A

PROJECT REPORT
ON
I.M.F
And its contribution in Global Trade

INDEX
Name
Introduction
History
Asian Financial Crisis and Relief
Role of I.M.F
Technical Assistance
Lending by the I.M.F
Gold
SDR
Governance
Accountability
Tackling Current Challenges
Case Study
Bibliography

Page No.

IMF Head Office in Washington DC

INTRODUCTION
The International Monetary Fund (IMF) is an international organization that was created on July
22, 1944 at the Bretton Woods Conference and came into existence on December 27, 1945 when
29 countries signed the Articles of Agreement.[1] It originally had 45 members. The IMF's stated
goal was to stabilize exchange rates and assist the reconstruction of the worlds international
payment system post-World War II. The IMF describes itself as an organization of 188 countries
(as of April 2012), working to foster global monetary cooperation, secure financial stability,
facilitate international trade, promote high employment and sustainable economic growth, and
reduce poverty. The organization's stated objectives are to promote international economic
cooperation, international trade, employment, and exchange rate stability, including by making
financial resources available to member countries to meet balance of payments needs. Its
headquarters are in Washington, D.C.
The IMF works to foster global growth and economic stability. It provides policy advice and
financing to members in economic difficulties and also works with developing nations to help
them achieve macroeconomic stability and reduce poverty.
The IMF promotes international monetary cooperation and exchange rate stability, facilitates the
balanced growth of international trade, and provides resources to help members in balance of
payments difficulties or to assist with poverty reduction.
With its near-global membership of 188 countries, the IMF is uniquely placed to help member
governments take advantage of the opportunitiesand manage the challengesposed by
globalization and economic development more generally. The IMF tracks global economic trends
and performance, alerts its member countries when it sees problems on the horizon, provides a
forum for policy dialogue, and passes on know-how to governments on how to tackle economic
difficulties.
The IMF provides policy advice and financing to members in economic difficulties and also
works with developing nations to help them achieve macroeconomic stability and reduce
poverty.
Marked by massive movements of capital and abrupt shifts in comparative advantage,
globalization affects countries' policy choices in many areas, including labor, trade, and tax
policies. Helping a country benefit from globalization while avoiding potential downsides is an

important task for the IMF. The global economic crisis has highlighted just how interconnected
countries have become in todays world economy.
Key IMF activities
The IMF supports its membership by providing:

policy advice to governments and central banks based on analysis of economic trends and
cross-country experiences.

research, statistics, forecasts, and analysis based on tracking of global, regional, and
individual economies and markets.

loans to help countries overcome economic difficulties.

concessional loans to help fight poverty in developing countries.

technical assistance and training to help countries improve the management of their
economies.

Original aims
The IMF was founded more than 60 years ago toward the end of World War II (see History). The
founders aimed to build a framework for economic cooperation that would avoid a repetition of
the disastrous economic policies that had contributed to the Great Depression of the 1930s and
the global conflict that followed.
Since then the world has changed dramatically, bringing extensive prosperity and lifting millions
out of poverty, especially in Asia. In many ways the IMF's main purposeto provide the global
public good of financial stabilityis the same today as it was when the organization was
established.
More specifically, the IMF continues to:

provide a forum for cooperation on international monetary problems

facilitate the growth of international trade, thus promoting job creation, economic growth,
and poverty reduction;

promote exchange rate stability and an open system of international payments; and

lend countries foreign exchange when needed, on a temporary basis and under adequate
safeguards, to help them address balance of payments problems.

An Adapting IMF
The IMF has evolved along with the global economy throughout its 65-year history, allowing the
organization to retain its central role within the international financial architecture
As the world economy struggles to restore growth and jobs after the worst crisis since the Great
Depression, the IMF has emerged as a very different institution. During the crisis, it mobilized
on many fronts to support its member countries. It increased its lending, used its cross-country
experience to advise on policy solutions, supported global policy coordination, and reformed the
way it makes decisions. The result is an institution that is more in tune with the needs of its 188
member countries.

Stepping up crisis lending : The IMF responded quickly to the global economic crisis,
with lending commitments reaching a record level of more than US$250 billion in 2010.
This figure includes a sharp increase in concessional lending (thats to say, subsidized
lending at rates below those being charged by the market) to the worlds poorest nations.

Greater lending flexibility : The IMF has overhauled its lending framework to make it
better suited to countries individual needs. It is also working with other regional
institutions to create a broader financial safety net, which could help prevent new crises.

Providing analysis and advice : The IMFs monitoring, forecasts, and policy advice,
informed by a global perspective and by experience from previous crises, have been in
high demand and have been used by the G-20.

Drawing lessons from the crisis : The IMF is contributing to the ongoing effort to draw
lessons from the crisis for policy, regulation, and reform of the global financial
architecture.

Historic reform of governance : The IMFs member countries also agreed to a

significant increase in the voice of dynamic emerging and developing economies in the
decision making of the institution, while preserving the voice of the low-income
members.

The IMF currently has a near-global membership of 188 countries. To become a member,
a country must apply and then be accepted by a majority of the existing members. In June
2010, Tuvalu joined the IMF, becoming the institution's 187th member.

Upon joining, each member country of the IMF is assigned a quota, based broadly on its
relative size in the world economy. The IMF's membership agreed in November 2010 on
a major overhaul of its quota system to reflect the changing global economic realities,
especially the increased weight of major emerging markets in the global economy.
A member country's quota defines its financial and organizational relationship with the
IMF, including:

Subscriptions: A member country's quota subscription determines the maximum amount

of financial resources the country is obliged to provide to the IMF. A country must pay its
subscription in full upon joining the IMF: up to 25 percent must be paid in the IMF's own
currency, called Special Drawing Rights (SDRs) or widely accepted currencies (such as
the dollar, the euro, the yen, or pound sterling), while the rest is paid in the member's own
currency.

Voting power: The quota largely determines a member's voting power in IMF decisions.
Each IMF member's votes are comprised of basic votes plus one additional vote for each
SDR 100,000 of quota. The number of basic votes attributed to each member is
calculated as 5.502 percent of total votes. Accordingly, the United States has 421,965
votes (16.76 percent of the total), and Tuvalu has 759 votes (0.03 percent of the total).

Access to financing: The amount of financing a member country can obtain from the
IMF is based on its quota. For instance, under Stand-By and Extended Arrangements,
which are types of loans, a member country can borrow up to 200 percent of its quota
annually and 600 percent cumulatively.

