What is IMF?

The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution.

What IMF does?

The International Monetary Fund (IMF) works to achieve sustainable growth and prosperity for all of its member countries.

It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being.

When was IMF established?

The IMF was established in 1944 in the aftermath of the Great Depression of the 1930s.

Where is the headquarter of IMF?

IMF is headquartered in Washington, D.C.

How many countries are members of IMF?

IMF consists of 190 member countries.

What is the mission of IMF?

The IMF has three important missions:

1 . Furthering international monetary cooperation

2 . Encouraging the expansion of trade and economic growth

3 . Discouraging policies that would harm prosperity.

Mention about the organisational structure of IMF?

At the top of its organizational structure is the Board of Governors. The day-to-day work of the IMF is overseen by its 24-member Executive Board supported by IMF staff. The Managing Director is the head of the IMF staff and Chair of the Executive Board.

What are the sources of IMF funds?

The IMF’s resources mainly come from the money that countries pay as their capital subscription (quotas) when they become members.

Each member of the IMF is assigned a quota, based broadly on its relative position in the world economy. Countries can then borrow from this pool when they fall into financial difficulty.

How IMF helps the member countries?

The IMF provides loans—including emergency loans—to member countries experiencing actual or potential balance of payments problems.

What are the benefits of joining the IMF?

Member countries of the IMF have access to information on the economic policies of all member countries, the opportunity to influence other members’ economic policies, technical assistance in banking, fiscal affairs, and exchange matters, financial support in times of payment difficulties, and increased opportunities for trade and investment.

What is the aim of IMF lending?

The aim is to help them rebuild the member’s international reserves, stabilize their currencies, continue paying for imports, and restore conditions for strong economic growth, while correcting underlying problems.

Why the IMF monitors the international monetary system?

The IMF monitors the international monetary system and global economic developments to identify risks and recommend policies for growth and financial stability.

The Fund also undertakes a regular health check of the economic and financial policies of its 190 member countries.

The IMF identifies possible risks to the economic stability of its member countries and advises their governments on possible policy adjustments.

Does IMF provides technical assistance and training?

Yes , the IMF provides technical assistance and training to governments, including central banks, finance ministries, revenue administrations, and financial sector supervisory agencies.

These capacity development efforts are centered on the IMF’s core areas of expertise ranging from taxation through central bank operations to the reporting of macroeconomic data.

Such training also helps countries tackle cross-cutting issues, such as income inequality, gender equality, corruption, and climate change.

What is the basis of voting power in the IMF?

Voting power in the IMF is based on a quota system. Each member has a number of basic votes, equal to 5.502% of the total votes, plus one additional vote for each special drawing right (SDR) of 100,000 of a member country’s quota.

The basic votes generate a slight bias in favour of small countries, but the additional votes determined by SDR outweigh this bias.

Name the ten countries having highest percentage of the total quota

1 . USA (17.43%) 2 . Japan (6.47%) 3 . China (6.40%) 4. Germany (5.59%)

5 . France (4.23%) 6 . UK (4.23%) 7. Italy (3.16 %)

8 . India (2.75 %) 9 . Russia (2.71 %) 10 . Brazil (2.32 %)

Name the ten countries having highest percentage of the total votes

1 . USA (16.50 %) 2 . Japan (6.14 %) 3 . China (6.08 %) 4. Germany (5.31 %)

5 . France (4.03 %) 6 . UK (4.03 %) 7 . Italy (3.02 %)

8 . India (2.63 %) 9 . Russia (2.59 %) 10 . Brazil (2.22 %)

What is SDR?

The SDR is an international reserve asset. The SDR is not a currency, but its value is based on a basket of five currencies—the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

What are the important publications of IMF?

1 . World Economic Outlook ( published twice a year ) https://www.imf.org/en/publications/weo

2 . Global Financial Stability Report

3 . Fiscal Monitor

4. Regional Economic Outlook

What are the various lending instruments available with IMF ?

The IMF has several lending instruments to meet the different needs and specific circumstances of its members such as: Stand-by Arrangement (SBA) , Stand-by Credit Facility (SCF) , Extended Fund Facility (EFF) , Extended Credit Facility (ECF) , Rapid Financing Instrument (RFI) , Rapid Credit Facility (RCF) , Flexible Credit Line (FCL) , Short-term Liquidity Line (SLL) , Precautionary and Liquidity Line (PLL) , Resilience and Sustainability Facility (RSF) , Policy Coordination Instrument (PCI) , etc.

For more information on lending instruments of IMF visit https://fotisedu.com/lending-instruments-of-imf/

PRACTICE QUESTIONS

QUES 1 . ‘Global Financial Stability Report’ is prepared by the: UPSC 2016

(a) European Central Bank

(b) International Monetary Fund

(c) International Bank for Reconstruction and Development

(d) Organization for Economic Cooperation and Development

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QUES 2 . Regarding the International Monetary Fund, which one of the following statements is correct? UPSC 2011

(a) It can grant loans to any country

(b) It can grant loans to only developed countries

(c) It grants loans to only member countries

(d) It can grant loans to the central bank of a country

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QUES 3 . Which of the following organizations brings out the publication known as ‘World Economic Outlook’? UPSC 2014

(a) The International Monetary Fund

(b) The United Nations Development Programme

(c) The World Economic Forum

(d) The World Bank

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