58 - International Monetary Fund (IMF)

GK BY - SANJAY UTTAM

 International Monetary Fund (IMF)

1). The International Monetary Fund (IMF) is an international organization of 188 countries working together to-
· Foster global monetary co-operation
· Secure financial stability
· Facilitate international trade
· Promote high employment and sustainable economic growth
· Reduce poverty around the world

2). It was formed in 1944 at the Bretton Woods Conference

3). Established on 27 th December 1945, with 29 member countries initially

4). Headquarters – Washington DC

5). Managing Director – Christine Lagarde

6). Regional offices – Paris and Geneva

7). It was formed with the following objectives–
· To stabilize exchange rates
· Assist the reconstruction of the world’s international payment system post the World War II

8). Now the role of IMF is much more active managing the economic policy instead of just exchange rates

9). Low income countries can borrow on concessional terms i.e., there is a period of time with no interest rates through the
· Extended Credit Facility(ECF)
· Standby Credit Facility(SCF)
· Rapid Credit Facility(RCF)

10). IMF also provides non-concessional loans which has interest rates as follows–
· Standby Arrangements(SBA)
· Flexible Credit Line(FCL)
· Precautionary and Liquidity Line(PLL)
· Extended Fund Facility(EFF)

11). IMF provides emergency assistance to all its members facing urgent balance of payment needs through the newly introduced Rapid Financing Instrument (RFI)

12). To become a member of IMF, a country must apply and then be accepted by a majority of the existing 188 members

· Each member is assigned a
quota based on its relative size of their economy upon joining

· A member’s quota determines the maximum amount of financial resources

· A member must pay its subscription – 25% to be paid in the IMF’s own currency called as Special Drawing Rights(SDR) and the remaining 75% in the member’s own currency

13). Each member of IMF has 250 Basic votes and one additional vote for each SDR 100,000 of quota.

Top 5-members of IMF based on their voting power are as follows
· United states – 16.75% –
421,961 votes
· Japan – 6.23% – 157,022 votes
· Germany – 5.81% – 146,392 votes
· France – 4.29% – 108,122 votes
· United kingdom – 4.29% –
108,122 votes

14). India has 58,952 votes with 2.6% voting power

15). Palau is the last member country having voting power of 0.01% and 281 votes

16). The amount of finance that a member can obtain from IMF is based on its quota. There are two types of loans which are as follows
· Stand-By loans – 200% of its quota
· Extended arrangements loans – 600% of its quota