SDR allocations: SDRs are used as an international reserve asset. A member's share of
general SDR allocations is established in proportion to its quota. The most recent general
allocation of SDRs took place in 2009.

HISTORY
Co-operation and Reconstruction (1944-1971)
During the Great Depression of the 1930s, countries attempted to shore up their failing
economies by sharply raising barriers to foreign trade, devaluing their currencies to compete
against each other for export markets, and curtailing their citizens' freedom to hold foreign
exchange. These attempts proved to be self-defeating. World trade declined sharply (see chart
below), and employment and living standards plummeted in many countries.
This breakdown in international monetary cooperation led the IMF's founders to plan an
institution charged with overseeing the international monetary systemthe system of exchange
rates and international payments that enables countries and their citizens to buy goods and
services from each other. The new global entity would ensure exchange rate stability and
encourage its member countries to eliminate exchange restrictions that hindered trade.

The Bretton Woods agreement

The IMF was conceived in July 1944, when representatives of 45 countries meeting in the town
of Bretton Woods, New Hampshire, in the northeastern United States, agreed on a framework for
international economic cooperation, to be established after the Second World War. They
believed that such a framework was necessary to avoid a repetition of the disastrous economic
policies that had contributed to the Great Depression.
The IMF came into formal existence in December 1945, when its first 29 member countries
signed its Articles of Agreement. It began operations on March 1, 1947. Later that year, France
became the first country to borrow from the IMF.
The IMF's membership began to expand in the late 1950s and during the 1960s as many African
countries became independent and applied for membership. But the Cold War limited the Fund's
membership, with most countries in the Soviet sphere of influence not joining.

The End of Bretton Woods System (1971-1981)

By the early 1960s, the U.S. dollar's fixed value against gold, under the Bretton Woods system of
fixed exchange rates, was seen as overvalued. A sizable increase in domestic spending on
President Lyndon Johnson's Great Society programs and a rise in military spending caused by the
Vietnam War gradually worsened the overvaluation of the dollar.
The system dissolved between 1968 and 1973. In August 1971, U.S. President Richard Nixon
announced the "temporary" suspension of the dollar's convertibility into gold. While the dollar
had struggled throughout most of the 1960s within the parity established at Bretton Woods, this
crisis marked the breakdown of the system. An attempt to revive the fixed exchange rates failed,
and by March 1973 the major currencies began to float against each other.
Since the collapse of the Bretton Woods system, IMF members have been free to choose any
form of exchange arrangement they wish (except pegging their currency to gold): allowing the
currency to float freely, pegging it to another currency or a basket of currencies, adopting the
currency of another country, participating in a currency bloc, or forming part of a monetary
union.

Debt and Painful Reforms (1982-1989)

The oil shocks of the 1970s, which forced many oil-importing countries to borrow from
commercial banks, and the interest rate increases in industrial countries trying to control inflation
led to an international debt crisis.
During the 1970s, Western commercial banks lent billions of "recycled" petrodollars, getting
deposits from oil exporters and lending those resources to oil-importing and developing
countries, usually at variable, or floating, interest rates. So when interest rates began to soar in
1979, the floating rates on developing countries' loans also shot up. Higher interest payments are
estimated to have cost the non-oil-producing developing countries at least $22 billion during
197881. At the same time, the price of commodities from developing countries slumped
because of the recession brought about by monetary policies. Many times, the response by

developing countries to those shocks included expansionary fiscal policies and overvalued
exchange rates, sustained by further massive borrowings.
When a crisis broke out in Mexico in 1982, the IMF coordinated the global response, even
engaging the commercial banks. It realized that nobody would benefit if country after country
failed to repay its debts.
The IMF's initiatives calmed the initial panic and defused its explosive potential. But a long road
of painful reform in the debtor countries, and additional cooperative global measures, would be
necessary to eliminate the problem.

Societal Change for Eastern Europe and Asian Upheaval (1990-2004)

The fall of the Berlin wall in 1989 and the dissolution of the Soviet Union in 1991 enabled the
IMF to become a (nearly) universal institution. In three years, membership increased from 152
countries to 172, the most rapid increase since the influx of African members in the 1960s.
In order to fulfill its new responsibilities, the IMF's staff expanded by nearly 30 percent in six
years. The Executive Board increased from 22 seats to 24 to accommodate Directors from Russia
and Switzerland, and some existing Directors saw their constituencies expand by several
countries.
The IMF played a central role in helping the countries of the former Soviet bloc transition from
central planning to market-driven economies. This kind of economic transformation had never
before been attempted, and sometimes the process was less than smooth. For most of the 1990s,
these countries worked closely with the IMF, benefiting from its policy advice, technical
assistance, and financial support.
By the end of the decade, most economies in transition had successfully graduated to market
economy status after several years of intense reforms, with many joining the European Union in
2004.

ASIAN FINANCIAL CRISIS

In 1997, a wave of financial crises swept over East Asia, from Thailand to Indonesia to Korea
and beyond. Almost every affected country asked the IMF for both financial assistance and for
help in reforming economic policies. Conflicts arose on how best to cope with the crisis, and the
IMF came under criticism that was more intense and widespread than at any other time in its
history.
From this experience, the IMF drew several lessons that would alter its responses to future
events. First, it realized that it would have to pay much more attention to weaknesses in countries
banking sectors and to the effects of those weaknesses on macroeconomic stability. In 1999, the
IMFtogether with the World Banklaunched the Financial Sector Assessment Program and
began conducting national assessments on a voluntary basis. Second, the Fund realized that the
institutional prerequisites for successful liberalization of international capital flows were more
daunting than it had previously thought. Along with the economics profession generally, the IMF
dampened its enthusiasm for capital account liberalization. Third, the severity of the contraction
in economic activity that accompanied the Asian crisis necessitated a re-evaluation of how fiscal
policy should be adjusted when a crisis was precipitated by a sudden stop in financial inflows.

Debt relief for poor countries

During the 1990s, the IMF worked closely with the World Bank to alleviate the debt burdens of
poor countries. The Initiative for Heavily Indebted Poor Countries was launched in 1996, with
the aim of ensuring that no poor country faces a debt burden it cannot manage. In 2005, to help
accelerate progress toward the United Nations Millennium Development Goals (MDGs), the
HIPC Initiative was supplemented by the Multilateral Debt Relief Initiative (MDRI).

