International Monetary Fund (IMF) -Part 1: History and Introduction

Dr. Manishika Jain- Join online Paper 1 intensive course. Includes tests and expected questions.

History

  • Cooperation and reconstruction after WWII (1944-71)

  • Established at the 1944 Bretton Woods Conference

  • Created to prevent economic crises like the Great Depression

  • Formally came into existence on 27th December, 1945

Introduction

  • An international organization that provides financial assistance to member countries

  • Responsible for creation and maintenance of international monetary system

  • Nurtures economic growth and maintains high levels of employment among member countries

  • Headquartered in Washington, D.C.

  • 189 member countries

  • Sister organization – World Bank

  • Every member country of IMF is a member of World Bank

  • Founding fathers – J.M. Keynes and Harry Dexter White

Key Activities

  • Policy advice to member countries

  • Research, data, forecasts and analysis of global economy

  • Provision of loans

  • Technical assistance and training

Objectives

  • To promote global monetary cooperation

  • To obtain financial stability

  • To ease international trade

  • To promote high employment growth

  • To facilitate high sustainable economic growth

  • To reduce poverty across the world

  • To manage balance of payments imbalances and international monetary crises

  • To advise countries on their macroeconomic policies

IMF Functions

  • Economic and financial surveillance

  • Technical assistance and training

  • Lending

  • Research, data, statistics and analytics

Conditionality

  • Set of conditions for taking loans from IMF

  • Introduced in a 1952 Executive Board decision

Conditions may include:

  • Austerity

  • Devaluation

  • Trade liberalization

  • Improving administration and governance

  • Correct macroeconomic imbalances

  • Implement policy reforms

Publications

  • Country reports

  • Finance and development – quarterly

  • World Economic Outlook

  • Global Financial Stability Report

  • Research Bulletin

  • Staff papers

MCQs

Q 1 – Which of the following is NOT true about IMF?

a) IMF is the result of Bretton Woods Conference

b) IMF was established along the World Bank

c) Currently, there are 193 member countries of the IMF

d) IMF is headquartered in Washington, D.C.

Ans – c) Currently, there are 193 member countries of the IMF

Q 2 – The Bretton Woods system of fixed exchange rate system collapsed in ?

a) January 1965

b) August 1970

c) December 1976

d) August 1971

Ans – d) August, 1971

Q 3 – When was IMF established?

a) 27th December 1945

b) 24th September 1946

c) 27th December 1947

d) 30th January 1945

Ans – a) 27th December, 1945

Q 4 – Who among the following is/are the founding father/s of IMF?

i) Milton Friedman

ii) John Maynard Keynes

iii) Adam Smith

iv) Harry Dexter White

Choose the correct option:

a) Only ii)

b) Only ii) and iv)

c) Only i) and iii)

d) Only iii)

Ans – b) Only ii) and iv)

#ugcnet

#imf

#economics

#internationaleconomics