Professional Documents
Culture Documents
IMF
Established in 1944 by 44 Nations ( currently 182 member countries ) after Bretton Woods Conference in USA. Goal - To stabilize exchange rates and assist the reconstruction of the world's international payment system Has no affiliates or subsidiaries Headquarters in Washington, D.C., three small offices are maintained in Paris, Geneva, New York ( UN)
Objectives of IMF
INTERNATIONAL MONETARY CO OPERATION TO FACILITATE EXPANSION AND BALANCED GROWTH OF INTERNATIONAL TRADE TO PROMOTE EXCHANGE STABILITY GENERATING HIGHER EMPLOYMENT AND INCOME ABOLITION OF EXCHANGE RESTRICTION AID TO MEMBERS DURING EMERGENCY
TO SHORTEN THE DURATION AND LESSEN THE DEGREE OF DISEQUILIBRIUM IN THE INTERNATIONAL BALANCE OF PAYMENTS OF MEMBERS.
Executive Board
IMF Managing Directors
First Deputy Managing Dir Deputy Managing Dir Deputy Managing Dir
Financing of the IMF IMFs resources come mainly from the quota subscription that countries pay when they join the IMF, following periodic reviews in which quotas are increased ( once in 5 years). Countries pay 25% of their quota subscription in Special Drawing Rights (SDRs) or major currencies, such as U.S. dollars or Japanese yen; IMF can call the remainder, payable in the members own currency, to be made available for lending as needed. Quotas determine not only a countrys subscription payments, but also the amount of financing that it can receive from IMF, and its share in SDR allocations. Quota also are the main determinant of countries voting power in the IMF. Quotas are intended broadly to reflect members relative size in the world economy: the larger a countrys economy in terms of output, and the larger and more variable its trade, the higher its quota tends to be.
Organization
Board of Governors
Each member country appoints one Governor and and Alternate Governor
Executive Board
24 Executive Directors which are representatives for the members
Managing Director
the chairman of the Executive Board
Governors spend most of their time dealing with their own countries
report their countries plans to their representatives only meet with entire IMF board once a year
If these plans are sufficient for the Executive Directors, the IMF grants the member a loan
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) International Center for the Settlement of Investment Disputes (ICSID)
IBRD continued
Lends to countries with relatively high per capita incomes Money is used for:
development projects (i.e. highways, schools) programs to help governments change the way they manage their economies
lends to countries with annual per capita incomes of about $800 or less
Its loans are knows as credits
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
152 members
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
IDA does not charge an interest rate, only a 0.75% service charge
repayment period is 30-45 years with a 10 grace period
Asian Crisis
Financial crisis broke out in Asia in 1997
large declines in currencies, stock markets, and other asset prices
IMFs Actions
Temporary tightening of monetary policy
correct the weaknesses in the financial system remove features of the economy that were impediments to growth assist in reopening lines of external financing maintaining a sound fiscal policy