Globalization and the Crisis (2005 - present)

The IMF has been on the front lines of lending to countries to help boost the global economy as
it suffers from a deep crisis not seen since the Great Depression.For most of the first decade of
the 21st century, international capital flows fueled a global expansion that enabled many
countries to repay money they had borrowed from the IMF and other official creditors and to
accumulate foreign exchange reserves.
The global economic crisis that began with the collapse of mortgage lending in the United States
in 2007, and spread around the world in 2008 was preceded by large imbalances in global capital
flows.Global capital flows fluctuated between 2 and 6 percent of world GDP during 1980-95, but
since then they have risen to 15 percent of GDP. In 2006, they totaled $7.2 trillionmore than a
tripling since 1995. The most rapid increase has been experienced by advanced economies, but
emerging markets and developing countries have also become more financially integrated.
The founders of the Bretton Woods system had taken it for granted that private capital flows
would never again resume the prominent role they had in the nineteenth and early twentieth
centuries, and the IMF had traditionally lent to members facing current account difficulties.
The latest global crisis uncovered a fragility in the advanced financial markets that soon led to
the worst global downturn since the Great Depression. Suddenly, the IMF was inundated with
requests for stand-by arrangements and other forms of financial and policy support.
The international community recognized that the IMFs financial resources were as important as
ever and were likely to be stretched thin before the crisis was over. With broad support from
creditor countries, the Funds lending capacity was tripled to around $750 billion. To use those
funds effectively, the IMF overhauled its lending policies, including by creating a flexible credit
line for countries with strong economic fundamentals and a track record of successful policy
implementation. Other reforms, including ones tailored to help low-income countries, enabled
the IMF to disburse very large sums quickly, based on the needs of borrowing countries and not
tightly constrained by quotas, as in the past.

For more on the ideas that have shaped the IMF from its inception until the late 1990s, take a
look at James Boughton's "The IMF and the Force of History: Ten Events and Ten Ideas that
Have Shaped the Institution.

ROLE OF IMF
Surveillance
When a country joins the IMF, it agrees to subject its economic and financial policies to the
scrutiny of the international community. It also makes a commitment to pursue policies that are
conducive to orderly economic growth and reasonable price stability, to avoid manipulating
exchange rates for unfair competitive advantage, and to provide the IMF with data about its
economy. The IMF's regular monitoring of economies and associated provision of policy advice
is intended to identify weaknesses that are causing or could lead to financial or economic
instability. This process is known as surveillance.

 Country surveillance
Country surveillance is an ongoing process that culminates in regular (usually annual)
comprehensive consultations with individual member countries, with discussions in between as
needed. The consultations are known as "Article IV consultations" because they are required by
Article IV of the IMF's Articles of Agreement. During an Article IV consultation, an IMF team of
economists visits a country to assess economic and financial developments and discuss the
country's economic and financial policies with government and central bank officials. IMF staff
missions also often meet with parliamentarians and representatives of business, labor unions, and
civil society.
The team reports its findings to IMF management and then presents them for discussion to the
Executive Board, which represents all of the IMF's member countries. A summary of the Board's
views is subsequently transmitted to the country's government. In this way, the views of the
global community and the lessons of international experience are brought to bear on national
policies. Summaries of most discussions are released in Public Information Notices and are
posted on the IMF's web site, as are most of the country reports prepared by the staff.

Regional surveillance
Regional surveillance involves examination by the IMF of policies pursued under currency
unionsi ncluding the euro area, the West African Economic and Monetary Union, the Central
African Economic and Monetary Community, and the Eastern Caribbean Currency Union.
Regional economic outlook reports are also prepared to discuss economic developments and key
policy issues in Asia Pacific, Europe, Middle East and Central Asia, Sub-Saharan Africa, and the
Western Hemisphere.

Global surveillance

Global surveillance entails reviews by the IMF's Executive Board of global economic trends and
developments. The main reviews are based on the World Economic Outlook reports, the Global
Financial Stability Report, which covers developments, prospects, and policy issues in
international financial markets, and the Fiscal Monitor, which analyzes the latest developments
in public finance. All three reports are published twice a year, with updates being provided on a
quarterly basis. In addition, the Executive Board holds more frequent informal discussions on
world economic and market developments.

Technical Assistance
The IMF shares its expertise with member countries by providing technical assistance and
training in a wide range of areas, such as central banking, monetary and exchange rate policy, tax
policy and administration, and official statistics. The objective is to help improve the design and
implementation of members' economic policies, including by strengthening skills in institutions
such as finance ministries, central banks, and statistical agencies. The IMF has also given advice
to countries that have had to reestablish government institutions following severe civil unrest or
war.
In 2008, the IMF embarked on an ambitious reform effort to enhance the impact of its technical
assistance. The reforms emphasize better prioritization, enhanced performance measurement,
more transparent costing and stronger partnerships with donors.

TECHNICAL ASSISTANCE

Beneficiaries of technical assistance

Technical assistance is one of the IMF's core activities. It is concentrated in critical areas of
macroeconomic policy where the Fund has the greatest comparative advantage. Thanks to its
near-universal membership, the IMF's technical assistance program is informed by experience
and knowledge gained across diverse regions and countries at different levels of development.
About 80 percent of the IMF's technical assistance goes to low- and lower-middle-income
countries, in particular in sub-Saharan Africa and Asia. Post-conflict countries are major
beneficiaries. The IMF is also providing technical assistance aimed at strengthening the
architecture of the international financial system, building capacity to design and implement
poverty-reducing and growth programs, and helping heavily indebted poor countries (HIPC) in
debt reduction and management.

Types of Technical Assistance

The IMF's technical assistance takes different forms, according to needs, ranging from long-term
hands-on capacity building to short-notice policy support in a financial crisis. Technical
assistance is delivered in a variety of ways. IMF staff may visit member countries to advise
government and central bank officials on specific issues, or the IMF may provide resident
specialists on a short- or a long-term basis. Technical assistance is integrated with country reform
agendas as well as the IMF's surveillance and lending operations.

The IMF is providing an increasing part of its technical assistance through regional centers
located in Gabon, Mali, Mauritius, and Tanzania for Africa; in Barbados and Guatemala for
Central America and the Caribbean; in Lebanon for the Middle East; and in Fiji for the Pacific
Islands. The IMF also offers training courses for government and central bank officials of
member countries at its headquarters in Washington, D.C., and at regional training centers in
Austria, Brazil, China, India, Singapore, Tunisia, and the United Arab Emirates.

