INTRODUCTIO

N to
IM
Maryam Mobin
 What is the
IMF?
• The intergovernmental
organization that oversees the
global financial system.

• IMF organizes the conduct

of international monetary
affairs.
 History of
IMF monetary
• An international
conference was held at Bretton
Woods in U.S.A. in July which
lead to:
Establishment of I. M. F.
Setting up of World Bank
The International Monetary Fund
was created in July 1944, originally
with 45 members, with a goal to
stabilize exchange rates and assist
the reconstruction of the world
international payment system.
Member
s of
IM
188 Members of IMF
 Types of
Membership
Original membership:
• All those countries whose
representatives took part in Bretton
Woods conference
• Who agreed to be the members of the
fund prior to 31st December,1945.

Ordinary membership:
• All those who became its
members subsequently.
• BANK has the authority to suspend any
member and similarly every member is
free to resign.
• Agree to the code of conduct found in
the IMF Articles of Agreement

• Pay a quota subscription

• Refrain from restrictions on exchange of

foreign currency

• Strive for openness in economic policies

affecting other countries.
Resource
s of
IM
• When a country joins IMF, it is assigned
a quota which determines its
maximum contribution to the IMF’s
financial resources.

• It based on the country's relative size in

the world economy, its voting power and
drawing rights.
• IMF has signed a number of bilateral loan and
note purchase agreements to supplement its quota
resources.

• It maintains two standing multilateral borrowing

arrangements:
 The expanded New Arrangements to Borrow
(NAB)

 Gold
• The IMF’sholdings
gold holdings amount to
about 90.5 million troy ounces
(2,814.1 metric tons), making the IMF one
of the largest official holders of gold
in the world.

• The IMF’s Articles of Agreement strictly

limit the use of gold.
• The IMF currently provides two primary types of
financial assistance to low-income countries:

 Low-interest loans under the Poverty Reduction and

Growth Trust (PRGT)

 Debt relief under the Heavily Indebted Poor

Countries (HIPC) Initiative and the
Catastrophe Containment and Relief (CCR)
Trust.
Functions
of
I
M
Tehseen Khalid
 Three Major Functions of
IMF
1. Surveillance
• Gathering the data and gives
advices in making policies of the
country.
2.Technical Assistant
• Strengthening the human skills and
institutional skills of the country.

3.Financial Assistant
• Lending to countries to support
reforms
• The IMF also plays an important
role in the fight against Money
Laundering and Terrorism
Structure
of
IMF
 Structure of IMF
• IMF is Governed by FOUR main Bodies:

1: Governing Body
2: Executive Board
3: Managing Director
4: IMF Staff
 1. The Governing
Body
• All powers of the IMF are Vested in its
Board of Governors, all the members of
countries are represented.(187)
• Ministry of finance or President of
central bank
• Governor and Alternate Governor
• Meet once in a year in
Washington DC
• December 2002, the United States
governor was Secretary of the Treasury
Paul O'Neill,and the alternate, Federal
Board Ch. Alan Greenspan.
  Voting Power
• Each member nation is required to
contribute funds according to its
Economic size and Strength
  Special Drawing
Rights(SDR)
• A unit for the amount of foreign
currency member states can draw on

Currencies including:
• Euro, Pound Sterling, Japanese yen and
US Dollar
  Advisers of the
GB
• It is being advised by TWO Committees:

I. International Monetary & Financial

Committee (IMFC)
II. The Development Committee
 International Monetary &
Financial Committee (IMFC)

• IMFC has 24 Members

• Meets twice a year (Spring , Annual)
• Matters of common concern affecting
the global economy
• Communiqués provide guidance for the
IMF's work program
 The Development Committee

