International Monetary Fund

 The International Monetary Fund (IMF) is 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 around the world.
 What the IMF do?

An
Key IMF adapting
Activities IMF
Original
Aims
 KEY ACTIVITIES
The IMF supports its membership by providing…..

policy advice to •concessional loans to

governments and help fight poverty in
developing countries;
central banks based
and
on analysis of •technical assistance
economic trends and and training to help
cross-country countries improve the
experiences management of their
economies.
More specifically, the IMF continues to
 provide a forum for cooperation on international monetary
problems
 facilitate the growth of international trade, thus promoting job
creation, economic growth, and poverty reduction;
 promote exchange rate stability and an open system of
international payments; and
 lend countries foreign exchange when needed, on a temporary
basis and under adequate safeguards, to help them address
balance of payments problems.
The International Monetary Fund (IMF) was created in July 1944,
under the Bretton Woods system which consisted of three
international organizations:

 1) The International Monetary Fund (IMF): With the purpose of

creating international monetary co-operation.

 2) The International Bank of Reconstruction and Development

(IBRD): With the purpose of international development assistance
and Investment

 3) The International Trade Organization (ITO): With the Purpose

of promoting international trade .
These three elements of the Bretton Woods system were
conceived in a context of war, with the memories of high
unemployment, hyperinflation, depression and fluctuating
exchange rates which characterized the 1930’s.

However, The International Trade Organization was rejected by

US Congress, and in place the General Agreement of Tariffs
and Trade was developed, and enacted in 1948 in replace of the
ITO.
• Membership: 186 countries
• Headquarters: Washington, DC
• Executive Board: 24 Directors representing countries or groups of
countries
• Staff: approximately 2,478 from 143 countries
• Total quotas: $325 billion (as of 3/31/09)
• Additional pledged or committed resources: $500 billion
• Loans committed (as of 9/1/09): $175.5 billion, of which $124.5 billion
have not been drawn
• Biggest borrowers: Hungary, Mexico, Ukraine
• Technical assistance: Field delivery in FY2009—173 persons
during FY2009
• Surveillance consultations: Concluded in 2008—177 countries in
2008, of which 155 voluntarily published information on their
consultation (as of 03/31/09)
• Original aims: Article I of the Article of Agreement sets out the
IMF’s main 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; and
– making resources available (with adequate safeguards) to members experiencing
balance of payments difficulties.
International Joint IMF-
Monetary and Board of World Bank
Financial Development
Governors Committee
Committee

Executive Independent
Evaluation
Board
Office

Managing
Director
1) Surveillance
2) Conditional Financial Support
3) Technical Assistance
The appraisal of a country’s economic and structural
policies and performance from an international
standpoint. It is a regulatory or jurisdictional function,
which historically has been focused on the assessment
of the exchange arrangements, the exchange rates and
balance of payments.
Exchange Rates, Monetary and Fiscal Policies: Remain at the centre of
IMFsurveillance.
Structural Policies: Added to IMF surveillance agenda after the 1980’s oil
priceshock. Concerned with the macroeconomic performance of a country, and
payspecial attention to such issues as international trade and labour market issues.
Financial Sector: Added during the early 1990’s following a series of international
banking crisis's.
Institutional Issues: Concerned with such issues as independence of the
centralbank, financial sector regulation.
Assesment of Risks and Vulnerability: Crises prevention
Provide short term loans (1 to 5 years) to countries
experiencing balance of payments problems so that
they can restore conditions for sustainable
economic growth conditional upon policies and
procedures developed by the fund to govern the
access to and the use of its resource by member
countries.
• In the event that member countries experience difficulties
financing their balance of payments, the IMF is also a
fund that can be tapped to facilitate recover. A policy
program supported by financing is designed by the
national authorities in close cooperation with the IMF.

• The IMF also provides low-income countries with loans at

a concessional interest rate through the Poverty Reduction
and Growth Facility (PRGF) and the Exogeneous Shocks
Facility(ESF).
• The IMF’s goal for its technical support is to
contribute to the development of the productive
resources of member countries by enhancing the
effectiveness of economic policy and financial
policy.
The IMF provides technical assistance and training
mainly in four areas:
• Monetary and financial policies (monetary policy instruments, banking
system supervision and restructuring, foreign management and operations,
clearing settlement systems for payments, and structural development of
central banks)
• Fiscal policy and management (tax and customs policies and
administration, budget formulation, expenditure management, design of
social safety nets, and management of domestic and foreign debt)
•
• Compilation, management, dissemination, and improvement of statistical
data
• Economic and financial legislation.
 The Special Drawing Right (SDR) is an interest-bearing
international reserve asset created by the IMF in 1969 to
supplement other reserve assets of member countries.
 Its value is based on a basket of four key international
currencies, and SDRs can be exchanged for freely usable
currencies.
 The basket composition is reviewed every five years to ensure
that it reflects the relative importance of currencies in the
world's trading and financial systems.
 Countries that have larger holdings of SDRs than their
allocations receive interest based on the SDR interest rate.
 The SDR was created to support the Bretton Woods fixed exchange rate
system.
 A country participating in this system needed official reserves—
government or central bank holdings of gold and widely accepted foreign
currencies.
 But the international supply of two key reserve assets that were gold and
the U.S. dollar—proved inadequate.
 Therefore, the international community decided to create a new
international reserve asset.
 SDR are like coupons,holders can exchange them for curriences required
for making international payments in two ways:-first, through the
arrangement of voluntary exchanges and second, by the IMF designating
members.
 weight

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US Dollar
German
Japanese
french
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US Dollar
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US Dollar
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US Dollar
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SDR Fact Sheet

US Dollar

currencies with year

European
Japanese
jan 1981- jan 1986- jan 1991- jan 1996- jan

dec
2000 British
dec 1985 dec1990 dec 1995 dec 1998 1999-

US Dollar
European
Japanese
jan

dec

British
US Dollar
European
jan

dec

Japanese
2005 2010
2001- 2006-

British
weight
 General Allocations.
 The first allocation was for a total amount of
SDR 9.3 billion in 1970-72.
 The second SDRallocation,
Allocations tofor
IMF SDR
Members12.1 bn in

1979–81.
 The third general allocation was approved on
August 7, 2009 for an amount of SDR 161.2
billion
 Special Allocations.