Partnership with Donors

Bilateral and multilateral donors are playing an increasingly important role in enabling the IMF
to meet country needs in this area, with their contributions now financing about two thirds of the
IMF's field delivery of technical assistance. Strong partnerships between recipient countries and
donors enable IMF technical assistance to be developed on the basis of a more inclusive dialogue
and within the context of a coherent development framework. The benefits of donor
contributions thus go beyond the financial aspect.
The IMF is currently seeking to leverage the comparative advantages of its technical assistance
to expand donor financing to meet the needs of recipient countries. As part of this effort, the
Fund is strengthening its partnerships with donors by engaging them on a broader, longer-term
and more strategic basis.
The idea is to pool donor resources in multi-donor trust funds that would supplement the IMF's
own resources for technical assistance while leveraging the Fund's expertise and experience.
Expansion of the multi-donor trust fund model is envisaged on a regional and topical basis,
offering donors different entry points according to their priorities. To this end, the IMF is
establishing a series of topical trust funds, covering such topics as anti-money
laundering/combating the financing of terrorism; fragile states; public financial management;
management of natural resource wealth, public debt sustainability and management, statistics
and data provision; and financial sector stability and development.

LENDING BY THE IMF

A country in severe financial trouble, unable to pay its international bills, poses potential
problems for the stability of the international financial system, which the IMF was created to
protect. Any member country, whether rich, middle-income, or poor, can turn to the IMF for
financing if it has a balance of payments needthat is, if it cannot find sufficient financing on

affordable terms in the capital markets to make its international payments and maintain a safe
level of reserves.
IMF loans are meant to help member countries tackle balance of payments problems, stabilize
their economies, and restore sustainable economic growth. This crisis resolution role is at the
core of IMF lending. At the same time, the global financial crisis has highlighted the need for
effective global financial safety nets to help countries cope with adverse shocks. A key objective
of recent lending reforms has therefore been to complement the traditional crisis resolution role
of the IMF with more effective tools for crisis prevention.
The IMF is not a development bank and unlike the World Bank and other development agencies,
it does not finance projects.

The Changing Nature of Lending

About four out of five member countries have used IMF credit at least once. But the amount of
loans outstanding and the number of borrowers have fluctuated significantly over time.
In the first two decades of the IMF's existence, more than half of its lending went to industrial
countries. But since the late 1970s, these countries have been able to meet their financing needs
in the capital markets.
The oil shock of the 1970s and the debt crisis of the 1980s led many lower- and lower-middleincome countries to borrow from the IMF.
In the 1990s, the transition process in central and eastern Europe and the crises in emerging
market economies led to a further increase in the demand for IMF resources.
In 2004, benign economic conditions worldwide meant that many countries began to repay their
loans to the IMF. As a consequence, the demand for the Funds resources dropped off sharply .

But in 2008, the IMF began making loans to countries hit by the global financial crisis The IMF
currently has programs with more than 50 countries around the world and has committed more
than $325 billion in resources to its member countries since the start of the global financial crisis.
While the financial crisis has sparked renewed demand for IMF financing, the decline in lending
that preceded the financial crisis also reflected a need to adapt the IMF's lending instruments to
the changing needs of member countries. In response, the IMF conducted a wide-ranging review
of its lending facilities and terms on which it provides loans.
In March 2009, the Fund announced a major overhaul of its lending framework, including
modernizing conditionality, introducing a new flexible credit line, enhancing the flexibility of the
Funds regular stand-by lending arrangement, doubling access limits on loans, adapting its cost
structures for high-access and precautionary lending, and streamlining instruments that were
seldom used. It has also speeded up lending procedures and redesigned its Exogenous Shocks
Facility to make it easier to access for low-income countries. More reforms have since been
undertaken, most recently in November 2011.

Lending to preserve Financial Stability

Article I of the IMF's Articles of Agreement states that the purpose of lending by the IMF is "...to
give confidence to members by making the general resources of the Fund temporarily available
to them under adequate safeguards, thus providing them with opportunity to correct
maladjustments in their balance of payments without resorting to measures destructive of
national or international prosperity."
In practice, the purpose of the IMF's lending has changed dramatically since the organization
was created. Over time, the IMF's financial assistance has evolved from helping countries deal
with short-term trade fluctuations to supporting adjustment and addressing a wide range of
balance of payments problems resulting from terms of trade shocks, natural disasters, postconflict situations, broad economic transition, poverty reduction and economic development,
sovereign debt restructuring, and confidence-driven banking and currency crises.

Today, IMF lending serves three main purposes.

First, it can smooth adjustment to various shocks, helping a member country avoid disruptive
economic adjustment or sovereign default, something that would be extremely costly, both for
the country itself and possibly for other countries through economic and financial ripple effects
(known as contagion).
Second, IMF programs can help unlock other financing, acting as a catalyst for other lenders.
This is because the program can serve as a signal that the country has adopted sound policies,
reinforcing policy credibility and increasing investors' confidence.
Third, IMF lending can help prevent crisis. The experience is clear: capital account crises
typically inflict substantial costs on countries themselves and on other countries through
contagion. The best way to deal with capital account problems is to nip them in the bud before
they develop into a full-blown crisis.

Conditions for Lending

When a member country approaches the IMF for financing, it may be in or near a state of
economic crisis, with its currency under attack in foreign exchange markets and its international
reserves depleted, economic activity stagnant or falling, and a large number of firms and
households going bankrupt. In difficult economic times, the IMF helps countries to protect the
most vulnerable in a crisis.
The IMF aims to ensure that conditions linked to IMF loan disbursements are focused and
adequately tailored to the varying strengths of members' policies and fundamentals. To this end,
the IMF discusses with the country the economic policies that may be expected to address the
problems most effectively. The IMF and the government agree on a program of policies aimed at
achieving specific, quantified goals in support of the overall objectives of the authorities'

economic program. For example, the country may commit to fiscal or foreign exchange reserve
targets.
The IMF discusses with the country the economic policies that may be expected to address the
problems most effectively. The IMF and the government agree on a program of policies aimed at
achieving specific, quantified goals in support of the overall objectives of the authorities'
economic program. For example, the country may commit to fiscal or foreign exchange reserve
targets.
Loans are typically disbursed in a number of installments over the life of the program, with each
installment conditional on targets being met. Programs typically last up to 3 years, depending on
the nature of the country's problems, but can be followed by another program if needed. The
government outlines the details of its economic program in a "letter of intent" to the Managing
Director of the IMF. Such letters may be revised if circumstances change.
For countries in crisis, IMF loans usually provide only a small portion of the resources needed to
finance their balance of payments. But IMF loans also signal that a country's economic policies
are on the right track, which reassures investors and the official community, helping countries
find additional financing from other sources.

