INTERNATIONAL MONETARY FUND

BUSINESS ENVIRONMENT
ASSIGNMENT ON

INTERNATIONAL MONETARY FUND

SUBMITTED TO: PRIYANKA KALIA

SUBMITTED BY: KULVIR SINGH 10204190085

1|Page

INTERNATIONAL MONETARY FUND

CERTIFICATE
This is certify that KULVIR SINGH M.B.A. 2nd semester student of

INFOTECH

COMPUTERS

has

done

project

on

"INTERNATIONAL MONETARY

FUND" under the

guidance and supervision of Miss PRIYANKA KALIA .The quality of work fairly fulfills all necessary requirement related to above said course.

CENTRE HEAD
(SATINDER SINGH SETHI)

SUPERVISED BY
(PRIYANKA KALIA)

2|Page

INTERNATIONAL MONETARY FUND

ACKNOWLEDGEMENT

First of all we would like to thank Almighty God for giving us the strength and courage to accomplish all tasks, big and small. And the will power and patience in making this report possible. The research for this report has enlightened us with the insight and knowledge to how international economic organizations work. We would like to express our sincere thanks to MISS. PRIYANKA KALIA, Project in charge , for their valuable and never ending help contribution and positive criticism and precious advice. In the end we hope and pray that this report meets the criteria, which we were asked to adhere to and you have a worthy time going through it. Thank you sincerely

3|Page

INTERNATIONAL MONETARY FUND

PREFACE
The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The International Monetary Fund (IMF) is the international organization that oversees the global financial system by following the macroeconomic policies of its member-countries; in particular those with an impact on exchange rate and the balance of payments. It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development. It also offers highly leveraged loans, mainly to poorer countries. Its headquarters are in Washington, D.C., United States. The IMF's primary purpose is to ensure the stability of the international monetary systemthe 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 sustainable economic growth and rising living standards.

4|Page

INTERNATIONAL MONETARY FUND

INTERNATIONAL MONTARY FUND

International Monetary Fund, Washington, D.C.

5|Page

INTERNATIONAL MONETARY FUND

TABLE OF CONTENT

TITLE INTRODUCATION WHY WAR IT CREATED OBJECTIVE HISTORY OF IMF MEMBERSHIP

page no. 1 2 2 3 9 10 14 17 20 21 22 24 25 27 29 30 31

GOVERNANCE AND ORGANISATION MANAGEMENT WORK OF IMF WHERE DOSE IMF GETS ITS MONEY SPECIAL DRAWING RIGHT IMF MAIN BUSINESS ACHIEVEMENT OF IMF SHORTCOMINGS OF IMF IMF AND INDIA RELATION CONCLUSION BIBLIOGRAPHY APPENDIX

6|Page

INTERNATIONAL MONETARY FUND

INTRODUCTION
IMF: International Monetary Fund is the world's central organization for international monetary cooperation. It is an organization in which almost all countries of the world work together to promote the common goal. The IMF is an independent international organization. It is a cooperative of 187 member countries, whose objective is to promote world economic stability and growth. The member countries are the shareholders of the cooperative, providing the capital of the IMF through quota subscriptions. In return, the IMF provides its members with macroeconomic policy advice, financing in times of balance of payments need, and technical assistance and training to improve national economic management. Its headquarters are in Washington, D.C., United States The IMF is one of several autonomous organizations designated by the United Nations (UN) as Specialized Agencies, with which the UN has established working relationships.2 The IMF is a permanent observer at the UN. The work of the IMF is of three main types. Surveillance involves the monitoring of economic and financial developments, and the provision of policy advice, aimed especially at crisis-prevention. The IMF also lends to countries with balance of payments difficulties, to provide temporary financing and to support policies aimed at correcting the underlying problems; loans to low-income countries are also aimed especially at poverty reduction. Third, the IMF provides countries with technical assistance and training in its areas of expertise. Supporting all three of these activities is IMF work in economic research and statistics. In recent years, as part of its efforts to strengthen the international financial system, and to enhance its effectiveness at preventing and resolving crises, the IMF has applied both its surveillance and technical assistance work to the development of standards and codes of good practice in its areas of responsibility, and to the strengthening of financial sectors. The IMF also plays an important role in the fight against moneylaundering and terrorism.

7|Page

INTERNATIONAL MONETARY FUND

Why was it created?

The IMF was conceived in July 1944, when representatives of 45 governments meeting in the town of Bretton Woods, New Hampshire, in the northeastern United States, agreed on a framework for international economic cooperation. They believed that such a framework was necessary to avoid a repetition of the disastrous economic policies that had contributed to the Great Depression of the 1930s. During that decade, attempts by countries to shore up their failing economiesby limiting imports, devaluing their currencies to compete against each other for export markets, and curtailing their citizens' freedom to buy goods abroad and to hold foreign exchangeproved to be self-defeating. World trade declined sharply, and employment and living standards plummeted in many countries. Seeking to restore order to international monetary relations, the IMF's founders charged the new institution with overseeing the international monetary system to ensure exchange rate stability and encouraging member countries to eliminate exchange restrictions that hindered trade. The IMF came into existence in December 1945, when its first 29 member countries signed its Articles of Agreement. Since then, the IMF has adapted itself as often as needed to keep up with the expansion of its membership187 countries as of June 2010and changes in the world economy.

Objective
1) To promote international monetary co-operation through a permanent institution. 2) To facilitate the expansion and balanced growth of international trade and to contribute there by to the promotion and maintenance of high level of employment of the member countries.

8|Page

INTERNATIONAL MONETARY FUND

3) To promote exchange stability, to maintain orderly exchange arrangement among member and to avoid competitive depreciation. 4) To assist in the establishment of multilateral system of payment in a respect of current transaction between member and in the elimination of foreign exchange restriction. 5) To give confidence to member by making the fund's resources available to them under adequate sage guard, thus providing them with opportunity to correct maladjustment in their balance of payments with out resorting to measures destructive of national or international prosperity. 6) To shorten the duration and lessen the degree of disequilibrium in the international balance of payment of member. The objective was to help member achieve high standard and sustainable economic growth and development, while eschewing the beggar -thy- neighbor policies that had contributed to the great depression.

