Headquarters : Washington D C , USA

Members : 185 countries

Managing Director : Dominique Strauss-Kahn

History of IMFIMF was introduced as there arouse a need for International cooperation in economics, trade and balance of payment affairs.United States made a proposal for establishment of International Stabilization Fund. It was known as White planUK proposed establishment of International Clearing Union. It was known as Keynes plan.IMF came in to existence by the joint plan prepared in 1944.Thus IMF came in to existence to promote economic and financial co-operation among the member countries.

EMERGENCE OF IMFThe International Monetary Fund was formally created in July 1944. during the United nations Monetary and Financial ConferenceThe IMF was formally organized on December 27 1945, when the first 29 countries signed its Articles of Agreement. The statutory purposes of the IMF today are the same as when they were formulated in 1944 . Headquarters IMF is a post-war international monetary institution.

Growth in IMF Membership, 1945 - 2005 (number of countries)

Organizational structureBOARD OF GOVERNORSEXECUTIVE BOARD OF DIRECTORS MANAGING DIRECTORIMF SECRETARIATInterim CommitteeDevelopment committee

Key Members

IMF Member CountryQuota: Millions of SDRs Quota: PercentageAustralia 3236.4 1.49Belgium 4605.2 2.12U S A 37149.5 17.09United Kingdom 10738.5 4.94 India 4158.3 1.91 Brazil 3036.1 1.4

Objectives of IMFTo avoid the competitive devaluation and exchange control.To establish and maintain currency convertibility.To develop multilateral trade and payments.To promote international monetary co-operation through a permanent institute.To facilitate the expansion of balanced growth of international trade.To provide exchange stability.

Objectives Conti.To maintain orderly exchange arrangements among members and to avoid competitive exchange depreciation.To assist in the establishment of a multilateral system of payments in respect of current transactions.To lend confidence to members by making the funds resources available to them under adequate safeguards.To shorten the duration and lessen the degree of disequilibrium in the international balance of payments of members.

Functions of IMFGuardian of good conduct in the area of Balance of paymentsReducing tariffs and other trade restrictionsProvides technical adviceProvides short term financial assistance to its member countries Provides machinery for orderly adjustment of exchange rates Reservoir of currencies Lending institution of foreign currencies

Machinery for altering the par values of the currency of a member countryInternational consultancyConducts research studies and publishes report

How Does IMF Get Its MoneyMainly from the Quotas that countries deposit when they join.The Quotas reflects the size of each members economy.Under some Circumstances it gets money from Trusts.

Role of IMFLending:- Providing financial assistance to low-income countries experiencing protracted BOP through:-Poverty Reduction And Growth Facility(PRGF) Heavily Indebted Poor Countries Initiative(HIPC)Multilateral Debt Relief Initiative (MDRI)

Technical Assistance:- For development of productive resources of member countries through help in Policy Making and Training.Regional Technical Assistance Center at Pacific, Caribbean and Africa.It accounts for about one-fifth of IMFs operating budget. Bilateral donors of technical assistance program:-Australia, China, Canada, France, Germany, India, Japan, Russia, Luxembourg, Portugal, US, UK etc.Multilateral Donors:- African Development Bank, Arab Monetary Fund, Asian Development Bank etc.

Ghana : discovery of oil fieldNigeria : natural gasDeveloping countries : combat poverty and growth.

Surveillance:- Help in providing policy advise to low income countries by:-Establishing Economic Frameworks that support sustained growth and poverty reduction.Identify and manage sources of macroeconomic risk and vulnerabilities.Strengthen institutions and policies that underline sound macroeconomic management.Progress report is annually published in Global Monitoring Report by IMF and World Bank.

Balance of Payment DifficultiesIt occurs due to:-Fiscal DeficitHigh Level of external and/or public debtExchange rate fixed at inappropriate levelsNatural Disasters or Armed conflictsIt causes:-Countrys Currency Depreciate rapidlyInternational goods expensive

Balance of Payment Status

World's payment balances in 2005 (States in surplus in blue (dark blue = Euroland) / States in deficit in red)And also in here

How IMF helpsThrough IMF LendingThrough IMF Loan

IMF Helps Ghana Learn From Others on Inflation Targets

February 14, 2008 The IMF is sharing its cross-country experience in inflation targeting with Ghana as the country adapts its monetary policy and aims to reach middle-income status by 2015.

IMF to Back Liberia With Debt Relief, New Finance

March 20, 2008 In a major move to back Liberia's economic recovery after a ruinous 14-year period of civil war, the IMF has announced a series of measures to support it with debt relief and new financing.