Main Lending Facilities

In an economic crisis, countries often need financing to help them overcome their balance of
payments problems. Since its creation in June 1952, the IMFs Stand-By Arrangement (SBA) has
been used time and again by member countries, it is the IMFs workhorse lending instrument for
emerging market countries. Rates are non-concessional, although they are almost always lower
than what countries would pay to raise financing from private markets. The SBA was upgraded
in 2009 to be more flexible and responsive to member countries needs. Borrowing limits were
doubled with more funds available up front, and conditions were streamlined and simplified. The
new framework also enables broader high-access borrowing on a precautionary basis.

The Flexible Credit Line (FCL) is for countries with very strong fundamentals, policies, and
track records of policy implementation. It represents a significant shift in how the IMF delivers
Fund financial assistance, particularly with recent enhancements, as it has no ongoing (ex post)
conditions and no caps on the size of the credit line. The FCL is a renewable credit line, which at
the countrys discretion could be for either 1-2 years, with a review of eligibility after the first
year. There is the flexibility to either treat the credit line as precautionary or draw on it at any
time after the FCL is approved. Once a country qualifies (according to pre-set criteria), it can tap
all resources available under the credit line at any time, as disbursements would not be phased
and conditioned on particular policies as with traditional IMF-supported programs. This is
justified by the very strong track records of countries that qualify to the FCL, which give
confidence that their economic policies will remain strong or that corrective measures will be
taken in the face of shocks.
The Precautionary and Liquidity Line (PLL) builds on the strengths and broadens the scope of
the Precautionary Credit Line (PCL). The PLL provides financing to meet actual or potential
balance of payments needs of countries with sound policies, and is intended to serve as insurance
and help resolve crises. It combines a qualification process (similar to that for the FCL) with
focused ex-post conditionality aimed at addressing vulnerabilities identified during qualification.
Its qualification requirements signal the strength of qualifying countries fundamentals and
policies, thus contributing to consolidation of market confidence in the countrys policy plans.
The PLL is designed to provide liquidity to countries with sound policies under broad
circumstances, including countries affected by regional or global economic and financial stress.
The Rapid Financing Instrument (RFI) provides rapid and low-access financial assistance to
member countries facing an urgent balance of payments need, without the need for a full-fledged
program. It can provide support to meet a broad range of urgent needs, including those arising
from commodity price shocks, natural disasters, post-conflict situations and emergencies
resulting from fragility.
The Extended Fund Facility is used to help countries address balance of payments difficulties
related partly to structural problems that may take longer to correct than macroeconomic
imbalances. A program supported by an extended arrangement usually includes measures to

improve the way markets and institutions function, such as tax and financial sector reforms,
privatization of public enterprises.
The Trade Integration Mechanism allows the IMF to provide loans under one of its facilities to a
developing country whose balance of payments is suffering because of multilateral trade
liberalization, either because its export earnings decline when it loses preferential access to
certain markets or because prices for food imports go up when agricultural subsidies are
eliminated.

Lending to low-income countries

To help low-income countries weather the severe impact of the global financial crisis, the IMF
has revamped its concessional lending facilities to make them more flexible and meet increasing
demand for financial assistance from countries in need. These changes became effective in
January 2010. Once additional loan and subsidy resources are mobilized, these changes will
boost available resources for low-income countries to US$17 billion through 2014.
Three types of loans were created under the new Poverty Reduction and Growth Trust (PRGT) as
part of this broader reform: the Extended Credit Facility, the Rapid Credit Facility and the
Standby Credit Facility.
The Extended Credit Facility (ECF) provides financial assistance to countries with protracted
balance of payments problems. The ECF succeeds the Poverty Reduction and Growth Facility
(PRGF) as the Funds main tool for providing medium-term support LICs, with higher levels of
access, more concessional financing terms, more flexible program design features, as well as
streamlined and more focused conditionality.
The Rapid Credit Facility (RCF) provides rapid financial assistance with limited conditionality to
low-income countries (LICs) facing an urgent balance of payments need. The RCF streamlines
the Funds emergency assistance, provides significantly higher levels of concessionality, can be

used flexibly in a wide range of circumstances, and places greater emphasis on the countrys
poverty reduction and growth objectives.
The Standby Credit Facility (SCF) provides financial assistance to low-income countries (LICs)
with short-term balance of payments needs. It provides support under a wide range of
circumstances, allows for high access, carries a low interest rate, can be used on a precautionary
basis, and places emphasis on countries poverty reduction and growth objectives.
Several low-income countries have made significant progress in recent years toward economic
stability and no longer require IMF financial assistance. But many of these countries still seek
the IMF's advice, and the monitoring and endorsement of their economic policies that comes
with it. To help these countries, the IMF has created a program for policy support and signaling,
called the Policy Support Instrument.

Debt relief
In addition to concessional loans, some low-income countries are also eligible for debts to be
written off under two key initiatives.
The Heavily Indebted Poor Countries (HIPC) Initiative, introduced in 1996 and enhanced in
1999, whereby creditors provide debt relief, in a coordinated manner, with a view to restoring
debt sustainability; and
The Multilateral Debt Relief Initiative (MDRI), under which the IMF, the International
Development Association (IDA) of the World Bank, and the African Development Fund (AfDF)
canceled 100 percent of their debt claims on certain countries to help them advance toward the
Millennium Development Goals.

Borrowing Arrangements

If the IMF believes that its resources might fall short of members' needsfor example, in the
event of a major financial crisisit can supplement its own resources by borrowing. It has had a
range of bilateral borrowing arrangements in the 1970s and 1980s. Currently it has two standing
multilateral borrowing arrangements and one bilateral borrowing agreement.
Through the New Arrangements to Borrow (NAB) and the General Arrangements to Borrow
(GAB), a number of member countries and institutions stand ready to lend additional funds to the
IMF. The GAB and NAB are credit arrangements between the IMF and a group of members and
institutions to provide supplementary resources of up to SDR 34 billion (about US$50 billion) to
the IMF to forestall or cope with an impairment of the international monetary system or to deal
with an exceptional situation that poses a threat to the stability of that system.
In April 2009, the Group of Twenty industrialized and emerging market economies agreed to
triple the Funds lending capacity to $750 billion, enabling it to inject extra liquidity into the
world economy during this time of crisis. The additional support will come from several sources,
including contributions from member countries that have pledged to help boost the Funds
lending capacity.

