MARKOVA ANASTASIA
ZHURBA ALEXANDER
International
Monetary
Fund
What is the IMF
THE INTERNATIONAL MONETARY FUND (IMF)
- IS AN INTERNATIONAL ORGANISATION,
WHICH CONTRIBUTES:
- international financial stability
- monetary cooperation
- international trade
- employment and sustainable economic growth
- reducement global poverty
STRUCTURE
AND
GOVERNANCE
Main principle & Objectives
The IMF's mission is to promote
global economic growth and
financial stability, encourage
international trade, and reduce
poverty around the world
Main principle & Objectives
1. International money cooperation
2. Ensure exchange stability
3. Balanced growth of trade
4. Eliminate exchange control
5. Multilateral trade and payments
6. Balanced growth
7. Promote investment of capital
Historical Background
Cooperation and reconstruction (1944-1971)
The Great Depression; a sharp decline in world
trade, as well as a decline in employment and
living standards in many countries
disruption of international
monetary
cooperation
the abolition of currency restrictions
that hinder trade
The Bretton Woods agreement
Meeting of representatives of 45 countries in the city of
Bretton Woods, New Hampshire, in the northeastern part of
the United States to agree on a framework for international
cooperation
The IMF officially began its existence in December 1945
and started its activity on March 1, 1947. Later that
year, France became the first country to take out a
loan from the IMF
The end of the Bretton Woods
agreement (1972-1981)
The system collapsed between 1968
and 1973: temporary suspension of
the convertibility of the dollar into
→ →
gold system crash by March
1973, the major currencies began to
fluctuate against each other
Debts and reforms
Oil shocks of the 1970s, rising interest rates in industrialized
→
countries the international debt crisis
→
In 1979, interest rates began to rise floating interest rates on
loans from developing countries have also risen sharply
Commodity prices from developing countries have fallen due to the
recession caused by monetary policy. Consequences: expansionary
fiscal policy and inflated exchange rates supported by further large
borrowings
Social changes for Eastern Europe and Asian
Upheaval (1990-2004)
The IMF is becoming an almost
universal institution
→
New economic transformations by the end
of the decade, most transition economies had
successfully transitioned to a market economy
after several years of intensive reforms
Asian financial crisis
A large number of requests from Asian
countries for financial assistance and
assistance in reforming economic policy
Criticism of actions provided by the IMF
Globalization and the crisis (2005-now)
→ the IMF was inundated with requests for standby
arrangements and other forms of financial and political
support
→ the IMF's financial resources are more important than
ever and are likely to be exhausted before the crisis ends
→ IMF credit policy review: creating a flexible credit line
for countries with strong economic foundations and
experience in successful policy implementation
Institutional effects
1. It helps states to adjust to the social and institutional
preconditions of global capitalism
2. Financial assistance is provided only if governments agree to
undertake far-reaching institutional and political reforms
3. The IMF was quite useful during the crises starting from 1980s
Successful cases
India case
Greek case
Argentinian and Mexican cases
Criticism
1. Critics of the IMF maintain that it intervenes either too
much or too little and that its policies can create moral
hazard.
2. The IMF supersedes national autonomy, exacerbates
economic problems more often than not, and serves as a
tool for the wealthiest nations only.
3. A country in a financial crisis might ask the IMF for a
bailout, but it's unclear whether the country is in crisis
because it made poor policy decisions knowing that IMF
aid would serve as a backstop.
References