HISTORY
Cooperation and reconstruction (194471)
During the Great Depression of the 1930s, countries attempted to shore up their failing economies by sharply raising barriers to foreign trade, devaluing their currencies to compete against each other for export markets, and curtailing their citizens' freedom to hold foreign exchange. These attempts proved to be selfdefeating. World trade declined sharply (see chart below), and employment and living standards plummeted in many countries. This breakdown in international monetary cooperation led the IMF's founders to plan an institution charged with overseeing the international monetary systemthe system of exchange rates and international payments that enables countries and their citizens to buy goods and services from each other. The new global entity

9|Page

INTERNATIONAL MONETARY FUND

would ensure exchange rate stability and encourage its member countries to eliminate exchange restrictions that hindered trade.

The Bretton Woods agreement The IMF was conceived in July 1944, when representatives of 45 countries meeting in the town of Bretton Woods, New Hampshire, in the northeastern United States, agreed on a framework for international economic cooperation, to be established after the Second World War. They believed that such a framework was necessary to avoid a repetition of the disastrous economic policies that had contributed to the Great Depression. The IMF came into formal existence in December 1945, when its first 29 member countries signed its Articles of Agreement. It began operations on March 1, 1947. Later that year, France became the first country to borrow from the IMF. The IMF's membership began to expand in the late 1950s and during the 1960s as many African countries became independent and applied for membership. But the Cold War limited the Fund's membership, with most countries in the Soviet sphere of influence not joining. Par value system The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates (the value of their currencies in terms of the U.S. dollar and, in the case of the United States, the value of the dollar in terms of gold) pegged at rates that could be adjusted only to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement. This par value system also known as the Bretton Woods systemprevailed until 1971, when the U.S. government suspended the convertibility of the dollar (and dollar reserves held by other governments) into gold.

The end of the Bretton Woods System (197281)

By the early 1960s, the U.S. dollar's fixed value against gold, under the Bretton Woods system of fixed exchange rates, was seen as overvalued. A sizable increase in domestic spending on President Lyndon Johnson's Great Society programs and a rise in military spending caused by the Vietnam War gradually worsened the overvaluation of the dollar.
10 | P a g e

INTERNATIONAL MONETARY FUND

End of Bretton Woods system The system dissolved between 1968 and 1973. In August 1971, U.S. President Richard Nixon announced the "temporary" suspension of the dollar's convertibility into gold. While the dollar had struggled throughout most of the 1960s within the parity established at Bretton Woods, this crisis marked the breakdown of the system. An attempt to revive the fixed exchange rates failed, and by March 1973 the major currencies began to float against each other. Since the collapse of the Bretton Woods system, IMF members have been free to choose any form of exchange arrangement they wish (except pegging their currency to gold): allowing the currency to float freely, pegging it to another currency or a basket of currencies, adopting the currency of another country, participating in a currency bloc, or forming part of a monetary union. Oil shocks Many feared that the collapse of the Bretton Woods system would bring the period of rapid growth to an end. In fact, the transition to floating exchange rates was relatively smooth, and it was certainly timely: flexible exchange rates made it easier for economies to adjust to more expensive oil, when the price suddenly started going up in October 1973. Floating rates have facilitated adjustments to external shocks ever since. The IMF responded to the challenges created by the oil price shocks of the 1970s by adapting its lending instruments. To help oil importers deal with anticipated current account deficits and inflation in the face of higher oil prices, it set up the first of two oil facilities. Helping poor countries From the mid-1970s, the IMF sought to respond to the balance of difficulties confronting many of the world's poorest countries by concessional financing through what were known as the Trust Fund. 1986, the IMF created a new concessional loan program called the Adjustment Facility. The SAF was succeeded by the Enhanced Adjustment Facility in December 1987. payments providing In March Structural Structural

11 | P a g e

INTERNATIONAL MONETARY FUND

Debt and painful reforms (198289)

The oil shocks of the 1970s, which forced many oil-importing countries to borrow from commercial banks, and the interest rate increases in industrial countries trying to control inflation led to an international debt crisis. During the 1970s, Western commercial banks lent billions of "recycled" petrodollars, getting deposits from oil exporters and lending those resources to oilimporting and developing countries, usually at variable, or floating, interest rates. So when interest rates began to soar in 1979, the floating rates on developing countries' loans also shot up. Higher interest payments are estimated to have cost the non-oil-producing developing countries at least $22 billion during 197881. At the same time, the price of commodities from developing countries slumped because of the recession brought about by monetary policies. Many times, the response by developing countries to those shocks included expansionary fiscal policies and overvalued exchange rates, sustained by further massive borrowings. When a crisis broke out in Mexico in 1982, the IMF coordinated the global response, even engaging the commercial banks. It realized that nobody would benefit if country after country failed to repay its debts. The IMF's initiatives calmed the initial panic and defused its explosive potential. But a long road of painful reform in the debtor countries, and additional cooperative global measures, would be necessary to eliminate the problem. Societal Change for Eastern Europe and Asian Upheaval (1990-2004) The fall of the Berlin wall in 1989 and the dissolution of the Soviet Union in 1991 enabled the IMF to become a (nearly) universal institution. In three years, membership increased from 152 countries to 172, the most rapid increase since the influx of African members in the 1960s.

12 | P a g e

INTERNATIONAL MONETARY FUND

In order to fulfill its new responsibilities, the IMF's staff expanded by nearly 30 percent in six years. The Executive Board increased from 22 seats to 24 to accommodate Directors from Russia and Switzerland, and some existing Directors saw their constituencies expand by several countries. The IMF played a central role in helping the countries of the former Soviet bloc transition from central planning to market-driven economies. This kind of economic transformation had never before been attempted, and sometimes the process was less than smooth. For most of the 1990s, these countries worked closely with the IMF, benefiting from its policy advice, technical assistance, and financial support. By the end of the decade, most economies in transition had successfully graduated to market economy status after several years of intense reforms, with many joining the European Union in 2004. Asian Financial Crisis In 1997, a wave of financial crises swept over East Asia, from Thailand to Indonesia to Korea and beyond. Almost every affected country asked the IMF for both financial assistance and for help in reforming economic policies. Conflicts arose on how best to cope with the crisis, and the IMF came under criticism that was more intense and widespread than at any other time in its history. From this experience, the IMF drew several lessons that would alter its responses to future events. First, it realized that it would have to pay much more attention to weaknesses in countries banking sectors and to the effects of those weaknesses on macroeconomic stability. In 1999, the IMFtogether with the World Bank launched the Financial Sector Assessment Program and began conducting national assessments on a voluntary basis. Second, the Fund realized that the institutional prerequisites for successful liberalization of international capital flows were more daunting than it had previously thought. Along with the economics profession generally, the IMF dampened its enthusiasm for capital account liberalization. Third, the severity of the contraction in economic activity that accompanied the Asian crisis necessitated a re-evaluation of how fiscal policy should be adjusted when a crisis was precipitated by a sudden stop in financial inflows.
13 | P a g e

INTERNATIONAL MONETARY FUND

Debt relief for poor countries During the 1990s, the IMF worked closely with the World Bank to alleviate the debt burdens of poor countries. The Initiative for Heavily Indebted Poor Countries was launched in 1996, with the aim of ensuring that no poor country faces a debt burden it cannot manage. In 2005, to help accelerate progress toward the United Nations Millennium Development Goals (MDGs), the HIPC Initiative was supplemented by the Multilateral Debt Relief Initiative (MDRI).

