International Monetary Fund (IMF)

Submitted ByAASHAY AGARWAL (3113) GAURAV LAMBA (3129) SURAJ SINGH GAUR (3131) PARINEETA BARTAKKE (3143) ROHIT DAULATANII (3146) SHREYANS BHANDARI (3149)

INTRODUCTION
The International Monetary Fund (IMF) is an international organization that was created on July 22, 1944 at the Bretton Woods Conference and came into existence on December 27, 1945 when 29 countries signed the Articles of Agreement . The IMF's stated goal was to stabilize exchange rates and assist the reconstruction of the worlds international payment system post World War II. Countries contribute money to a pool through a quota system from which countries with payment imbalances can borrow funds temporarily.

 The IMF describes itself as an organization of 188 countries (as of April 2012), working to foster global monetary cooperation, secure financial

stability, facilitate international trade, promote high employment and

sustainable economic growth, and reduce poverty. The organization's stated objectives are to promote international

economic cooperation, international trade, employment, and exchange

rate stability, including by making financial resources available to member countries to meet balance of payments needs.

Its headquarters is in Washington, D.C.

PRIMARY OBJECTIVES
To reduce disequilibrium in the international balance of payments of member countries. To promote capital investment in backward and underdevelopment countries. To provide short term monetary help to members during emergency . To secure multilateral convertibility. To promote international monetary cooperation.

THE CURRENT MANAGEMENT TEAM

Managing Director, Christine Lagarde, a French national, joined the IMF as Managing Director in July 2011. Before coming to the IMF, she was France's Minister for Economy, Finance and Industry. David Lipton, of the United States, joined the IMF as Special Advisor to the Managing Director in July 2011. On September 1, 2011 he became First Deputy Managing Director. Naoyuki Shinohara, a Japanese national, joined the IMF as Deputy Managing Director in March 2010. Previously, he was Japan's ViceMinister of Finance for International Affairs.

 Nemat Shafik, from Egypt, became Deputy Managing Director of the IMF
in April, 2011. Previously she had worked at the U.K. Department for International Development (DFID), the World Bank, and the International

Finance Corp.
Min Zhu, from China, joined the IMF as Special Advisor to the Managing Director in May 2010. On July 26, 2011 he became Deputy Managing

Director. Before coming to the IMF, Min Zhu was a Deputy Governor of
the Peoples Bank of China and previously worked at the World Bank.

VOTING POWER
Voting power in the IMF is based on a quota system. Each member has a number of basic votes" (each member's number of basic votes equals 5.502% of the total votes), plus one additional vote for each Special Drawing Right (SDR) of 100,000 of a member countrys quota . The Special Drawing Right is the unit of account of the IMF and represents a claim to currency. The basic votes generate a slight bias in favor of small countries, but the additional votes determined by SDR outweigh this bias.

FUNCTIONS
Surveillance:
1. Exchange rate, monetary, and fiscal policies. 2. Financial sector issues 3. Assessment of risks and vulnerabilities 4. Institutional and structural issues

 Technical assistance:
1. Monetary and financial policies. 2. Fiscal policy and management.

3. Compilation, management, dissemination, and

improvement of statistical data . 4. Advising on economic and financial legislation.

IMF FUNDING
The resources for IMF loans are provided by member countries, primarily through their payment of quotas. Multilateral and bilateral borrowing

arrangements provide a further backstop to IMF resources.

In March 2011, the expanded and more flexible New Arrangements to Borrow (NAB) came into effect and was activated.

The Fund has signed a number of bilateral loan and note purchase
agreements, which can be used to finance IMF-supported programs approved prior to the NAB activation.

 The Fund has signed a number of bilateral loan and note purchase agreements, which can be used to finance IMF-supported programs

approved prior to the NAB activation.

Concessional lending and debt relief for low-income countries are financed through separate contribution-based trust funds.

MEMBER COUNTRIES
The members of the IMF are 188 members of the UN and the Republic of
Kosovo. All members of the IMF are also International Bank for Reconstruction and Development (IBRD) members and vice versa. Former members are Cuba (which left in 1964) and the Republic of China, which was ejected from the UN in 1980 after losing the support of then U.S. President Jimmy Carter and was replaced by the People's Republic of China. Taiwan Province of China is still listed in the official IMF indices . Apart from Cuba, the other states that do not belong to the IMF are North Korea, Andorra, Monaco, Liechtenstein, Nauru, Cook Islands, Niue, Vatican City, and the states with limited recognition

LEADERSHIP
Board of Governors
The Board of Governors consists of one governor and one alternate governor for each member country. The Board normally meets once a year and is

responsible for electing or appointing executive directors to the Executive

Board. The International Monetary and Financial Committee has 24 members and monitors developments in global liquidity and the transfer of resources to developing countries. The Development Committee has 25 members and advises on critical development issues and on financial resources required to promote economic development in developing countries.

 Executive Board
24 Executive Directors make up Executive Board. The Executive Directors represent all 188 member-countries. Countries with large economies have

their own Executive Director, but most countries are grouped in

constituencies representing four or more countries. Following the 2008 Amendment on Voice and Participation, eight countries each appoint an Executive Director: the United States, Japan, Germany, France, the United Kingdom, China, the Russian Federation, and Saudi Arabia. The remaining 16 Directors represent constituencies consisting of 4 to 22 countries. The Executive Director representing the largest constituency of 22 countries

accounts for 1.55% of the vote.

 Managing Director
The IMF is led by a Managing Director, who is head of the staff and serves as Chairman of the Executive Board. The Managing Director is assisted by a

First Deputy Managing Director and three other Deputy Managing Directors.
Historically the IMFs managing director has been European and the president of the World Bank has been from the United States. In 2011 the world's largest developing countries, the BRIC nations, issued a statement declaring that the tradition of appointing a European as managing director undermined the legitimacy of the IMF and called for the appointment to be merit-based. The head of the IMF's European department is Antnio Borges of Portugal, former deputy governor of the Bank of Portugal. He was elected in October 2010.

CRITICISMS
The IMF has the obstacle of being unfamiliar with local economic
conditions, cultures, and environments in the countries they are requiring policy reform. The Fund knows very little about what public spending on programs like public health and education actually means, especially in African countries; they have no feel for the impact that their proposed national budget will have on people. The IMFs role as a generalist institution specializing in macroeconomic issues needs reform.

 The recipient governments are sacrificing policy autonomy in exchange for funds, which can lead to public resentment of the local leadership for accepting and enforcing the IMF conditions. Political instability can result from more leadership turnover as political leaders are replaced in electoral backlashes. Another criticism is that IMF programs are only designed to address poor governance, excessive government spending, excessive government intervention in markets, and too much state ownership .

 It is claimed that conditionalities retard social stability and hence inhibit the stated goals of the IMF, while Structural Adjustment Programs lead to

an increase in poverty in recipient countries.

The IMF sometimes advocates austerity programmes, cutting public spending and increasing taxes even when the economy is weak, in order

to bring budgets closer to a balance, thus reducing budget deficits.

THANK YOU