IMF

Background Of IMF
• On July 1, 1944 the U. S. invited 44 countries to attend united Monetary
and Financial conference at Bretton Woods, New Hampshire.
• The conference prepared not only the articles of the proposed IMF but
also the World Bank (IBRD).
• The agreement was signed by 27 countries and became effective on
December 27, 1945.
• In May, 1946 the IMF became operational.
• The articles were amended in 1969, 1978 and 1992 following the
collapse of fixed exchange rates system and oil price crisis in early 70s.
• The first amendment gave rise to the creation of Special Drawing Rights
(SDR).
• The 2nd amendments were on the review of the IMF's responsibilities.
• The 3rd was on empowering the Fund to suspend the membership of its
member that failed to fulfil its obligations.
• In mid 90s the IMF squeezed its financial resources. The group of seven
summits in Halifax arranged in June 1995 recommended to double the
IMF's general arrangement to borrow up to $55 million.
 International Monetary Fund
• IMF is a finance monitoring organization formed on
December 1945.Primary purpose of IMF is to
develop policies regarding money monitoring,
uniform standards for currency exchange
• and stable payment systems that should be
mutually accepted by all the member countries of
IMF.
• At present number of registered countries with IMF
are 182, operations in 110 countries with 2600
employees.
 Functions of IMF
• Functions of IMF are to develop fair and monitor currency
exchange rates among all the countries.
• IMF also provides short tem loans to its member countries
so they could bring their imbalanced payment system into
balance.
• One more important function of IMF is to draw lending
money model for borrower countries. In this way IMF also
acts as Debtor.
• IMF also provides Training and Technical assistance in
the areas of finance management system, Tax system,
banking system development to its member countries through
its Monetary and Exchange Affairs Department, the Fiscal
Affairs Department, and the Bureau of Statistics. The Legal
Department, the Bureau of Computing Services, and the area
departments also coordinate.
 Functions of IMF
• IMF also helps to draw a systematic system for foreign transactions to
take place.
• It provides advice on microeconomic development.
• If any country is facing adverse balance of payment and facing the
difficulty to get the currency of creditor country, it can get short term
credit from the fund to clear the debit
• The IMF allows the debtor country to purchase foreign currency in
exchange for its own currency up to 75% of its quota plus an addition
25% each year. The maximum limit of the quota is 200% in special
circumstances.
• If the demand of any particular country currency increases and its stock
with the fund falls below 75% of its quota, the IMF can declare it scare.
But IMF also tries to increase its supply by these methods.
– IMF purchases the Scare currency by gold.
– IMF borrows from those countries scare currency that has surplus amount.
– IMF allows the debtor countries to impose restrictions on the imports of
creditor country.
– IMF is very useful to avoid the competitive depreciation which took place
before World war-II.
– When the devaluation policy is indispensable
for any country then IMF provides loan to
correct the balance of payment of that
country. These are the main functions of
International Monetary Fund. Every member
of IMF provides a fixed quota of money to
IMF. Size of amount is based on the ability of
government to pay.
 WTO
• The World Trade Organization (WTO) is an
organization that intends to supervise and liberalize
international trade.
• The organization officially commenced on January
1, 1995 under the Marrakech Agreement, replacing
the General Agreement on Tariffs and Trade
(GATT), which commenced in 1948.
• The organization deals with regulation of trade
between participating countries;
• It provides a framework for negotiating and
formalizing trade agreements, and a dispute
resolution process aimed at enforcing participants'
adherence to WTO agreements which are signed
by representatives of member governments and
ratified by their parliaments
 WTO
• The organization is currently endeavoring to
persist with a trade negotiation called the Doha
Development Agenda (or Doha Round)
• Doha Round was launched in 2001 to enhance
equitable participation of poorer countries which
represent a majority of the world's population.
• However, the negotiation has been dogged by
"disagreement between exporters of agricultural
bulk commodities and countries with large
numbers of subsistence farmers on the precise
terms of a 'special safeguard measure' to protect
farmers from surges in imports.
• The WTO has 153 members, representing more
than 97% of total world trade and 30 observers,
most seeking membership.
• The WTO is governed by a ministerial
conference, meeting every two years; a general
council, which implements the conference's
policy decisions and is responsible for day-to-
day administration; and a director-general, who
is appointed by the ministerial conference.
• The WTO's predecessor, the General Agreement on Tariffs and
Trade (GATT), was established after World War II in the wake of
other new multilateral institutions dedicated to international
economic cooperation — notably the Bretton Woods institutions
known as the World Bank and the International Monetary Fund.
• A comparable international institution for trade, named the
International Trade Organization was successfully negotiated. The
ITO was to be a United Nations specialized agency and would
address not only trade barriers but other issues indirectly related to
trade, including employment, investment, restrictive business
practices, and commodity agreements.
• But the ITO treaty was not approved by the U.S. and a few other
signatories and never went into effect
 Doha Round
• The WTO launched the current round of negotiations, the
Doha Development Agenda (DDA) or Doha Round, at the
fourth ministerial conference in Doha, Qatar in November
2001.
• The Doha round was to be an ambitious effort to make
globalization more inclusive and help the world's poor,
particularly by slashing barriers and subsidies in farming.
• The initial agenda comprised both further trade liberalization
and new rule-making, underpinned by commitments to
strengthen substantial assistance to developing countries.
• The negotiations have been highly contentious and agreement
has not been reached, despite the intense negotiations at
several ministerial conferences and at other sessions.
• Disagreements still continue over several key areas including
agriculture subsidies