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When there is a country where has a serious finance problem, other countries loan the money for the poor country.IMF is a kind of association among the countries to prepare the situation when the nation bank of country is bankrupted.
HISTORY OF IMF
The International Monetary Fund Was created in 1944, at the Bretton Woods conference to prevent the kinds of chain reaction in the
Bretton wood agreement was contracted in 1944 and IMF was created
in 1946.
IMF started to make service with IBRD (International Bank of Reconstruction and Development) in 1947.
IMF headquarters is in Washington D.C , U.S.A Five largest shareholders are United States, Japan, Germany, France,
United Kingdom.
China, Russia, and Saudi Arabia have their own seats on the Board. 16 other Executive Directors are elected for two year terms by groups of countries, known as Constituencies.
Total quotas of $312 billion; outstanding loans of $71 billion to 82 countries (According to the report of August 31, 2005).
GROWTH IN IMF MEMBERSHIP (1945-2003) In the beginning 29 member countries Today, 187 member countries.
PURPOSES OF IMF IMF promote international monetary cooperation. expansion and balanced growth of international trade.
FUNCTIONS OF IMF
Surveillance (like a doctor) Gathering data and assessing economic policies of countries.
Technical Assistance (like a teacher) Strengthening human skills and institutional capacity of countries.
to
support
reforms
Managing Director
Executive Board (24 Members) Weighted Voting System:
US Representative holds 17% of total Voting Power 27 Countries together hold 1.4% of total Voting Power Decisions are most often made by consensus, rather than fractious parliamentary fights.
Day to day affairs are guided by the Executive Board & 24 Executive Directors. Managing Director of IMF is Chairman of Executive Board.
India and the IMF has a positive relationship. The IMF has provided financial assistance to India, which has helped in boosting the country's economy.
The IMF praised the country for it was able to avoid the Asian
Financial Crisis in 1999 and was also able to maintain the average
rate of growth of its economy.
The Managing Director of International Monetary Fund Rodrigo De Rato visited India in May 2005.
In 2005, the IMF said that the budget of India is very positive
for it points that the economy of the country will grow at the rate of 6.7%. International Monetary Fund said that the reasons behind the economy growth of India are that the RBI has been able to control inflation and has also handled its monetary policies very skillfully.
The IMF has suggested that India can become a financial super power by bringing in more reforms in its economic policies
International Monetary Fund (IMF) maintains international monetary cooperation among its members World Bank aids in the development and reconstruction of it members
The
IMF BRIEFING
Exchange
rate
stability,
balance
of
payments
Currently 187 member countries By sharing economic policies the system of buying and selling currencies would be stable
International
Bank
for
Reconstruction
and
Development (IBRD)
International Development Association (IDA) International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA)
After the Great Depression in the 1930s there was a need for an
Uncertainty of the value of paper money (no longer used the gold standard)
proposals for monetary system by Harry Dexter White (U.S.) and John Keynes (UK)
establish the value of each currency eliminate restrictions and certain practices on trade assistance for post-war reconstruction
Bretton
iv) help establish multilateral system of payments and eliminate foreign exchange restrictions
of disequilibrium
the world
its value is based on the worth of the worlds five major currencies US Dollar, French Franc, Pound Sterling, Japanese Yen, Deutsche Mark
ORGANIZATION
Board of Governors
Each member country appoints one Governor and and Alternate Governor
Executive Board
Managing Director
Governors
report their countries plans to their representatives only meet with entire IMF board once a year
members
Managing
2,600 people
Size of the quotas determine voting power IMF decides on the quota for each member
A country that had not taken in enough foreign currency to pay the other countries for what they have bought
If
WORLD BANK
Made up of 5 different organizations
International
Bank
for
Reconstruction
and
Development (IBRD)
International Development Association (IDA) International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA)
World
181
member countries
IBRD CONTINUED
development projects (i.e. highways, schools) programs to help governments change the way they manage their economies
Established in 1960
lends to countries with annual per capita incomes of about $800 or less
161 members
finances private sector investments, mobilizes capital in international financial markets, and provides technical assistance and advice to governments and businesses
provides both loan and equity finance for business ventures in developing countries
developing
investment
provides investment marketing services and legal advisory services to its members
152
members
international investment
Provides
members
Members subscriptions
Callable Capital
portion of the subscriptions that the Bank borrows the Bank charges a rate of interest rate on its loans to pay this back
Replenishments
loans must be repaid within 15-20 years with a 5 year grace period
IDA
service charge
ASIAN CRISIS
Financial
affected
IMF
arranged programs of economic stabilization and reform with Indonesia, Korea, and Thailand
IMFS ACTIONS
Temporary correct remove
the weaknesses in the financial system features of the economy that were
impediments to growth
assist
maintaining