Globalization and the Crisis (2005 - present)

The IMF has been on the front lines of lending to countries to help boost the global economy as it suffers from a deep crisis not seen since the Great Depression. For most of the first decade of the 21st century, international capital flows fueled a global expansion that enabled many countries to repay money they had borrowed from the IMF and other official creditors and to accumulate foreign exchange reserves. The global economic crisis that began with the collapse of mortgage lending in the United States in 2007, and spread around the world in 2008 was preceded by large imbalances in global capital flows. Global capital flows fluctuated between 2 and 6 percent of world GDP during 1980-95, but since then they have risen to 15 percent of GDP. In 2006, they totaled $7.2 trillionmore than a tripling since 1995. The most rapid increase has been experienced by advanced economies, but emerging markets and developing countries have also become more financially integrated. The founders of the Bretton Woods system had taken it for granted that private capital flows would never again resume the prominent role they had in the nineteenth and early twentieth centuries, and the IMF had traditionally lent to members facing current account difficulties. The latest global crisis uncovered fragility in the advanced financial markets that soon led to the worst global downturn since the Great Depression. Suddenly, the

14 | P a g e

INTERNATIONAL MONETARY FUND

IMF was inundated with requests for stand-by arrangements and other forms of financial and policy support. The international community recognized that the IMFs financial resources were as important as ever and were likely to be stretched thin before the crisis was over. With broad support from creditor countries, the Funds lending capacity was tripled to around $750 billion. To use those funds effectively, the IMF overhauled its lending policies, including by creating a flexible credit line for countries with strong economic fundamentals and a track record of successful policy implementation. Other reforms, including ones tailored to help low-income countries, enabled the IMF to disburse very large sums quickly, based on the needs of borrowing countries and not tightly constrained by quotas, as in the past. For more on the ideas that have shaped the IMF from its inception until the late 1990s, take a look at James Boughton's "The IMF and the Force of History: Ten Events and Ten Ideas that Have Shaped the Institution."

MEMBERSHIP
Original members All those countries whose representative took part in BRETTEN WOODS CONFERENCE and who agreed to be the member of the Fund prior to 31st December 1945 , are called the original member of the Fund. All those who become its member subsequently are called as the ordinary member of the Fund. Other members Membership shall be open to other countries at such times and in accordance with such terms as may be prescribed by the Board of Governors. These terms, including the terms for subscriptions, shall be based on principles consistent with those applied to other countries that are already members. Fund can terminates the membership of such country as does not deserve its rules. In 1947, the number of member-countries was 40, now there are 187 countries in the world are its member

15 | P a g e

INTERNATIONAL MONETARY FUND

GOVERNANCE AND ORGANIZATION

The IMF's mandate and governance have evolved along with changes in the global economy, allowing the organization to retain a central role within the international financial architecture. The diagram below provides a stylized view of the IMF's current governance structure.

Board of Governors The Board of Governors is the highest decision-making body of the IMF. It 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 head of the central bank. While the Board of Governors has delegated most of its powers to the IMF's Executive Board, it retains the right to approve quota increases, special drawing
16 | P a g e

INTERNATIONAL MONETARY FUND

right (SDR) allocations, the admittance of new members, compulsory withdrawal of members, and amendments to the Articles of Agreement and By-Laws. The Board of Governors also elects or appoints executive directors and is the ultimate arbiter on issues related to the interpretation of the IMF's Articles of Agreement. Voting by the Board of Governors usually takes place by mail-in ballot. The Boards of Governors of the IMF and the World Bank Group normally meet once a year, during the IMF-World Bank Spring and Annual Meetings, to discuss the work of their respective institutions. The Meetings, which take place in September or October, have customarily been held in Washington for two consecutive years and in another member country in the third year. The Annual Meetings usually include two days of plenary sessions, during which Governors consult with one another and present their countries' views on current issues in international economics and finance. During the Meetings, the Boards of Governors also make decisions on how current international monetary issues should be addressed and approve corresponding resolutions. The Annual Meetings are chaired by a Governor of the World Bank and the IMF, with the chairmanship rotating among the membership each year. Every two years, at the time of the Annual Meetings, the Governors of the Bank and the Fund elect Executive Directors to their respective Executive Boards. Ministerial Committees The IMF Board of Governors is advised by two ministerial committees, the International Monetary and Financial Committee (IMFC) and the Development Committee. The IMFC has 24 members, drawn from the pool of 187 governors. Its structure mirrors that of the Executive Board and its 24 constituencies. As such, the IMFC represents all the member countries of the Fund. The IMFC meets twice a year, during the Spring and Annual Meetings. The Committee discusses matters of common concern affecting the global economy
17 | P a g e

INTERNATIONAL MONETARY FUND

and also advises the IMF on the direction its work. At the end of the Meetings, the Committee issues a joint communiqu summarizing its views. These communiqus provide guidance for the IMF's work program during the six months leading up to the next spring or Annual Meetings. There is no formal voting at the IMFC, which operates by consensus. The Development Committee is a joint committee, tasked with advising the Boards of Governors of the IMF and the World Bank on issues related to economic development in emerging and developing countries. The committee has 24 members (usually ministers of finance or development). It represents the full membership of the IMF and the World Bank and mainly serves as a forum for building intergovernmental consensus on critical development issues. The Executive Board The IMF's 24-member Executive Board takes care of the daily business of the IMF. Together, these 24 board members represent all 187 countries. Large economies, such as the United States and China, have their own seat at the table but most countries are grouped in constituencies representing 4 or more countries. The largest constituency includes 24 countries. The Board discusses everything from the IMF staff's annual health checks of member countries' economies to economic policy issues relevant to the global economy. The board normally makes decisions based on consensus but sometimes formal votes are taken. At the end of most formal discussions, the Board issues what is known as a summing up, which summarizes its views. Informal discussions may be held to discuss complex policy issues still at a preliminary stage. Governance Reform To be effective, the IMF must be seen as representing the interests of all its 187 member countries. For this reason, it is crucial that its governance structure reflect todays world economy. In 2010, the IMF agreed wide-ranging governance reforms to reflect the increasing importance of emerging market countries. The reforms also ensure that smaller developing countries will retain their influence in the IMF.
18 | P a g e