Exchange rateThe exchange rates between two countries specifies how much one currency is worth in terms of other. Ex:- JPY 102 = USD 1 & USD 1= 41.35 INR

Spot exchange rate refers to the current exchange rate

Free or Pegged If a currency is free floating, its exchange rate is allowed to vary against that of other currencies and is determined by the market forces of supply and demand.

Nominal & real exchange ratesThe nominal exchange rate is the price in domestic currency of one unit of foreign currency.

SPECIAL DRAWING RIGHTS(SDR)is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas

Its value is based on a basket of key international currencies. SDRs are popularly known as papergold

WHY SDR WAS CREATED?SDR was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. International supply of two key reserve assets gold and the U.S. dollarproved inadequate for supporting the expansion of world trade and financial development A few years later, the Bretton Woods system collapsed and the major currencies shifted to a floating exchange rate regime.Today, the SDR has only limited use as a reserve asset.

SDR valuation

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine goldwhich, at the time, was also equivalent to one U.S. dollar

After the collapse of the Bretton Woods system in 1973, however, the SDR was redefined as a basket of currencies,today consisting of the euro, Japanese yen, pound sterling, and U.S. dollar

The basket composition is reviewed every five years to ensure that it reflects the relative importance of currencies in the world's trading and financial systems.

The SDR Interest Rate

The SDR interest rate provides the basis for calculating the interest charged to members on regular (non-concessional) IMF loans.

The SDR interest rate is determined weekly

SDR ALLOCATIONUnder its Articles of Agreement, the IMF may allocate SDRs to members in proportion to their IMF quotas

Each member country of the IMF is assigned a quota, based broadly on its relative size in the world economy

Indias quota 4158.2 millions US$ of SDRs, 1.91% of total.

If a member's 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.

2 types of allocations 1) general allocations of SDRs 2) special one time allocation of SDRs

EMERGENCY ASSISTANCEThe IMF provides emergency assistance to help members countries during natural disasters and conflicts.

Since 1962, 38 countries have received aid upto US $2.9 billion from IMF.

Emergency assistance loans are subject to the basic rate of charge and should be repaid within 3.5 to 5 yrs.

Countries that received emergency assistance since 1995

CountryYearEventAmount(U.S $MILLION)BANGLADESH1998FLOODS138.2DOMINICAN 1998HURRICANE55.9TURKEY1999EARTHQUAKE501.0GRENADA2003HURRICANE4.0MALDIVES2005TSUNAMI6.3SRILANKA2005TSUNAMI158.4DOMINICAN2008HURRICANE3.3

Role of IMF in INDIAJoined IMF on 27 DEC, 1945

Subscribes to the IMFs special data dissemination standard

India borrowed SDR 3.9 billion (1981-82)SDR 2.2 billion (1991-93)

Technical assistanceIn recent years, the fund has provided India in government securities, foreign exchange market, public expenditure management & tax & custom administrationsCurrent scenarioSDR (Net cumulative allocation)- 681.17 mHoldings - 6.78 mOutstanding purchases & loans - None

Where do our interest lie?Our monetary policy framework is not consistent , we need to build a consistent framework of monetary policy

Our strengthBy James Gordon (Washington based multilateral institution's representative)India does not need any financing from IMF considering that the country had crossed $103 billion of FOREX reservesEmerging market economy Feb 13, 2004Acc to indiatimes - India borrowed from IMF in crisis of 1990s & fully repaid its loan.

Cont..Acc to finance ministry source FOREX crossed $ 100 billion and now providing money to nation building countries like$ 43 m to Indonesia$ 350 m to Brazil$ 05 m to Burundi So now India has that potential to be include into IMF financial transactions plan (40 countries) By P Uaidynathan Iyer in New Delhi Jan 19, 2004

IMF and the World BankIMF and World bank both were created at an International Conference convened in Bretton Woods.

IMF promotes international monetary cooperation and provides policy advice and technical assistance to maintain strong economies.

The World bank promotes long-term economic development and poverty reduction to help countries reform particular sectors or implement specific projects

IMF and World bank collaborate regularly and at many levels on assistance to member countries and are involved in several joint initiatives.

Criticisms of IMF

CaseIraqi Oil Crisis

Common Criticisms of the IMF The IMF has created an immoral system of modern day colonialism that drains the poor The IMF serves wealthy countries and Wall Street The IMF is a secretive institution with no accountability IMF policies promote corporate welfare IMF Policies hurt the environment

Thank You

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