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International Monetary Fund Management

Meaning

The International Monetary Fund (IMF) is an organization of 190 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.

Illustration: Meaning

Existence

  • It came into existence through Bretton Woods Conference along with International Bank for Reconstruction and Development (IBRD)
  • It came into formal existence 1945 but started operations from 1947.
  • It has 190 members. Most recent being Andorra

Functions

  • According to the IMF itself, it works to foster global growth and economic stability by providing policy advice and financing the members by working with developing countries to help them achieve macroeconomic stability and reduce poverty.
  • Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid the balance of payments.
  • In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality, which was established in the 1950s. Low-income countries can borrow on concessional terms, which means there is a period of time with no interest rates, through the Extended Credit Facility (ECF) , the Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF) .

Purpose

  • The main purpose of the organization Is to keep the international monetary system stable.
  • The IMF achieves this by Surveillance of countries i.e.. , keeps an eye on the policies of the various governments and also publishes reports if there is any danger through these.

Financial Assistance

  • Every member of the organization has a Quota allocated to it and it depends on a country՚s openness to trade, variability and reserves.
  • The IMF grants loans to the countries which are facing Balance of Payment Deficit situation i.e.. , the exports are comparatively lesser in relation to imports

Governance at IMF

  • Board of governors: It includes 1 governor and 1 AG from every member country.
  • Committee: 24 governors advising to Executive board.
  • Executive Board: It includes 24 members who perform daily operational tasks.
  • Managing Director: It also has 4 Deputy MDs

Board of Governors

  • The Board of Governors consists of one governor and one alternate governor for each member country. Each member country appoints its two governors. The Board normally meets once a year and is responsible for electing or appointing executive director to the Executive Board.
  • While the Board of Governors is officially responsible for approving quota increases, special drawing right allocations, the admittance of new members, compulsory withdrawal of members, and amendments to the Articles of Agreement and By-Laws, in practice it has delegated most of its powers to the IMF՚s Executive Board.

Reports of IMF

  • World Economic Outlook Report: It is based on Global prospects.
  • Global Financial Stability Report: It is on the condition of the financial markets across the world.
  • External Sector Report: It is based on the external positions of the countries

Executive Directors

24 Executive Directors make up the Executive Board. The Executive Directors represent all 189 member countries in a geographically based roster. Countries with large economies have their own Executive Director, but most countries are grouped in constituencies representing four or more countries.

Managing Director

The IMF is led by a managing director, who is head of the staff and serves as Chairman of the Executive Board. Historically, the IMF՚s managing director has been a European citizen and the president of the World Bank has been an American citizen.

MCQs

IMF was formed through?

1. GATT

2. Bretton Woods Conference

3. Doha round

4. None of the above

Which is the latest member of IMF?

1. Guinea

2. Andorra

3. Thailand

4. Belarus

Manishika