INTERNATIONAL MONETARY FUND

19 | P a g e

INTERNATIONAL MONETARY FUND

MANAGEMENT
The IMF is led by a Managing Director, who is head of the staff and Chairman of the Executive Board. He is assisted by a First Deputy Managing Director and two other Deputy Managing Directors. The Management team oversees the work of the staff, and maintains high-level contacts with member governments, the media, nongovernmental organizations, think tanks, and other institutions. Managing Director: Duties and selection According to the IMF's Articles of Agreement, the Managing Director "shall be chief of the operating staff of the Fund and shall conduct, under the direction of the Executive Board, the ordinary business of the Fund. Subject to the general control of the Executive Board, he shall be responsible for the organization, appointment, and dismissal of the staff of the Fund." The IMF's Executive Board is responsible for selecting the Managing Director. Any Executive Director may submit a nomination for the position, consistent with past practice. When more than one candidate is nominated, as has been the case in recent years, the Executive Board aims to reach a decision by consensus.

THE CURRENT MANAGEMENT TEAM

20 | P a g e

INTERNATIONAL MONETARY FUND

Managing Director, Christine Lagarde, a French national, joined the IMF as Managing Director in July 2011. Before coming to the IMF, she was France's Minister for Economy, Finance and Industry.

First Deputy Managing Director, John Lipsky, an American, has been First Deputy Managing Director since September 2006. Before coming to the IMF, he worked for JPMorgan Investment Bank.

Naoyuki Shinohara, a Japanese national, joined the IMF as Deputy Managing Director in March 2010. Previously, he was Japan's Vice-Minister of Finance for International Affairs.

21 | P a g e

INTERNATIONAL MONETARY FUND

Nemat Shafik, from Egypt, became Deputy Managing Director of the IMF in April, 2011. Previously she had worked at the U.K. Department for International Development (DFID), the World Bank, and the International Finance Corp.

Min Zhu, from China, joined the IMF as Special Advisor to the Managing Director in May 2010. On July 26, 2011 he became Deputy Managing Director. Before coming to the IMF, Min Zhu was a Deputy Governor of the Peoples Bank of China and previously worked at the World Bank.

David Lipton, of the United States, joined the IMF on July 26, 2011 as a Special Advisor to the Managing Director. Prior to joining the Fund, Lipton served as Special Assistant to the President and as Senior Director for International Economic Affairs at the U.S. National Economic Council and U.S. National Security Council at the White House.

22 | P a g e

INTERNATIONAL MONETARY FUND

WORKS OF INTERNATIONAL MONETARY FUND

The IMF's primary purpose is to ensure the stability of the international monetary systemthe system of exchange rates and international payments that enables countries (and their citizens) to transact with one other. This system is essential for promoting sustainable economic growth, increasing living standards, and reducing poverty. Following the recent global crisis, the Fund has been clarifying and updating its mandate to cover the full range of macroeconomic and financial sector issues that bear on global stability Surveillance: To maintain stability and prevent crises in the international monetary system, the IMF reviews country policies, as well as national, regional, and global economic and financial developments through a formal system known as surveillance. Under the surveillance framework, the IMF provides advice to its 187 member countries, encouraging policies that foster economic stability, reduce vulnerability to economic and financial crises, and raise living standards. It provides regular assessment of global prospects in its World Economic Outlook, financial markets in its Global Financial Stability Report, and public finance developments in its Fiscal Monitor, and publishes a series of regional economic outlooks. The Funds Executive Board has been considering a range of options to enhance multilateral, financial, and bilateral surveillance, and better integrate the three. Financial assistance: IMF financing provides member countries the breathing room they need to correct balance of payments problems. A policy program supported by IMF financing is designed by the national authorities in close cooperation with the IMF, and continued financial support is conditioned on effective implementation of this program. In an early response to the recent global economic crisis, the IMF strengthened its lending capacity and approved a major overhaul of the mechanisms for providing financial support in April 2009, with further reforms adopted in August 2010. In the most recent reforms, IMF lending instruments were improved further to provide flexible crisis prevention tools to a broad range of members with sound
23 | P a g e

INTERNATIONAL MONETARY FUND

fundamentals, policies, and institutional policy frameworks. In low-income countries, the IMF doubled loan access limits and is boosting its lending to the worlds poorer countries, with interest rates set at zero until 2012. Technical assistance: The IMF offers technical assistance and training to help member countries strengthen their capacity to design and implement effective policies. Technical assistance is offered in several areas, including tax policy and administration, expenditure management, monetary and exchange rate policies, banking and financial system supervision and regulation, legislative frameworks, and statistics.

key IMF activity

The IMF lends to member countries that have temporary balance of payment problem. The IMF does not lend for specific purpose or project. The Financial assistance provided by the IMF enables the member to reduce its reserve or to make larger payment for imports and other external purpose. When a country becomes member of the Fund, it has to declare par value of its currency in terms of dollar or gold. This facilities multilateral convertible of that currency. Fund also allows its member the facility of making changes in their exchange rate. Any country can change the par value of its currency by 10% after notifying the Fund. If the country was to make 20% change in its par value , it must seeks prior approval of the Fund. In such a case , the Fund has to communicate its decision within 72 hours. In case larger change than 20 % , the Fund requires more time to take its decision. Such decision is taken by two-third of the member. The Fund can change, by a majority decision , par value of all countries by a given proportion. When a country has an adverse balance of payments , the fund gives the foreign currency required by the said country , on loan at a fixed rate of exchange . it enable the country to discharge liability .such loan are of short duration
24 | P a g e