GOLD

The IMF holds a relatively large amount of gold among its assets, not only for reasons of
financial soundness, but also to meet unforeseen contingencies.
The IMF holds about 90.5 million ounces, or 2,814.1 metric tons, of gold at designated
depositories. The IMF's total gold holdings are valued on its balance sheet at about $4.9 billion
(SDR 3.2 billion) on the basis of historical cost. The IMF's holdings amount to about $160
billion (as determined by end-February 2012 market prices).
Gold and the international monetary system
Gold played a central role in the international monetary system after World War II. The countries
that joined the IMF between 1945 and 1971 agreed to keep their exchange rates pegged in terms
of the dollar and, in the case of the United States, the value of the dollar in terms of gold. This
"par value system" ceased to work after 1971
Until the late 1970s, 25 percent of member countries' initial quota subscriptions and subsequent
quota increases had to be paid for with gold. Payment of charges and repayments to the IMF by
its members constituted other sources of gold.
Use of Gold in the IMF
The IMF's Articles of Agreement strictly limit the use of the gold following the Second
Amendment in 1978. But in some circumstances, the IMF may sell gold or accept gold as
payment from member countries.

In September 2009, the IMF's Executive Board approved the total sale of 403.3 metric tons of
gold as a key step in implementing the new income model to help put the IMF's finances on a
sound long-term footing. The IMF sold this gold in two phasesthe first phase was set aside
exclusively for off-market sales to official holders.
A total of 212 metric tons was sold during this first phase, comprising sales to the Reserve Bank
of India, the Bank of Mauritius, and the Central Bank of Sri Lanka. An additional amount was
later sold to the Bangladesh Bank. In February 2010, the on-market phase of its gold sales
program began. So as to avoid disruption to the gold market, these sales were phased over time.
In December 2010, the IMF concluded the gold sales program with total sales of 403.3 metric
tons of gold. Total proceeds amounted to about $15 billion (SDR 9.5 billion).
Proceeds equivalent to the book value of the gold sold, about $4.2 billion (SDR 2.7 billion), were
retained in the IMF's General Resources Account. Profits from the gold sales were invested in an
income-generating fund to supplement IMF income. In February 2012, the Executive Board
approved the distribution to all IMF member countries of about $1.1 billion (SDR 700 million) in
reserves attributed to a portion of the windfall profits from recent IMF gold sales, with the
expectation that member countries would return equivalent amounts to support concessional
lending to low-income countries. The distribution will be effected only when members provide
satisfactory assurances that they would make new Poverty Reduction and Growth Trust subsidy
contributions equivalent to at least 90 percent of the amount distributedi.e. about $1 billion
(SDR 630 million).
The selling of gold by the IMF is rare as it requires an Executive Board decision with an 85
percent majority of the total voting power. Prior to the recent sale of gold, the last time gold was
sold by the institution was through off-market transactions completed in April 2001, with 12.9
million ounces traded. This transaction was approved by the membership as a means to finance
the IMF's participation in the Heavily Indebted Poor Countries Initiative and the continuation of
the Poverty Reduction and Growth Facility.

SPECIAL DRAWING RIGHTS (SDR)

The Special Drawing Right (SDR) is an international reserve asset, created by the IMF in 1969
to supplement the existing official reserves of member countries.
The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the
freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in
exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges

between members; and second, by the IMF designating members with strong external positions
to purchase SDRs from members with weak external positions. In addition to its role as a
supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other
international organizations.
In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of
the IMF and some other international organizations.

SDRs value
The value of the SDR is based on a basket of key international currenciesthe euro, Japanese
yen, pound sterling, and U.S. dollar. The U.S. dollar-value of the SDR is posted daily on the
IMFs website. The basket composition is reviewed every five years by the Executive Board to
ensure that it reflects the relative importance of currencies in the worlds trading and financial
systems.
The SDR interest rate provides the basis for calculating the interest charged to members on
regular (nonconcessional) IMF loans, the interest paid and charged to members on their SDR
holdings, and the interest paid to members on a portion of their quota subscriptions. The SDR
interest rate is determined weekly and is based on a weighted average of representative interest
rates on short-term debt in the money markets of the SDR basket currencies.

SDR allocations to IMF members

Under its Articles of Agreement, the IMF may allocate SDRs to members in proportion to their
IMF quotas, providing each member with a costless asset. However, if a members SDR holdings
rise above its allocation, it earns interest on the excess; conversely, if it holds fewer SDRs than
allocated, it pays interest on the shortfall.
There are two kinds of allocations:

General allocations of SDRs. General allocations have to be based on a long-term global need
to supplement existing reserve assets. Decisions to allocate SDRs have been made three times: in
1970-72, for SDR 9.3 billion; in 197981, for SDR 12.1 billion; and in August 2009, for an
amount of SDR 161.2 billion.

Special allocations of SDRs. A special one-time allocation of SDRs through the Fourth
Amendment of the Articles of Agreement was implemented in September 2009. The purpose of
this special allocation was to enable all members of the IMF to participate in the SDR system on
an equitable basis and correct for the fact that countries that joined the Fund after 1981more
than one-fifth of the current IMF membershiphad never received an SDR allocation.
With the general SDR allocation of August 2009 and the special allocation of Setember 2009, the
amount of SDRs increased from SDR 21.4 billion to SDR 204.1 billion (currently equivalent to
about $317 billion).

GOVERNANCE
Government Structure
The IMF's mandate and governance have evolved along with changes in the global economy,
allowing the organization to retain a central role within the international financial architecture.
The diagram below provides a stylized view of the IMF's current governance structure.

Board of Governors
The Board of Governors is the highest decision-making body of the IMF. It consists of one
governor and one alternate governor for each member country. The governor is appointed by the
member country and is usually the minister of finance or the head of the central bank.
While the Board of Governors has delegated most of its powers to the IMF's Executive Board, it
retains the right to approve quota increases, special drawing right (SDR) allocations, the
admittance of new members, compulsory withdrawal of members, and amendments to the
Articles of Agreement and By-Laws.

