3.01 BILLION(OR SDR 2.2 BILLION) ITS GROSS DRAWINGSFROM THE FUND$ 3.5 BILLION THIS SPEAKS OF THE FUNDS CONFIDENCE IN THE INDIAN ECONOMY