INTERNATIONAL MONETARY FUND

The fund buys and sells the currency of the member countries. Whenever a country buys the currency of another country from the fund . the later makes it available by purchasing the same from the country concerned , of which it constitutes the national currency . however in ny one year a member country can purchase from the fund foreign currency up to the maximum of 15 % of its quota the fund is called the bank of central bank of the central banks of different countries of the world just as a central bank holds the cash reserve of the commercial banks of the country , likewise IMF also mobilize resources of the central bank of the member countries the fund also provide technical assistance to its member countries the fund sends its experts on deputation to member countries to advise them on the matter like exchange control , foreign payments credit money , central banking and economic policy etc. The Fund also publishes many technical journals and magazines. It also imparts training to the representative of member countries. This training is imported to the senior officers of the central banks and Finance Departments. In 1975, a training centre was set up. Although IMF is opposed to any sort of control either on foreign exchange or foreign trade , yet member countries have been given the right to resort to these controls during emergency in the hope that they will lift it as early as the situation warranted. There is the possibility on the part of the debtor country to buy foreign currencies in exchange for its own currency. It may cause the supply of such currencies to increase with the Fund as have no demand and deplete the supply of such currencies as are in great demand. Hence for maintaining the liquidity of resources three provision have been made (1) when a member country wants to do buy any foreign currency in exchange for gold, it can do so. (2) when Fund has the currency of a member country excess of its quota , the latter can buy back the surplus currency by making payment in gold. (3) Every member country is required to buy a part of its currency lying with the Fund every year in return for gold or securities.

25 | P a g e

INTERNATIONAL MONETARY FUND

Where does the IMF get its money?

The IMF's resources come mainly from the quotas that countries deposit when they join the IMF. Quotas broadly reflect the size of each member's economy: the larger a country's economy in terms of output, and the larger and more variable its trade, the larger its quota tends to be. For example, the United States, the world's largest economy, has the largest quota in the IMF. Quotas are reviewed periodically and can be increased when deemed necessary by the Board of Governors. Countries deposit 25 percent of their quota subscriptions in Special Drawing Rights or major currencies, such as U.S. dollars or Japanese yen. The IMF can call on the remainder, payable in the member's own currency, to be made available for lending as needed. Quotas, together with the equal number of basic votes each member has, determine countries' voting power. Quotas also help to determine the amount of financing countries can borrow from the IMF, and their share in SDR allocations. Most IMF loans are financed out of members' quotas. The exceptions are loans under the Poverty Reduction and Growth Facility, which are paid out of trust funds administered by the IMF and financed by contributions from the IMF itself and a broad spectrum of its member countries. If necessary, the IMF may borrow from a number of its financially strongest member countries to supplement the resources available from its quotas. It has done so on several occasions when borrowing countries needed large amounts of financing and a failure to help them might have put the international monetary system at risk. Like other financial institutions, the IMF also earns income from the interest charges and fees levied on its loans. It uses this income to meet funding costs, pay for administrative expenses, and maintain precautionary balances. In the early 2000s, there was a decline in the demand for the IMF's no concessional loans, reflecting benign global economic and financial conditions as well as policies in many emerging market countries that had reduced their vulnerability to crises. To diversify its income sources, the IMF established an investment account in 2005. The funds in the account are invested in eligible marketable obligations denominated in SDRs or in the securities of members whose currencies are included in the SDR basket. The Fund also began to explore other options for reducing its dependence on lending for its income.
26 | P a g e

INTERNATIONAL MONETARY FUND

Special Drawing Right (SDR)

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 and some other international organizations. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations. SDRs value The value of the SDR is based on a basket of key international currenciesthe euro, Japanese yen, pound sterling and U.S. dollar. The U.S. dollar-value of the SDR is posted daily on the IMFs website. The basket composition is reviewed every five years by the Executive Board to ensure that it reflects the relative importance of currencies in the worlds trading and financial systems. The SDR interest rate provides the basis for calculating the interest charged to members on regular (no concessional) IMF loans, the interest paid and charged to members on their SDR holdings, and the interest paid to members on a portion of their quota subscriptions. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term debt in the money markets of the SDR basket currencies. SDR allocations to IMF members Under its Articles of Agreement, the IMF may allocate SDRs to members in proportion to their IMF quotas, providing each member with a costless asset. However, if a members SDR holdings rise above its allocation, it earns interest on
27 | P a g e

INTERNATIONAL MONETARY FUND

the excess; conversely, if it holds fewer SDRs than allocated, it pays interest on the shortfall. There are two kinds of allocations General allocations of SDRs. General Allocations have to be based on a longterm global need to supplement existing reserve assets. Decisions to allocate SDRs have been made three times: in 1970-72, for SDR 9.3 billion; in 197981, for SDR 12.1 billion; and in August 2009, for an amount of SDR 161.2 billion. Special allocations of SDRs. A special one-time allocation of SDRs through the Fourth Amendment of the Articles of Agreement was implemented in September 2009. The purpose of this special allocation was to enable all members of the IMF to participate in the SDR system on an equitable basis and correct for the fact that countries that joined the Fund after 1981more than one-fifth of the current IMF membershiphad never received an SDR allocation. With the general SDR allocation of August 2009 and the special allocation of September 2009, the amount of SDRs increased from SDR 21.4 billion to SDR 204.1 billion (currently equivalent to about $317 billion).

The IMF's main business

Macroeconomic and financial sector policies In its oversight of member countries, the IMF focuses on the following: Macroeconomic policies relating to the government's budget, the management of money and credit, and the exchange rate; Macroeconomic performancegovernment and consumer spending, business investment, exports and imports, output (GDP), employment, and inflation; Balance of paymentsthat is, the balance of a country's transactions with the rest of the world; Financial sector policies, including the regulation and supervision of banks and other financial institutions; and
28 | P a g e

