Professional Documents
Culture Documents
Arun Mishra
9893686820
arunjimishra@gmail.com
HISTORY
The International Monetary Fund was conceived
in July 1944 originally with 45 members and came
into existence in December 1945 when 29
countries signed the agreement.
2. Executive Board
3. A Managing Director
Managing Director
Elected by the Executive Directors.
Can be a Politician or an imp. International official.
Is anon-voting chairman of the board &
Head of the fund staff.
Quotas & subscriptions
Quota subscriptions generate most of the IMF's
financial resources.
Each member country of the IMF is assigned a
quota, based broadly on its relative size in the
world economy.
A member's quota determines its maximum
financial commitment to the IMF and its voting
power, and has a bearing on its access to IMF
financing.
A new country is assigned an initial quota in the
same range as the quotas of existing members.
Quotas & subscriptions
The quota formula is a weighted average of GDP (weight
of 50%), openness (30%), economic variability (15%), &
international reserves (5%)
For this purpose, GDP is measured as a blend of GDP
based on a market exchange rates (weight of 60%) & on
PPP exchange rates (40%).
Quotas are denominated in Special Drawing Rights
(SDRs)
The formula also includes a compression factor that
reduces the dispersion in calculated quota shares across
members.
Voting Rights
VOTING RIGHTS & QUOTA for INDIA
in IMF
Indias quota in IMF to rise to 2.7 per cent from
the existing 2.44 per cent
Voting share of India would rise to 2.6 per cent
from the current 2.34 per cent
For the first time, four emerging market
countries BRIC will be among the 10 largest
members of the IMF.
Special Drawing Rights (SDR)
The SDR is an international reserve asset, created by the
IMF in 1969 to supplement its member countries' official
reserves.
Its value is based on a basket of four key international
currencies, and SDRs can be exchanged for freely usable
currencies.
With a general SDR allocation that took effect on August
28 and a special allocation on September 9, 2009, the
amount of SDRs increased from SDR 21.4 billion to SDR
204.1 billion (currently equivalent to about $324 billion).
The value of the SDR was initially defined as
equivalent to 0.888671 grams of fine gold.
the SDR was redefined as a basket of currencies,
today consisting of the euro, Japanese yen,
pound sterling, and U.S. dollar.
The U.S. dollar-value of the SDR is posted daily
on the IMF's website.
It is calculated as the sum of specific amounts of
the four currencies valued in U.S. dollars, on the
basis of exchange rates quoted at noon each day
in the London market.
Lending Policies
A member country may request IMF financial
assistance if it has a balance of payments need
that is, if it cannot find sufficient financing on
affordable terms to meet its net international
payments while maintaining adequate reserve
buffers going forward.
An IMF loan provides a cushion that eases the
adjustment policies and reforms that a country
must make to correct its balance of payments
problem and restore conditions for strong
economic growth.
IMF Facilities
the IMF has developed various loan instruments,
or facilities, that are tailored to address the
specific circumstances of its diverse
membership.
IMF financial policies govern the modalities for
the use of its financial resources under existing
IMF facilities.
Different Programmes of IMF
Stand-by Arrangements:
Under this arrangement a credit tranche which is
equal to 100 per cent of member countrys quota is
available for lending to it.
Typically, stand-by arrangements last for 12-18
months period.
Repayments of loans under this arrangement are
made within 3-5 years of each drawing the money
from IMF.
Different Programmes of IMF
Extended Fund Facility (EFF):
was created in 1974 to help the developing
countries over longer periods (upto 3 years)
The loans taken under this facility can be paid
back over a period of 4-10 years.
developing countries can borrow more than their
quota.
The important special facilities are:
Poverty Reduction and Growth Facility (PRGF)
Supplemental Reserve Facility (SRF)
Contingent Credit Line (CCL)
Special Oil Facility.
Criticism of IMF
Related to Conditionality:
Related to myopic one-size-fits-all approach
Privatization to state-run undertakings as pre-
condition for sanctioning aid.
Delay in responding to crises.