2.  IMF is the intergovernmental organization that
oversees the global financial system by following
the macroeconomic policies of its member
countries, in particular those with an impact on
exchange rate and the balance of payments.
 It is an organization formed with a stated objective
of stabilizing international exchange rates and
facilitating development through the enforcement
of liberalising economic policies on other countries
as a condition for loans, restructuring or aid.

3.  IMF is a forum of national economic policies,
international monetary and financial systems,
which involves active dialogue with each
member country.
 Total quotas of $312 billion; outstanding loans
of $71 billion to 82 countries (According to the
report of August 31, 2005).
 Five largest shareholders:United States,
Japan, Germany, France, United Kingdom.

4.  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.
 Its headquarters are in Washington, United
States.

5.  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
 IMF started to make service with IBRD in
1947.
 The IMF works to improve the economies of its
member countries

7. o Promote international monetary cooperation.
o Expansion and balanced growth of
international trade.
o Promote exchange rate stability.
o The elimination of restrictions on the
international flow of capital.

8. o Help establish multilateral system of
payments and eliminate foreign exchange
restrictions.
o Make resources of the Fund available to
members
o Shorten the duration and lessen the degree
of disequilibrium in international balances
of payments

9. o Promote international monetary cooperation,
exchange stability, and orderly exchange
arrangements.
o Foster economic growth and high levels of
employment.
o Temporary financial assistance to countries to
help the balance of payments adjustments

10.  In the beginning 29
member countries
 Today,187 member
Countries
 Staff of about 2680
Persons

12.  Focusing on its core macroeconomic and
financial areas of responsibility.
 Working in a complementary fashion with other
institutions established.
 Collection and allocation of reserves. Rendering
advice to member countries on their
international monetary affairs.

13.  Promoting research in various areas of
international economics and monetary
economics.
 Providing a forum for discussion and
consultation among member countries. Being
in the center of competence.

14.  Surveillance (like a doctor) Gathering data
and assessing economic policies of countries.
 Technical Assistance (like a teacher)
Strengthening human skills and institutional
capacity of countries.
 Financial Assistance (like a banker) Lending
to countries to support reforms

15.  Monitoring economic and financial developments
and policies, in member countries and at the
global level, giving policy advance to its
members based on its more than fifty years of
experience.
 Lending to member countries with balance of
payments problems, supporting adjustment and
reform policies aimed at correcting the
underlying problems.
 Providing the governments and central banks of
its member countries with technical assistance
and training in its areas of expertise.

16.  IMF looks at the performance of the economy
as a whole (macroeconomic performance)
 Focuses also on the financial sector policies
Ex: regulation and supervision of banks and
other financial institutions.
 Pays attention to structural policies that affect
macroeconomic performance.
 Ex: labor market policies (affect employment
and wage behavior)

17. … in their headquarters in Washington:
 The Executive Board meets three times a
week, maybe more.
 The Board has a voting system:- The larger
the economy, the more voting power it has
 - But, most decisions are based on consensus

18.  Most loans are provided by member
countries, determined by their quota, which
is calculated based upon a country’s relative
size in the world economy.
 For a closer look at the Member Quotas we
can reference the IMF website.
 Upon joining, the 25% of the quota is paid in
some major currency US Dollar, British
Pound, Yen while the remaining 75% is paid
in their own currency.

19.  IMF can only borrow from financially strong
economies to finance lending.
 The IMF Board selects these “strong currencies”
every three months, which make up its “usable”
resources.

20.  India and the IMF has a positive relationship.
The IMF has provided financial assistance to
India, which has helped in boosting the country's
economy.
 The IMF praised the country for it was able to
avoid the Asian Financial Crisis in 1999 and was
also able to maintain the average rate of growth
of its economy.
 In 2005, the IMF said that the budget of India is
very positive for it points that the economy of the
country will grow at the rate of 6.7%.

21.  The Managing Director of International
Monetary Fund Rodrigo De Rato visited India
in May 2005.
 International Monetary Fund said that the
reasons behind the economy growth of India
are that the RBI has been able to control
inflation and has also handled its monetary
policies very skillfully.
 The IMF has suggested that India can become
a financial super power by bringing in more
reforms in its economic policies that will
increase its growth rate to 8%.