INTERNATIONAL MONETARY FUND

Structural policies that affect macroeconomic performance, such as those governing labor markets, the energy sector, and trade. The IMF advises members on how they might improve their policies in these areas so as to achieve higher rates of employment, lower inflation, and sustainable economic growth. How does the IMF help poor countries? Most of the IMF's loans to low-income countries are made on concessional terms, under the Poverty Reduction and Growth Facility. They are intended to ease the pain of the adjustments these countries need to make to bring their spending into line with their income and to promote reforms that foster stronger, sustainable growth and poverty reduction. An IMF loan also encourages other lenders and donors to provide additional financing, by signaling that a country's policies are appropriate. The IMF is not a development institution. It does notand, under its Articles of Agreement, it cannotprovide loans to help poor countries build their physical infrastructure, diversify their export or other sectors, or develop better education and health care systems. This is the job of the World Bank and the regional development banks. Some low-income countries neither want nor need financial assistance from the IMF, but they do want to be able to borrow on affordable terms in international capital markets or from other lenders In 2005, the finance ministers and heads of government of the G-8 countries (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) launched the Multilateral Debt Relief Initiative (MDRI), which called for the cancellation of the debts owed to the IMF, the International Development Association of the World Bank Group, and the African Development Fund by all HIPC countries that qualify for debt reduction under the HIPC Initiative. The IMF implemented the MDRI in January 2006 by canceling the debt owed to it by 19 countries. Most of the cost is being borne by the IMF itself, with additional funds coming from rich member countries to ensure that the IMF's lending capacity is not compromised. To ensure that developing countries reap full benefit from the loans and debt relief they receive, in 1999 the IMF and the World Bank introduced a process known as the Poverty

29 | P a g e

INTERNATIONAL MONETARY FUND

Reduction Strategy Paper (PRSP) process. To qualify for loans under the Poverty Reduction and Growth Facility and debt relief under the HIPC Initiative, countries must draw up their own strategies for reducing poverty, with input from civil society. The IMF and the World Bank provide an assessment of the strategies, but the latter are "owned" by the countries that formulate them. Economic growth rising average incomeis necessary for the sustained reduction of poverty, and a considerable body of research has shown that international trade stimulates growth. Developing countries face many obstacles, however, to expanding their trade with other countries. Access to the industrial countries' markets is restricted by barriers such as tariffs and quotas, and developing countries themselves have barriers that prevent them from trading with each other. The IMF and the World Bank have been urging their members for years to eliminate barriers to trade. Even if their access to other markets is increased, however, many developing countries may not be able to benefit from trade opportunities. Their export sectors may be weak because of policies that discourage investment or trade, and they may lack appropriate institutions (like customs administration) and infrastructure (for example, electricity to run plants, and roads and ports to get products to markets). In 2005, the IMF and the World Bank introduced the concept of Aid for Trade for the least developed countries. Aid for Trade includes analysis, policy advice, and financial support. The IMF provides advice to countries on such issues as the modernization of customs administration, tariff reform, and the improvement of tax collection to compensate for the loss of tariff revenues that may follow trade liberalization. The IMF also participates in the Integrated Framework for TradeRelated Technical Assistance, a multi-agency, multi-donor program that helps the least developed countries by identifying impediments to their participation in the global economy and coordinating technical assistance from different sources.

ACHIEVEMENTS OF IMF
One of the main objectives of the Fund was to present a forum where most of the countries of world may be able to solve their monetary problem by mutual cooperation.

30 | P a g e

INTERNATIONAL MONETARY FUND

Because of the effort of the Fund rich countries like America gave liberal economics assistance under Marshall Plan for the reconstruction of European countries. At the time of the establishment of the Fund, almost all the countries were practicing exchange control in one way or the other. There were many restrictions on the foreign trade. IMF has succeeded in reducing the same and in establishing multilateral system of foreign payment corresponding to increase the international trade, the fund has succeeded in increasing liquidity .On the other hand , the fund has increased its resources from 2920 cr. SDRs to 21200 cr. SDRs on the other hand it has created a new liquid assert in form of SDR. As a result of it international liquidity has increased manifold. The funds has succeeded in expanding the international trade and marketing it free from restriction to a large extend . It has rendered payments relating to international trade easy . by helping the countries suffering from trade disequilibrium , it has promoted their trade. All this has resulted into expanding the value of world's export from 53 billion dollars in 1948 to more than 2000 billion dollars at present. The fund has done a special service to developing countries in finding a solution to their problems . it has been actively helping them in their unfavourable balance of payments and achieving monetary stability . These countries have been receiving adequate assistance from the fund n determining their monetary , export import and exchange policies . it has provided technical assistance to them besides imparting training to their senior officers The fund has come the rescue of all member countries faced with economic crisis. On account of hike in petrol prices many countries of the world experience acute shortage of foreign exchange. In order to ease this situation, it set up Petrol Facility Fund.

SHORTCOMINGS OF IMF
The fund has failed to achieve its main objective of exchange rate stability. It succeeded till 1971 in maintaining fixed rate of exchange. Thereafter, it
31 | P a g e

INTERNATIONAL MONETARY FUND

becomes variable once again. Lack of stability in exchange rate is the major failure of the fund. At present, rate of exchange is determined by market force of demand and supply. Many efforts were made by the IMF to bring stability in price of gold but it failed miserably. Up to 1971, the price of gold was kept stable at $35 per oz but thereafter it has increased manifold. The IMF has giving loan only for meeting temporary balance of payment deficit. It provides no loans for development projects to promote development. The IMF has failed to remove restriction on foreign trade and control on foreign exchange. Many countries of the world have resorted to policy of protection with greater vigour. Critics say that International Monetary Fund is club of rich countries. It works at the behest of rich countries like America Britain etc. and helps their supporters. It pursues a policy of discrimination. IMF is not proper solution of problem of international liquidity. Although IMF has considerably increased its permanent resources and help in problem of the creation of new currency in the form of Special Drawing Rights (SDR's), yet the problem of liquidity persists. Consequently it will be difficult for the fund to lend resources to developing countries and help them overcome their balance of payment deficit. While providing loans, IMF imposes many condition on member nation e.g. reduction in the growth rate of money supply measures to control wages, salaries and prices, devaluation , reduction in fiscal deficit , etc. It results in excessive interference of IMF in the working of domestic economics of member nations. In the year 1971, a global monetary crisis triggered off when America not only devalued dollars but also stopped its convertibility into gold. The fund failed to resolve this crisis. Developing countries have not gained much from IMF. In 1990, 70% of SDRs were distributed to 26 rich countries and remaining 30% of SDRs were distributed to other member nation of the world.