• 24 Members
• A joint committee, tasked with advising
• IMF & World Bank
• Issues related to
Economic development
• Developmental issues
 2. Executive
BoardDirectors
• 24 Executive
• 5 are appointed by the countries having
Largest Quotas
• US, UK, Japan, Germany, France
• 19 are appointed by Regional Groups of
remaining members
• Fund General Operation
• Function in Continuous Session
 3. IMF Managing Directors
• Headed by Executive Board
• Managing Director is chosen by E.B
• It is responsible for the conduct of the
ordinary business of the Fund
• Manager appointed for 5-Years
• May not serve concurrently
 4. IMF Staff
• It has staff of about 2,600 economists,
statisticians, research scholars, experts
in public finance and taxation and in
finance systems and banking, linguists,
writers and editors, and support
personnel.
• Most headquartered in Washington,
DC.
Importanc
e of
IM
F
Sibgha Saleem
The importance of IMF can be
explained for its following
works :
To bring about international
monetary cooperation.
To promote and establish system of
multinational trade and payments
system.

To help member nations to achieve

balanced economic growth.
To ensure stability in foreign
exchange rates.

To reduce the disequilibrium in the

balance of payments.

To offer special aids or loans to

member countries in solving
their economic problem.
Strength
of
s
im
f
 Stabi
Econo lize at the time of
my Need
 IMF can be seen as lender of last resort.

 The IMF can provide crucial loans to stabilize

the economy and prevent a collapse of
confidence.

 Its most important function is its ability to

provide loans to member nations in need of
a bailout.
 IMFguarantees long term
development
• IMF can impose necessary reforms on an
economy such as privatization, fiscal
responsibility etc.

• These policies may cause short term pain but

are essential for preventing future crisis and
long term development .
IMF Provides an External
Aid
It provides an external assessment
of the economy, which helps the
government to implement popular
ideas while focusing on its core
macroeconomic and financial areas
of responsibility.
IMF fills the gap to balance payments
 The IMF assists member nations in
several different capacities.

 If a country has a balance of payments

deficit, the IMF can step in to fill the gap.
 IMF Collaboration with
Institutions
 The World Bank.
 The regional development banks.
 The World Trade Organization.
 United Nations agencies.
 International bodies.
 IMF as an Economic
Adviser
• It serves as a council and adviser to
countries attempting a new
economic policy.

• It is also known for providing a

forum for discussion and consultation
among member countries.
Weaknesse
s of
I
M
Abeer Fatima
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• IMF implies same inflexible set of economic
policies for all its members regardless of the
situation

• For example, Policies of privatization

may work better in developed countries
in the West but are more difficult to
implement in the developing world
• Loans with high interest rates

• Country stays in debt unable to provide for its

people ~ Poverty and Unemployment
• As voting power is determined by the amount
of money that each country pays into the
IMF's quota system

• Dominated by the perspective of the G8

industrialized nations
• The U.S. is the largest shareholder of IMF.
Germany, Japan, France, Great Britain, and
the US combined control about 38 percent of
shares.
Hinder Social Security and
Social Development
• Structural adjustment policies (SAPs)
• Cut social development budgets like
education, health, food and transportation
budgets etc.
• Make exports cheaper

• Privatize national assets

• Cut down wages of employees

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• Foreign bodies have great
influence over key
economic issues and
resource management
and investments in IMF
debt countries.

• For example, Jamaica

argues that the IMF takes
away the ability for
countries to decide
national policy.
 Promote
Gender Discrimination
at National Level

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IMF policies hurtWOMEN the most in
IMF debt countries by following
means:
• Difficult to meet families' basic needs

• First to be drawn out of schools due to

high education fee as suggested by
SAPs

• More exploited as
sweatshops abuses increase with long working
hours, less wages and non-existent
facilities
 Violate Labor Rights

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• The IMF advises countries to
attract foreign investors by
weakening their labor laws

• For example, In Haiti,

the government was told
to eliminate a statute in
their labor code that
allowed increases in the
minimum wage on 10%
inflation.

• Workers in rich countries are

also hurt this.
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• IMF policies promote natural resource exploitation and
Unsustainable liquidation on a staggering scale

• Environmental ministries are not included in policy

making

• For example, in Africa the Ivory Coast's increased

reliance on cocoa exports has led to a loss of
two- thirds of the country's forests
Many member countries of IMF like
Italy and Greece, have been accused
of unsustainable budgets and unplanned
investments etc. because they believed
that IMF would come to their rescue

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CONCLUSIO
N