22.  The IMF collaborates with
◦ the World Bank,
◦ the regional development banks,
◦ the World Trade Organization,
◦ United Nations agencies, and
◦ other international bodies.
Each of these institutions has its own area of
responsibility and specialization and its particular
contribution to make to the world economy.

23. I. Monitoring national, global, and regional economic
and financial developments and advising member
countries on their economic policies (“surveillance”).
II. Lending members hard currencies to support policy
programs designed to correct balance of payments
problems.
III. Offering technical assistance in its areas of
expertise, as well as training for government and
central bank officials.

24. 
Bretton woods system
 The Bretton Woods system of monetary
management established the rules for commercial and
financial relations among the world's industrial
states. independent nation-states.
 Preparing to rebuild the international economic
system as World War II was still raging, 730
delegates from all 44 Allied nations gathered at the
Mount Washington Hotel in Bretton Woods, New
Hampshire, United States, for the United Nations
Monetary and Financial Conference. The delegates
deliberated upon and signed the Bretton Woods
Agreements during the first three weeks of July
1944.

25.  The SDR, or Special Drawing Rights, is an
international reserve asset that member countries can
add to their foreign currency and gold reserves and
use for payments requiring foreign exchange.
 Its value is set daily using a basket of four major
currencies: the euro, Japanese yen, pound sterling,
and U.S. dollar.
 The IMF introduced the SDR in 1969 because of
concern that the stock and prospective growth of
international reserves might not be sufficient to
support the expansion of world trade. (The main
reserve assets at the time were gold and U.S. dollars.)

26.  The SDR was introduced as a supplementary reserve
asset, which the IMF could "allocate" periodically to
members when the need arose, and cancel, as
necessary.
 IMF member countries may use SDRs in transactions
among themselves, with 16 "institutional" holders of
SDRs, and with the IMF.
 The SDR is also the IMF's unit of account. A number
of other international and regional organizations and
international conventions use it as a unit of account,
or as the basis for a unit of account.

27.  Most comes from the quota subscriptions
◦ the money each member contributes when joining the
IMF
 General Arrangements to Borrow (1962)
◦ line of credit set up with several governments and
banks throughout the world

28.  A country that had not taken in enough foreign
currency to pay the other countries for what
they have bought
◦ spends more money than it takes in
 IMF will lend foreign exchange to that member
◦ hoping to stabilize its currency which will strengthen
its trade

29. P Most of the IMF's loans to low-income countries are
made on concessional terms, under the Poverty
Reduction and Growth Facility.
2. Under a mechanism introduced by the IMF in 2005—
the Policy Support Instrument—countries can
request that the IMF regularly and frequently review
their economic programs to ensure that they are on
track.

30. Ð The success of a country's program is assessed
against the goals set forth in the country's poverty
reduction strategy, and the IMF's assessment can
be made public if the country wishes.
f The IMF also participates in debt relief efforts for
poor countries that are unable to reduce their debt
to a sustainable level even after benefiting from aid,
concessional loans, and the pursuit of sound policies.
n To ensure that developing countries reap full benefit
from the loans and debt relief they receive, in 1999
the IMF and the World Bank introduced a process
known as the Poverty Reduction Strategy Paper
(PRSP) process.

31.  25% of the country’s quota may be used
 If this is not sufficient, then members can
borrow up to 3 times the amount of its
quota
◦ present plans for reform to Executive Directors
 If these plans are sufficient for the
Executive Directors, the IMF grants the
member a loan

32. India’s current quota in the IMF is SDR 4158.2 millonin the total quota of
SDR 213 billion, giving it a shareholding of 1.95 per cent. India’s relative
position based on quota is 13th. However, based on voting share, India
(together with its constituent countries, viz., Bangladesh, Bhutan and Sri
Lanka) is ranked 21st in the list of 24 constitutencies.
The IMF members can either retain SDRs, use them in payments etc. or
sell them to other member countries.
IMF has played an important role in Indian economy. IMF has provided
economic assistance from time to time to India and has also provided
appropriate consultancy in determination of various policies in the country.
Till 1970, India was among the first five nations having the highest quota
with IMF and due to this status India was allotted a permanent place in
Executive Board of Directors.
In July 2004, India and IMF joint training programme at the National
Institute of Bank Management, Pune was established.

33.  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.

34. THANK
YOU