32 | P a g e

INTERNATIONAL MONETARY FUND

IMF and India Relations

India is among one of the developing economies that effectively employed the various Fund programs to fortify its fiscal structure. Through productive engagement with the IMF, India formulated a consistent approach to expand domestic and global assistance for economic reforms. Whenever India underwent balance of payments crises, it sought the help of IMF and in turn the internationally recognized reserve willingly helped India to overcome the difficulties. Recently, India purchased IMF gold to lend money to developing countries. This proves that the fiscal reforms set in motion by the previous finance ministers have finally started gaining momentum, transforming India from fiscal borrower to major lender. The speed at which the gold was purchased by India on September 18, 2009 astonished the market observers, who later considered it as a smart move towards shoring its bullion funds and steadily trying to stake on the US dollar. Some analysts predict that India is purchasing gold to move forward for higher voting share in the IMF. India is also seeking for a considerable say in global fiscal affairs and greater account in the IMF.The Reserve Bank of India forfeited USD 1,045/ ounce of yellow metal paying the amount in hard exchange and not in the IMF's internal division of account IMF 2010-11 prediction of Indian Economy The International Monetary Fund (IMF) predicted 8% expansion during 2010-11. However, the growth will be affected by high inflation and increasing monetary deficit in the concerned fiscal year.

India's long term economic prospects will continue to remain sturdy in 2010-11 followed by lower growth rate at 7.7% for the FY 2011-12. Other than high inflation and rising financial deficit, the major areas of concern are rise in asset cost and the prospects of an unanticipated slowdown in the influx of foreign investment in India caused due by the chaos in worldwide financial markets.

33 | P a g e

INTERNATIONAL MONETARY FUND

International Monetary Fund and India

34 | P a g e

INTERNATIONAL MONETARY FUND

CONCLUSION
Strengthening the monitoring of global, regional, and country economies The IMF has taken several steps to improve economic and financial surveillance, which is its framework for providing advice to member countries on macroeconomic policies . It is emphasizing research into the links between the financial sector and the real economy and the sharing of cross-country experiences and it is improving its ability to warn member countries of risks and vulnerabilities in their economies.

35 | P a g e

INTERNATIONAL MONETARY FUND

BIBLOGRAPHY
1. 2. 3. 4. 5. 6. 7. 8. www. imf.org finsys update The Hindu Businessline.Com Inquirer.net Business Economics -by sultan chand Business World magazine Modern Economic Theroy by sultan chand Business Environment by TR Jain and Mukesh Trehan

36 | P a g e

INTERNATIONAL MONETARY FUND

APPENDIX Fast Facts on the IMF

Membership: 187 countries Headquarters: Washington, D.C. Executive Board: 24 Directors representing countries or groups of countries Staff: Approximately 2,500 from 160 countries Total quotas: US$376 billion (as of 5/25/11) Additional pledged or committed resources: US$600 billion Loans committed (as of 5/25/11): US$280 billion, of which US$215 billion have not been drawn (see table) Biggest borrowers (amount agreed as of 5/25/11): Greece, Portugal, Ireland Biggest precautionary loans (amount agreed as of 5/25/11): Mexico, Poland, Colombia Surveillance consultations: Consultations concluded for 120 countries in FY2010 and for 88 countries in FY2011 as of 02/11/11 Technical assistance: Field delivery in FY2010192.5 person years Transparency: In 2009, over 90 percent of Article IV and program-related staff reports and policy papers were published Original aims: Article I of the Articles of Agreement sets out the IMFs goals: promoting international monetary cooperation; facilitating the expansion and balanced growth of international trade; promoting exchange stability; assisting in the establishment of a multilateral system of payments.
37 | P a g e

INTERNATIONAL MONETARY FUND

List of Members
Last Updated: April 19, 2011
The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Membership of the IMF (Date of entry into force: December 27, 1945) Chronological List (187 Member Countries) Member Belgium1 Bolivia1 Canada1 China1 Colombia1 (Czechoslovakia)1,2,3 Egypt1 Ethiopia1 France1 Greece1 Honduras1 Iceland1 India1 Iraq1 Luxembourg1 Netherlands1 Norway1 Effective Date of Membership December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 (December 27, 1945) December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945

38 | P a g e

INTERNATIONAL MONETARY FUND

Philippines1 South Africa1 United Kingdom1 United States1 (Yugoslavia)1,4,5 Dominican Republic1 Ecuador1 Guatemala1 Paraguay1 Iran, Islamic Republic of (Iran)1 Chile1 Mexico1 Peru1 Costa Rica1 (Poland)1, 6 Brazil1 Uruguay1 (Cuba)1, 7 El Salvador8 Nicaragua8 Panama8 Denmark8 Venezuela, Repblica Bolivariana de8 Turkey Italy Syrian Arab Republic (Syria) Lebanon

December 27, 1945 December 27, 1945 December 27, 1945 December 27, 1945 (December 27, 1945) December 28, 1945 December 28, 1945 December 28, 1945 December 28, 1945 December 29, 1945 December 31, 1945 December 31, 1945 December 31, 1945 January 8, 1946 (January 10, 1946) January 14, 1946 March 11, 1946 (March 14, 1946) March 14, 1946 March 14, 1946 March 14, 1946 March 30, 1946 December 30, 1946 March 11, 1947 March 27, 1947 April 10, 1947 April 14, 1947

39 | P a g e

INTERNATIONAL MONETARY FUND

Australia Finland Austria Thailand (Siam) Pakistan Sri Lanka (Ceylon) Sweden Myanmar (Burma) Japan Germany Jordan Haiti (Indonesia)9 Israel Afghanistan, Islamic Rep. of (Afghanistan) Korea Argentina Vietnam (Viet Nam) Ireland Saudi Arabia Sudan Ghana Malaysia (Malaya) Tunisia Morocco Spain Libya

August 5, 1947 January 14, 1948 August 27, 1948 May 3, 1949 July 11, 1950 August 29, 1950 August 31, 1951 January 3, 1952 August 13, 1952 August 14, 1952 August 29, 1952 September 8, 1953 (April 15, 1954) July 12, 1954 July 14, 1955 August 26, 1955 September 20, 1956 September 21, 1956 August 8, 1957 August 26, 1957 September 5, 1957 September 20, 1957 March 7, 1958 April 14, 1958 April 25, 1958 September 15, 1958 September 17, 1958

40 | P a g e

INTERNATIONAL MONETARY FUND

Portugal Nigeria Lao People's Democratic Republic (Laos) New Zealand Nepal Cyprus Liberia Togo Senegal Somalia Sierra Leone Tanzania (Tanganyika) Kuwait Jamaica Cte d'Ivoire (Ivory Coast) Niger Burkina Faso (Upper Volta) Cameroon Central African Republic Chad Congo, Republic of Benin (Dahomey) Gabon Mauritania Trinidad and Tobago Madagascar (Malagasy Republic) Algeria