The Board of Governors also elects or appoints executive directors and is the ultimate arbiter on
issues related to the interpretation of the IMF's Articles of Agreement. Voting by the Board of
Governors usually takes place by mail-in ballot.
The Boards of Governors of the IMF and the World Bank Group normally meet once a year,
during the IMF-World Bank Spring and Annual Meetings, to discuss the work of their respective
institutions. The Meetings, which take place in September or October, have customarily been
held in Washington for two consecutive years and in another member country in the third year.
The Annual Meetings usually include two days of plenary sessions, during which Governors
consult with one another and present their countries' views on current issues in international
economics and finance. During the Meetings, the Boards of Governors also make decisions on
how current international monetary issues should be addressed and approve corresponding
resolutions.
The Annual Meetings are chaired by a Governor of the World Bank and the IMF, with the
chairmanship rotating among the membership each year. Every two years, at the time of the
Annual Meetings, the Governors of the Bank and the Fund elect Executive Directors to their
respective Executive Boards.

Ministerial Committees
The IMF Board of Governors is advised by two ministerial committees, the International
Monetary and Financial Committee (IMFC) and the Development Committee.
The IMFC has 24 members, drawn from the pool of 187 governors. Its structure mirrors that of
the Executive Board and its 24 constituencies. As such, the IMFC represents all the member
countries of the Fund.
The IMFC meets twice a year, during the Spring and Annual Meetings. The Committee discusses
matters of common concern affecting the global economy and also advises the IMF on the
direction its work. At the end of the Meetings, the Committee issues a joint communiqu

summarizing its views. These communiqus provide guidance for the IMF's work program
during the six months leading up to the next Spring or Annual Meetings. There is no formal
voting at the IMFC, which operates by consensus.
The Development Committee is a joint committee, tasked with advising the Boards of Governors
of the IMF and the World Bank on issues related to economic development in emerging and
developing countries. The committee has 24 members (usually ministers of finance or
development). It represents the full membership of the IMF and the World Bank and mainly
serves as a forum for building intergovernmental consensus on critical development issues.

The Executive Board

The IMF's 24-member Executive Board takes care of the daily business of the IMF. Together,
these 24 board members represent all 188 countries. Large economies, such as the United States
and China, have their own seat at the table but most countries are grouped in constituencies
representing 4 or more countries. The largest constituency includes 24 countries.
The Board discusses everything from the IMF staff's annual health checks of member countries'
economies to economic policy issues relevant to the global economy. The board normally makes
decisions based on consensus but sometimes formal votes are taken. At the end of most formal
discussions, the Board issues what is known as a summing up, which summarizes its views.
Informal discussions may be held to discuss complex policy issues still at a preliminary stage.

Country Representation
Unlike the General Assembly of the United Nations, where each country has one vote, decision
making at the IMF was designed to reflect the position of each member country in the global
economy. Each IMF member country is assigned a quota that determines its financial
commitment to the IMF, as well as its voting power.

To be effective, the IMF must be seen as representing the interests of all of its 188 member
countries, from its smallest shareholder Tuvalu, to its largest, the United States.
In November 2010, the IMF agreed on reform of its framework for making decisions to reflect
the increasing importance of emerging market and developing economies.

Giving more say to emerging markets

In recent years, emerging market countries have experienced strong growth and now play a much
larger role in the world economy.
The reforms will produce a shift of 6 percent of quota shares to dynamic emerging market and
developing countries. This realignment will give more say to a group of countries known as the
BRICS: Brazil, Russia, India, and China.

Protecting the voice of low-income countries

The reform package also contains measures to protect the voice of the poorest countries in the
IMF. Without these measures, this group of countries would have seen its voting shares decline.

Timeline for implementing the reform

The Board of Governors, the IMFs highest decision-making body, must ratify the new
agreement by an 85 percent majority before it comes into effect.
The plan is for the reform to be implemented in 2012.

ACCOUNTABILITY

The IMF is accountable to its 188 member governments, and is also scrutinized by multiple
stakeholders, from political leaders and officials to, the media, civil society, academia, and its

own internal watchdog. The IMF, in turn, encourages its own members to be as open as possible
about their economic policies to encourage their accountability and transparency.

Engagement with intergovernmental groups

Official groups, such as the Group of Twenty (G-20) industrialized and emerging market
countries (G-20) and the Group of Eight (G-8) are also actively engaged in the work of the IMF.
The G-20 consists of the 20 leading and emerging economies of the world, and includes all G-8
countries plus Argentina, Australia, Brazil, China, India, Indonesia, Korea, Mexico, Saudi
Arabia, South Africa, and Turkey, as well as the European Union. The G-20 discusses and
coordinates international financial stability and is a key player in shaping the work of the IMF.
Its meetings usually take place twice a year at the level of heads of state and government, with
several other ministerial-level meetings, including finance ministers and central bank governors,
held a few times a year.
The G-8 finance ministers and central bank governors meet at least twice annually to monitor
developments in the world economy and assess economic policies. The Managing Director of the
IMF is usually invited to participate in those discussions. The G-8 functions as a forum for
discussion of economic and financial issues among the major industrial countriesCanada,
France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States.

Civil society, think tanks, and the media

The IMF's work is scrutinized by the media, the academic community, and civil society
organizations (CSOs).
IMF management and senior staff communicate with the media on a daily basis. Additionally, a
biweekly press briefing is held at the IMF Headquarters, during which a spokesperson takes live

questions from journalists. Journalists who cannot be present are invited to submit their questions
via the online media briefing center.
IMF staff at all levels frequently meet with members of the academic community to exchange
ideas and receive new input. The IMF also has an active outreach program involving CSOs.

Internal watchdog
The IMF's work is reviewed on a regular basis by an internal watchdog, the Independent
Evaluation Office, established in 2001. The IEO is fully independent from IMF management and
operates at arm's length from the Executive Board, although the Board appoints its director.
The IEO's mission is to enhance the learning culture within the IMF, strengthen its external
credibility, promote greater understanding of the work of the Fund, and support institutional
governance and oversight.
The IEO establishes its own work program, selecting topics for review based on suggestions
from stakeholders inside and outside the IMF. Its recommendations strongly influence the Fund's
work.

