International Monetary Fund (IMF)International Business

Prepared By

Manu Melwin JoyAssistant Professor

Ilahia School of Management StudiesKerala, India.

Phone – 9744551114Mail – manu_melwinjoy@yahoo.comKindly restrict the use of slides for personal purpose.

Please seek permission to reproduce the same in public forms and presentations.

Introduction

• The InternationalMonetary Fund (IMF)is an internationalorganization that wasinitiated in 1944 atthe Bretton WoddsConference andformally created in1945 by 29 membercountries.

Introduction

• The IMF is a self-described"organization of 188countries, working to fosterglobal monetarycooperation, securefinancial stability, facilitateinternational trade,promote high employmentand sustainable economicgrowth, and reduce povertyaround the world.”

Official Goal

• The IMF's stated goal wasto assist in thereconstruction of theworld's Internationalpayment system post–World War II. Countriescontribute funds to a poolthrough a quota systemfrom which countries withpayment imbalancestemporarily can borrowmoney and otherresources.

Official goal

• As of the 14th General Reviewof Quotas in late 2010 thefund stood at SDR476.8bn, orabout US$755.7bn at then-current exchange rates.Through this fund, and otheractivities such as surveillanceof its members economiesand the demand for self-correcting policies, the IMFworks to improve theeconomies of its membercountries.

The IMF’s responsibilities

• The IMF's primarypurpose is to ensure thestability of theinternational monetarysystem—the system ofexchange rates andinternational paymentsthat enables countries(and their citizens) totransact with each other.

The IMF’s responsibilities• Surveillance: To maintainstability and prevent crises inthe international monetarysystem, the IMF reviewscountry policies and national,regional, and global economicand financial developmentsthrough a formal systemknown as surveillance. The IMFadvises its 188 membercountries, encouraging policiesthat foster economic stability,reduce vulnerability toeconomic and financial crises,and raise living standards.

The IMF’s responsibilities

• Financial Assistance: IMFfinancing provides membercountries the breathing roomthey need to correct balance ofpayments problems. A policyprogram supported by IMFfinancing is designed by thenational authorities in closecooperation with the IMF, andcontinued financial support isconditioned on effectiveimplementation of this program.

The IMF’s responsibilities

• Technical Assistance: The IMFprovides technical assistanceand training to help membercountries strengthen theircapacity to design andimplement effective policies.Technical assistance is offeredin several areas, including taxpolicy and administration,expenditure management,monetary and exchange ratepolicies, banking and financialsystem supervision andregulation, legislativeframeworks, and statistics.

Resources

• The primary source of theIMF's financial resources is itsmembers’ quotas, whichbroadly reflect members’relative position in the worldeconomy. Currently, totalquota resources amount toabout SDR 238 billion (about$368 billion). In addition, theIMF can borrow temporarily tosupplement its quotaresources.

Governance and organization

• The IMF is accountable to thegovernments of its membercountries. At the top of itsorganizational structure is theBoard of Governors, whichconsists of one Governor and oneAlternate Governor from eachmember country. The Board ofGovernors meets once each yearat the IMF – World Bank AnnualMeetings. Twenty-four of theGovernors sit on theInternational Monetary andFinancial Committee (IMFC) andnormally meet twice each year.

Governance and organization

• The day-to-day work of the IMFis overseen by its 24-memberexecutive board, whichrepresents the entiremembership; this work is guidedby the IMFC and supported bythe IMF staff. A proposedAmendment of the IMF’s Articlesof Agreement will introduce forthe first time an Executive Boardwhose members are all elected.The Managing Director is thehead of the IMF Staff andChairman of the Executive Boardand is assisted by four DeputyManaging Directors.