International Monetary Fund

Arun Sitaraman 02
Tejas Pawar 20
Rakhi S 27
Sunitha Sivadasan 39
Aditi Mahapadi 40

“It is an organization of 186 countries ,working to
foster global monetary cooperation , secure financial
stability ,facilitate international trade ,promote high
employment and sustainable economic growth and
reduce poverty” .
The IMF is the most detailed attempt to organize the
conduct of international monetary affairs.

The International Monetary Fund Was created in
1944, at the Bretton Woods conference to prevent the
kinds of chain reaction in the economic system that
caused world currencies to collapse like in the Great
Depression of the 1930s.
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.
The IMF was created to support orderly international
currency exchanges and to help nations having balance
of payment problems through short term loans of cash.

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).
The International Monetary Fund (IMF) is an
organization of 186 countries.

Original members- All those countries whose
representatives took part in Bretton woods conference and
who agreed to be the members
Ordinary Members- All those who became its members
subsequently
Process- Board of directors—Board of governors with
supported all documents and subscription and quota
amount as per the terms of membership

Fund has the authority to suspend any member and
similarly every member is free to resign.
Total 187 members
Only North Korea, the Vatican, and four other small
countries in Europe—none having its own currency—are
not members of the Fund

To promote international monetary cooperation.
To facilitate the expansion and balanced growth of
international trade.
To promote exchange rate stability
To correct maladjustments in the balance of payment.
To shorten the duration and lessen the degree of
disequilibrium in the international balance of payments
of members

Quotas
Gold Holdings
Borrowings Arrangements
General Arrangements To Borrow (GAB)
New Arrangements To Borrow (NAB)

Drawing Rights (Lending)
Gold (Reserve) Tranche
Credit Tranche
Lending Under Different Schemes
Compensatory and Contingency Financing Facility
(CCFF)
Buffer Stock Financing Facility
Supplemental Reserve Facility (SRF)

Structural Adjustment Facility (SAF)
Enhanced Structural Adjustment Facility (ESAF)
Emergency Financing Mechanism (EFM)
In recent years the IMF has taken up new
responsibilities, some of them are
Poverty Reduction and Growth Facility (PRGF)
Multilateral Debt Relief Initiative Assistance (MDRI)
Assistance to heavily Indebted Poor Countries (HIPC)
Emergency Assistance for natural disaster and countries
emerging from armed conflict

SDR is created by IMF
It is not linked to any single currency nor does its
creation depend on the supply or stock of gold.
It does not belong to any single country
All member countries have a claim on the created SDR.
It is not tangible but only a book entry.

Its value is determined by a basket of currencies and the
value is usually expressed in US Dollar.
At Present it is used for transactions between the
governments.
It is the unit of account of the IMF and used as an unit of
account or as a basis of unit of account by a number of
international organizations.
Besides the members, SDRs are also held by „prescribed‟
international institutions. There are 15 such institutions at
present.

What is International Liquidity?
Components of International Liquidity
Gold reserves with the Central bank of the country.
Foreign currencies held by Central Banks.
IMF Drawing Rights/Special Drawing Rights(SDRs).
A country‟s borrowing capacity in the international money market.

International Liquidity problem arises when demand for
it exceeds its supply.
It is a problem of liquidity gap.
Affects both the developing and the developed
countries.
The problem is a result of world trade expanding at a
faster rate than the supply of international liquidity.
Supply of Gold and Foreign exchange was growing far
less than the growth of International trade

IMF is an important source from where member
countries obtain a part of international Liquidity.
The main objective of IMF is to provide financial
assistance to meet short term balance of payments
problems.
It also provides help to meet foreign exchange shortage
that arises due to some unforeseen emergencies.
IMF has played an important role in :-
Drawing Rights.
Lending Schemes
By Creating Special Drawing Rights

Exacerbates Economic Problems

One Size Fits All

Decline in Public Services

Takes away political autonomy.

Moral Hazard

„Conditionality's‟ imposed on borrower countries.

Governance structures

Lack of Transparency and involvement‟

Supporting Military dictatorships.

Conditions of Loans

Sovereign debt Regulation

Growth. Europe's debt crisis

Social instability Governance and reform

Global imbalances Development

Unemployment

 www.imf.org
 The Guardian UK
 www.eui.eu
 www.financeinvestments.com

International Monetary Fund

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