Here's a more detailed breakdown of the International Monetary Fund (IMF):
Mission:
Foster global monetary cooperation
Secure financial stability
Facilitate international trade
Promote high employment and sustainable economic growth
Reduce poverty
Structure:
Founded in 1944 at the Bretton Woods Conference (more on that below) with 29 member countries, currently at 190
India is a founder member of the IMF.
The Finance Minister of India is the ex-officio Governor on the Board of Governors of the IMF.
RBI Governor is the Alternate Governor at the IMF.
India’s current quota in the IMF is SDR (Special Drawing Rights) 5,821.5 million, making it the 13th largest quota holding country at IMF and giving it shareholdings of 2.44%.
Headquartered in Washington, D.C.
Governed by a Board of Governors, with each member country having a voting share based on their financial quota (more voting power for wealthier countries is a common criticism).
Managed by a Managing Director (currently Kristalina Georgieva)
Activities:
Surveillance: Regularly publishes reports analyzing the global economy, regional economic outlooks, and individual member countries' economic and financial policies. These reports are a valuable resource for economists, policymakers, and investors.
Some key reports include:
World Economic Outlook
Global Financial Stability Report
Fiscal Monitor
Regional Economic Outlooks
Country Reports
Loan Programs: Provides financial assistance to countries facing economic difficulties through various lending mechanisms (more on that below).
Capacity Building: Offers training and technical assistance to member countries to improve their economic management.
Bretton Woods Conference:
Held in 1944, this historic conference established the IMF and the World Bank, laying the foundation for the modern international financial system.
Lending Mechanisms:
The IMF offers various loan programs to countries facing economic challenges:
Extended Fund Facility (EFF): Supports medium-term balance of payments problems and structural reforms.
Stand-By Arrangement (SBA): Provides short-term financial assistance to safeguard stability during temporary balance of payments difficulties.
Rapid Financing Instrument (RFI): Offers quick financial assistance for urgent balance of payments needs.
Precautionary and Liquidity Line (PLL): Provides short-term financing to countries with strong economic fundamentals as insurance against potential crises.
Catastrophe Containment and Relief (CCR) Trust: Offers financial assistance to low-income countries struck by natural disasters or other emergencies.
IMF Members: Any other state, whether or not a member of the UN, may become a member of the IMF in accordance with IMF Articles of Agreement and terms prescribed by the Board of Governors.
Membership in the IMF is a prerequisite to membership in the IBRD.
Pay a quota subscription: On joining the IMF, each member country contributes a certain sum of money, called a quota subscription, which is based on the country’s wealth and economic performance (Quota Formula).
It is a weighted average of GDP (weight of 50 %)
Openness (30 %),
Economic variability (15 %),
International reserves (5 %).
GDP of member country is measured through a blend of GDP—based on market exchange rates (weight of 60 %) and on PPP exchange rates (40 %).
Special Drawing Rights (SDRs) is the IMF’s unit of account and not a currency.
The currency value of the SDR is determined by summing the values in U.S. dollars, based on market exchange rates, of a SDR basket of currencies
SDR basket of currencies includes the U.S. dollar, Euro, Japanese yen, pound sterling and the Chinese renminbi (included in 2016).
The SDR currency value is calculated daily (except on IMF holidays or whenever the IMF is closed for business) and the valuation basket is reviewed and adjusted every five years.
Quotas are denominated (expressed) in SDRs.
SDRs represent a claim to currency held by IMF member countries for which they may be exchanged.
Members’ voting power is related directly to their quotas (the amount of money they contribute to the institution).
What are Special Drawing Rights (SDR)?
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves.
To date, a total of SDR 660.7 billion (equivalent to about US$943 billion) have been allocated.
This includes the largest-ever allocation of about SDR 456 billion approved on August 2, 2021 (effective on August 23, 2021).
This was to address the long-term global need for reserves, and help countries cope with the impact of the Covid-19 pandemic.
The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.
The SDR basket is reviewed every five years.
During the last review concluded in November 2015, the Board decided that the Chinese renminbi (RMB) met the criteria for SDR basket inclusion.
Criticisms:
Loan conditions (often referred to as structural adjustment programs) may impose austerity measures on borrowing countries, which can have negative social consequences.
The voting power structure, where wealthier countries hold more sway, is a concern for some.
Recent Initiatives:
The IMF is increasingly focusing on climate change and its economic impact, urging member countries to adopt sustainable economic policies.
Addressing issues of financial inclusion, especially for developing countries, is another area of focus.
Q. Global Financial Stability Report is prepared by the (2016)
(a) European Central Bank (b) International Monetary Fund (c) International Bank for Reconstruction and Development (d) Organization for Economic Cooperation and Development
Resources:
You can find more details and reports from the IMF on their website: https://imf.org/
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