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Lecture 13 and 14 - FirstAttachment

The IMF was established in 1945 to promote international monetary cooperation and stability. It aims to facilitate balanced global trade and financial systems. The IMF monitors economic policies, provides loans to countries with payment issues, and offers technical assistance. It is governed by the Board of Governors consisting of member countries, and managed operationally by the Executive Board. The IMF can impose conditions like structural adjustment programs on loan recipients. However, its voting system concentrates power among its largest financial contributors.

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Maheen Ali
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28 views

Lecture 13 and 14 - FirstAttachment

The IMF was established in 1945 to promote international monetary cooperation and stability. It aims to facilitate balanced global trade and financial systems. The IMF monitors economic policies, provides loans to countries with payment issues, and offers technical assistance. It is governed by the Board of Governors consisting of member countries, and managed operationally by the Executive Board. The IMF can impose conditions like structural adjustment programs on loan recipients. However, its voting system concentrates power among its largest financial contributors.

Uploaded by

Maheen Ali
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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International Monetary

Fund (IMF)
Introduction

o The IMF was established by the Bretton Woods System following World War II

o It was created by Western countries to establish a new monetary system that


would promote and regulate the world economy

o It is an organization of 189 member countries

o Its headquarter is in Washington, D.C

o Managing Director : Kristalina Georgieva


Aim and Objectives of IMF

o Promote international monetary cooperation

o Facilitate the expansion and balanced growth of international trade

o Promote exchange stability

o Assist in the establishment of a multilateral system of payments

o Make resources available (with adequate safeguards) to members experiencing


balance-of-payments difficulties
Functions of IMF

o To ensure the stability of the international monetary and financial system. It


helps resolve crises, and works with its member countries to promote growth
and alleviate poverty
o Surveillance: To maintain stability and prevent crises in the international
monetary system, the IMF monitors member country policies as well as
national, regional, and global economic and financial developments through a
formal system known as surveillance
o It provides advice to member countries and promotes policies designed to foster
economic stability, reduce vulnerability to economic and financial crises, and
raise living standards.
Continue..
o Financial assistance: It provide loans to its member countries that are experiencing actual or potential balance-of-
payments problems
o Individual country adjustment programs are designed in close cooperation with the IMF and are supported by IMF
financing

o Capacity development: IMF also provide technical assistance and training to its member countries to build better
economic institutions

o This includes, for example, designing and implementing more effective policies for taxation and administration,
expenditure management, monetary and exchange rate policies, banking and financial system supervision and
regulation, legislative frameworks, and economic statistics
More quota thus more voting power
Special Drawing Rights (SDR)
o The IMF issues an international reserve asset known as Special Drawing Rights (SDR)

o SDR is an international reserve asset (SDR currency of IMF, Special joined rights)

o It can supplement the official reserves of member countries. Total global allocations are currently about
SDR 204 billion (some $283 billion).

o IMF members can voluntarily exchange SDRs for currencies among themselves

o Imf provide non consational loans


Organization & Management

o The IMF has a management team and 17 departments that carry out its country,
policy, analytical, and technical work

o BOARD OF GOVERNORS:
o At the top of its organizational structure is the Board of Governors
o It consists of one governor and one alternate governor for each member country
o The governor is appointed by the member country and is usually the minister of
finance or the head of the central bank
o The Board of Governors meets once a year at the IMF–World Bank Annual
Meetings
Organization & Management
o Twenty-four of the governors serve on the International Monetary and Financial
Committee, or IMFC, which advises the IMF's Executive Board on the
supervision and management of the international monetary and financial system.
o Executive Board The day-to-day work of the IMF is overseen by its 24
member Executive Board , which represents the entire membership and supported
by IMF staff

o The Managing Director is the head of the IMF staff and chair of the Executive
Board and is assisted by four Deputy Managing Directors
Structural Adjustment Programs
o Power of IMF becomes clear when a country gets into financial trouble and needs funds to make payments
on private loans

o Before IMF grants a loan, it imposes conditions, requiring to make structural changes in economy

o These conditions are called ‘Structural Adjustment Programs

o The structural Adjustment Facility program (SAF) was introduced by the Fund in 1986
o 3 phases of IMF
IMF: DEMOCRATIC SYSTEM?
o IMF is an international organization in sense that its membership is made up of
countries, but it is by no means a democratic system

o Voting is based on wealth-weighted formula where the more a country contributes


to the fund's resources the more "say" that particular country has

o Currently, five countries (the U.S., Japan, Germany, France, and Great Britain) are
responsible for about 40 percent of the fund's resources; therefore, these five
countries control close to half of the votes on the board

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