Ethics office and code of conduct

The IMF also has its own Ethics Office. Established as an independent arm of the Fund in 2000,
the Office provides advice and guidance to IMF staff, and undertakes investigations into
allegations of unethical behavior and misconduct. An Integrity Hotlinea 24-hour
whistleblowing systemwas launched in 2008. The Ethics Office publishes an Annual Report,
which is published on the IMFs website.
Upon joining the IMF, all staff sign an agreement that commits them to adhere to the IMFs
ethics rules, which include a Code of Conduct and rules for financial disclosure. A separate Code

of Conduct applies to IMF Executive Directors. The IMFs Executive Board has also set out
Applicable Standards of Conduct for the Managing Director.

Transparency
The IMF also encourages its member countries to be as open as possible about their economic
policies. Greater openness encourages public discussion of economic policy, enhances the
accountability of policymakers, and facilitates the functioning of financial markets.
To that effect, the IMF's Executive Board has adopted a transparency policy to encourage
publication of member countries' policies and data. This policy designates the publication status
of most categories of Board documents as "voluntary but presumed." This means that publication
requires the member's explicit consent but is expected to take place within 30 days following the
Board discussion.
In taking these steps to enhance transparency, the Executive Board has had to consider how to
balance the IMF's responsibility to oversee the international monetary system with its role as a
confidential advisor to its members. The IMF regularly reviews its transparency policy.

TACKLING CURRENT CHALLENGES

A Partner in Europe

The IMF is actively engaged in Europe as a provider of policy advice, financing, and technical
assistance. We work both independently and, in European Union (EU) countries, in cooperation

with European institutions, such as the European Commission (EC) and the European Central
Bank (ECB). The IMF's work in Europe has intensified since the start of the global financial
crisis in 2008, and has been further stepped up since mid-2010 as a result of the sovereign debt
crisis in the euro area. As IMF Managing Director Christine Lagarde has stressed, to get beyond
the crisis, Europe must address three key issueslack of growth, reduced competitiveness, and
the need for greater integration. To restore confidence more immediately, the euro zone must
develop a strong firewall to protect its members.

Reinforcing multilateralism

The crisis highlighted the tremendous benefits from international cooperation. Without the
cooperation spearheaded by the Group of Twenty industrialized and emerging market economies
(G-20) the crisis could have been much worse. At their 2009 Pittsburgh Summit G-20 countries
pledged to adopt policies that would ensure a lasting recovery and a brighter economic future,
launching the "Framework for Strong, Sustainable, and Balanced Growth."
The backbone of this framework is a multilateral process, where G-20 countries together set out
objectives and the policies needed to get there. And, most importantly, they undertake to check
on their progress toward meeting those shared objectivesdone through the G-20 Mutual
Assessment Process or MAP. At the request of the G-20, the IMF provides the technical analysis
needed to evaluate how members policies fit togetherand whether, collectively, they can
achieve the G-20s goals.
The IMFs Executive Board has also been considering a range of options to enhance multilateral,
bilateral, and financial surveillance, and to better integrate the three. It has launched spillover
reports for the five most systemic economiesChina, the Euro Area, Japan, United Kingdom,
and the United Statesto assess the impact of policies by one country or area on the rest of the
world.

Rethinking Macroeconomic Principles

The severity of the crisisimmense hardship and suffering around the worldand the desire to
avoid a repeat also raised some profound questions about the pre-crisis consensus on
macroeconomic policies. In this context, the IMF is encouraging a wholesale re-examination of
macroeconomic policy principles in the wake of the global economic crisis.
In March 2011, the IMF hosted a high profile conference to take stock of these policy questions
and promote a discussion about the future of macroeconomic policy. The agenda focused on six
key areas: monetary policy; fiscal policy; financial intermediation and regulation; capital account
management; growth strategies; and the international monetary system (discussed further below).
A key goal of the conference was to promote a broad-based and ongoing dialogue that extends
beyond the corridors of the IMF. To this end, the conference was webcast and the conference cohosts opened an online discussion with posts on the IMF blog

CASE STUDY
India, China contributing a lot to global growth: IMF
Washington, Feb 5 (IANS):

India and China with their large economies growing at 7 and 10 percent respectively are
playing a significant role in global economic recovery, according to a top International
Monetary Fund (IMF) official.
"It's actually true, just by looking at the numbers and the weights that they have in the global
economy," Kalpana Kochhar, Deputy Director, Asia and Pacific Department told reporters in a
conference call Thursday when asked about India and China's role in the recovery.
"When you have two relatively large economies growing at 7 and 10 percent, respectively, India

and

China,

they

are

contributing

quite

lot

to

global

growth,"

she

said.

Noting that IMF forecast for global growth for next year is close to 4 percent, of which advanced
countries are only contributing less than 2 percent, Kochhar said: "So the rest of it is in fact
coming from emerging markets, and from within emerging markets, a large part from China and
India."
"So it's a significant contribution that's coming from these two countries," she added noting India
was one of the first countries to recover from the crisis.
"It benefited from the normalisation of global financing conditions and the return of risk appetite,
but also benefited from fiscal stimulus that was already in the pipeline and from timely monetary
and further fiscal easing after the crisis broke out."
After annual Article IV consultations with India last month, IMF has projected India's growth to
reach 6.75 percent for the fiscal year ending March, 2010, and then rising to 8 percent for the
year ending March, 2011.
IMF "believed there are a lot of indications already in the pipeline that suggest that this recovery
will in fact occur and will broaden," Kochhar said. But "along with the recovery, we've seen an
upward rise in prices. Inflation has picked up. Some of it is due to food, but some of it is also
due to demand pressures."
Against that background, IMF welcomed the moves that were taken by the Reserve Bank of
India (RBI) just last week to tighten monetary policy, Kochhar said. "And we believe that, given
current trends, there should be further gradual withdrawal of monetary accommodation."
While the stimulus measures were instrumental in supporting activity during the crisis, it has
pushed the deficit into double digits again, and the debt back to nearly 80 percent, Kochhar said.
IMF, therefore, recommend that the fiscal adjustment strategy begin with this next budget

suggesting that it should be anchored on a debt target along with some nominal expenditure
rules.
However as noted in its report just setting a debt target isn't enough. It has to be accompanied by
measures on both the revenue side and the expenditure side, particularly subsidy reform,
Kochhar said.
The third issue that IMF focused on was in financial sector reform, particularly reforms that
would be beneficial to finance the major infrastructure investment that the government of India is
planning over the next few years, she said

BIBLIOGRAPHY

http://www.imf.org
http://wiki.answers.com
http://www.imfmetal.org
www.fraudwatchers.org