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5/8/12
INTERNATIONAL
MONETARY FUND(IMF)BY:-AKANKSHAPGDM 3RD SEM
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IMF AT A GLANCE
Establishment:- Dec, 27,1945. 29countries signed agreement.
Financial operation:-march, 1, 1947. Current membership:-187 countries
Governing bodies
Executive board:- 24 members
Managing director:- Christinelaggard.
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Cont.
Staff:- more than 2700 from 187countries.
Total resources:- Primary purpose:-
Promote international monetary
cooperation.Facilitate expansion and balanced
growth of international trade.
Promote exchange stability and
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Cont..
Assist a multi-lateral system ofpayments in respect of transaction.
Shorten the duration and lessen thedegree of disequilibrium.
Eliminating foreign exchange
restrictions.
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Bretton Woods
The main goal of bretton woodssystem was to establishinternational economic order that to
prevent economic as well as politicalcollapse. The two interest are:-
1. Provision of adequate liquidity.
2. Creation of an adequate mechanismfor international trade adjustments.
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IMF
International monetary fund.
Fund created as international
institution to promote and supervisean open and stable internationalmonetary system.
Helps in resolving the short termbalance of payment problem underregime of fixed exchange rate andorderly expansion of international
trade.
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Function of IMF
To regulate the financial relations ofits members.
To provide financial assistance tomember experiencing BOPdifficulties.
Act as a consultative organ.
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ecen s ruc ura c anges nIMF
Quotas: Capital BaseOn joining, each member country paya sum of amount, called Quotas.
Subscription:-up to 25% in reservespecified by IMF.
Voting power:-250 basic +1 additional.
Access to financing:-borrow up to300% of its quotas.
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SDR:- An internationalreserve asset
Special drawing rights.
Created by IMF in 1969 to
supplement members. The value of SDR is determined daily
based on basket of major
international currencies. In 1981, the currencies of 5 countries
France, Germany, Japan ,UK and
united states.
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Cont.
The composition of SDR basket:
45% of US dollar
29% euro15% Japanese
11% pound(dec,29,2000)
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USES OF SDR
IMF member use SDR for in variety ofvoluntary transfer.
Helped to ensure the liquidity of theSDR System.
To settle financial obligation, to make
loan and donation. And as a security for settlement of
financial obligations.
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IMF Financing :- lendingpolicies and practices
Majority of members that draw onfund financing within the normal limitor poverty reduction and growth
facility(PRGF) Contingent credit lines(CCL) aimed at
crisis prevention , the provisions for
access in excess of the normal limit. Compensatory financing
facilities(CFF) intended to provide
financing for certain type of
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CCL
Introduce in April 1999.
Precautionary line of defense against
capital market development. Certain consideration for CCL are:-
1. Funds stands ready to move quickly
and flexibly to approve to use offund resources.
2. Strengthened surveillance , support
for greater transparency, promoting
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CFF
CFF was reviewed in march 2004.
This facility to cope with temporary
shortfalls in export earnings andimport cost.
In this the members with access toprivate capital market can expect toretain in face of temporary shocks aslong as BOP position remain strong.
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Emerging issues facing IMF
Global increasing demand of Crudeof for no. of countries.
Increasing inflation
Crisis in Euro area run beyondpolicymaker.
Deteriorating financing condition ofUS market
Equity price has also retreated but
not below pre crisis levels.
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IMF AND INDIA
India acquiring 11th place in IMFQuota.
Indias quota share has been raisedfrom 1.96% to 2.44%.
Provide economic assistance fromtime to time.
India acquire permanent place inExecutive board of director.