March 29, 1961 March 30, 1961 July 5, 1961 August 31, 1961 September 6, 1961 December 21, 1961 March 28, 1962 August 1, 1962 August 31, 1962 August 31, 1962 September 10, 1962 September 10, 1962 September 13, 1962 February 21, 1963 March 11, 1963 April 24, 1963 May 2, 1963 July 10, 1963 July 10, 1963 July 10, 1963 July 10, 1963 July 10, 1963 September 10, 1963 September 10, 1963 September 16, 1963 September 25, 1963 September 26, 1963

41 | P a g e

INTERNATIONAL MONETARY FUND

Mali Uganda Burundi Congo, Democratic Republic of the (Zare) Guinea Rwanda Kenya Malawi Zambia Singapore Guyana Indonesia9 Gambia, The Botswana Lesotho Malta Mauritius Swaziland (Yemen, People's Democratic Republic of (Southern Yemen))10 Equatorial Guinea Cambodia (Yemen Arab Republic)10 Barbados Fiji Oman Samoa (Western Samoa)

September 27, 1963 September 27, 1963 September 28, 1963 September 28, 1963 September 28, 1963 September 30, 1963 February 3, 1964 July 19, 1965 September 23, 1965 August 3, 1966 September 26, 1966 February 21, 1967 September 21, 1967 July 24, 1968 July 25, 1968 September 11, 1968 September 23, 1968 September 22, 1969

(September 29, 1969) December 22, 1969 December 31, 1969 (May 22, 1970) December 29, 1970 May 28, 1971 December 23, 1971 December 28, 1971

42 | P a g e

INTERNATIONAL MONETARY FUND

Bangladesh Bahrain Qatar United Arab Emirates Romania Bahamas, The Grenada Papua New Guinea Comoros Guinea-Bissau Seychelles So Tom and Prncipe Maldives Suriname Solomon Islands Cape Verde Dominica Djibouti St. Lucia St. Vincent and the Grenadines Zimbabwe Bhutan Vanuatu Antigua and Barbuda Belize Hungary St. Kitts and Nevis

August 17, 1972 September 7, 1972 September 8, 1972 September 22, 1972 December 15, 1972 August 21, 1973 August 27, 1975 October 9, 1975 September 21, 1976 March 24, 1977 June 30, 1977 September 30, 1977 January 13, 1978 April 27, 1978 September 22, 1978 November 20, 1978 December 12, 1978 December 29, 1978 November 15, 1979 December 28, 1979 September 29, 1980 September 28, 1981 September 28, 1981 February 25, 1982 March 16, 1982 May 6, 1982 August 15, 1984

43 | P a g e

INTERNATIONAL MONETARY FUND

Mozambique Tonga Kiribati Poland1,6 Angola Yemen, Republic of10 (Czechoslovakia)1,2,3 Bulgaria Namibia Mongolia Albania Lithuania Georgia Kyrgyz Republic (Kyrgyzstan) Latvia Marshall Islands Estonia Armenia Switzerland Russian Federation Belarus Kazakhstan Moldova Ukraine Azerbaijan Uzbekistan Turkmenistan

September 24, 1984 September 13, 1985 June 3, 1986 June 12, 1986 September 19, 1989 May 22, 1990 7 (September 20, 1990) September 25, 1990 September 25, 1990 February 14, 1991 October 15, 1991 April 29, 1992 May 5, 1992 May 8, 1992 May 19, 1992 May 21, 1992 May 26, 1992 May 28, 1992 May 29, 1992 June 1, 1992 July 10, 1992 July 15, 1992 August 12, 1992 September 3, 1992 September 18, 1992 September 21, 1992 September 22, 1992

44 | P a g e

INTERNATIONAL MONETARY FUND

San Marino Bosnia and Herzegovina5 Croatia5 Macedonia, former Yugoslav Republic of5 Slovenia5 Serbia5 Czech Republic3 Slovak Republic3 Tajikistan Micronesia, Federated States of Eritrea Brunei Darussalam Palau Timor-Leste (East Timor) Montenegro5 Kosovo Tuvalu Tuvalu 1

September 23, 1992 December 14, 1992 December 14, 1992 December 14, 1992 December 14, 1992 December 14, 1992 January 1, 1993 January 1, 1993 April 27, 1993 June 24, 1993 July 6, 1994 October 10, 1995 December 16, 1997 July 23, 2002 January 18, 2007 June 29, 2009 June 24, 2010 June 24, 2010

"Original members" (Article II, Section 1), which signed the Articles of Agreement by December 31, 1945. Costa Rica, Poland, Brazil, Uruguay, and Cuba signed the Articles by that date but their membership became effective upon deposit of their respective instruments of acceptance. 2 Czechoslovakia became a member of the Fund on December 27, 1945 and ceased to be a member, effective December 31, 1954; Czechoslovakia was readmitted as a member of the Fund on September 20, 1990, and ceased to be a member, effective January 1, 1993. 3 The Czech Republic and the Slovak Republic succeeded to the membership of Czechoslovakia on January 1, 1993. 4 The Socialist Federal Republic of Yugoslavia ceased to be a member, effective December 14, 1992.
45 | P a g e

INTERNATIONAL MONETARY FUND

Croatia (on January 15, 1993), Slovenia (on January 15, 1993), the former Yugoslav Republic of Macedonia (on April 21, 1993), Bosnia and Herzegovina (on December 20, 1995), and the Federal Republic of Yugoslavia (on December 20, 2000) succeeded to the membership in the Fund of the former Socialist Federal Republic of Yugoslavia, in each case, effective December 14, 1992. The Federal Republic of Yugoslavia was later renamed Serbia and Montenegro. In June 2006, Serbia and Montenegro, separated to become the Republic of Serbia and the Republic of Montenegro. Serbia succeeded to the membership of Serbia and Montenegro. 6 Poland became a member of the Fund on January 10, 1946 and withdrew from membership, effective March 14, 1950; Poland was readmitted as a member of the Fund on June 12, 1986. 7 Cuba withdrew from the Fund, effective April 2, 1964. 8 Countries that joined the Fund under the provisions for original members as extended to December 31, 1946 by Board of Governors Resolution IM-9. 9 Indonesia became a member of the Fund on April 15, 1954 and withdrew from membership, effective August 17, 1965; Indonesia was readmitted as a member of the Fund on February 21, 1967. 10 The Republic of Yemen succeeded to the membership of the Yemen Arab Republic and of the People's Democratic Republic of Yemen on May 22, 1990.

46 | P a g e