More Related Content
Imf (ali)
- 1. INTERNATIONAL MONEATARY FUND Presented By:- Mohd Ali Presented To:- Prof. Mohit Maurya SRMS IBS
- 2. HISTORY The International Monetary Fund was conceived in July 1944 originally with 45 members and came into existence in December 1945 when 29 countries signed the agreement. The IMF was originally laid out as a part of the Bretton Woods system exchange agreement in 1944. During the Great Depression, countries sharply raised barriers to trade in an attempt to improve their failing economies. This led to the devaluation of national currencies and a decline in world trade Their objective is to promote world economic stability and growth.
- 3. INTERNATIONAL MONETARY FUND The International Monetary Fund (IMF) is an international organization headquartered in Washington, of "189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development through the enforcement of liberalizing economic policies on other countries as a condition for loans, restructuring or aid.
- 4. QUICK FACTS Membership: 189 countries Headquarters: Washington, D.C. Staff: Approximately 2,600 from 147 countries Total quotas: US$327 billion (as of 3/13/15) Executive Board: 24 Directors each representing a single country or a group of countries Additional pledged or committed resources: US$ 885 billion Committed amounts under current lending arrangements (as of 3/13/15): US$163 billion, of which US$137 billion have not been drawn Biggest borrowers (amounts outstanding as of 3/13/15): Portugal, Greece, Ireland, Ukraine Biggest precautionary loans (amount agreed as of 3/13/15): Mexico, Poland, Colombia, Morocco
- 7. WHO RUNS THE IMF? MEMBER COUNTRIES BOARD OF GOVERNORS DEPUTY MANAGING DIRECTOR DEPUTY MANAGING DIRECTOR EXECUTIVE BOARD FIRST DPTY MANAGING DIRECTOR
- 8. OBJECTIVES I. To promote international monetary cooperation II. To facilitate the expansion and balanced growth of International Trade III. To promote exchange rate stability IV. To make its resources available to its members who are experiencing BOP problems V. To establish a multilateral system of payments
- 9. FUNCTIONS OF IMF Surveillance Gathering data and assessing economic policies of countries Monitoring economic and financial developments and policies, in member countries and at the global level, giving policy advance to its members based on its more than fifty years of experience.
- 10. Technical Assistance Strengthening human skills and institutional capacity of countries. Providing the governments and central banks of its member countries with technical assistance and training in its areas of expertise.
- 11. Financial Assistance Lending to countries to support reforms . Lending to member countries with balance of payments problems, supporting adjustment and reform policies aimed at correcting the underlying problems.
- 12. SPECIAL DRAWING RIGHTS (SDR) The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. With a general SDR allocation that took effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs increased from SDR 21.4 billion to SDR 204.1 billion (currently equivalent to about $324 billion).
- 13. The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold. the SDR was redefined as a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and U.S. dollar. The U.S. dollar-value of the SDR is posted daily on the IMF's website. It is calculated as the sum of specific amounts of the four currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.
- 14. INDIA AND THE IMF India joined the IMF on December 27, 1945, as one of the IMF's original members. 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%. India (together with its constituency countries Viz. Bangladesh, Bhutan and Sri Lanka) is ranked 17th in the list of 24 constituencies at the Executive Board.
- 15. India subscribes to the IMF's Special Data Dissemination Standard. Countries belonging to this group make a commitment to observe the standard and to provide information about their data and data dissemination practices.
- 16. WHERE THE IMF GETS ITS MONEY Most comes from the quota subscriptions the money each member contributes when joining the IMF General Arrangements to Borrow (1962) line of credit set up with several governments and banks throughout the world
- 17. QUOTAS & SUBSCRIPTIONS Quota subscriptions generate most of the IMF's financial resources. Each member country of the IMF is assigned a quota, based broadly on its relative size in the world economy. A member's quota determines its maximum financial commitment to the IMF and its voting power, and has a bearing on its access to IMF financing.
- 18. A member's quota subscription determines the maximum amount of financial resources the member is obliged to provide to the IMF. A member must pay its subscription in full upon joining the IMF: up to 25 percent must be paid in the IMF's own currency, called Special Drawing Rights (SDRs) or widely accepted currencies (such as the dollar, the euro, the yen, or pound sterling), while the rest is paid in the member's own currency. Voting power. The quota largely determines a member's voting power in IMF decisions. Each IMF member has 250 basic votes plus one additional vote for each SDR 100,000 of quota
- 19. A new country is assigned an initial quota in the same range as the quotas of existing members The quota formula is a weighted average of GDP (weight of 50 percent), openness (30 percent), economic variability (15 percent), and international reserves (5 percent ) GDP is measured as a blend of GDP based on a market exchange rates (weight of 60 percent) and on PPP exchange rates (40 percent). Quotas are denominated in Special Drawing Rights (SDRs)
- 20. BENEFITS TO INDIA FROM INTERNATIONAL MONETARY FUND’S MEMBERSHIP: Financial Assistance While India has not been a frequent user of IMF resources, IMF credit has been instrumental in helping India respond to emerging balance of payments problems on two occasions. In 1981-82, India borrowed SDR 3.9 billion under an Extended Fund Facility, the largest arrangement in IMF history at the time. In 1991-93, India borrowed a total of SDR 2.2 billion under two stand by arrangements, and in 1991 it borrowed SDR 1.4 billion under the Compensatory Financing Facility.
- 21. Technical Assistance In recent years, the Fund has provided India with technical assistance in a number of areas, including the development of the government securities market, foreign exchange market reform, public expenditure management, tax and customs administration Since 1981 the IMF Institute has provided training to Indian officials in national accounts, tax administration, balance of payments compilation, monetary policy, and other areas.
- 22. CASE-1991 INDIAN ECONOMIC CRISIS By 1985, India had started having balance of payments problems. By the end of 1990, it was in a serious economic crisis. The government was close to default, its central bank had refused new credit and foreign exchange reserves had been reduced to such a point that India could barely finance three weeks’ worth of imports which led the Indian government to airlift national gold reserves as a pledge to the International Monetary Fund (IMF) in exchange for a loan to cover balance of payment debts. The economic crisis was primarily due to the large and growing fiscal imbalances over the 1980s. During the mid- eighties, India started having balance of payments problems. Precipitated by the Gulf War, India’s oil import bill swelled, exports slumped, credit dried up, and investors took their money out.
- 23. Government of India's immediate response was to secure an emergency loan of $2.2 billion from the International Monetary Fund by pledging 67 tons of India's gold reserves as collateral. The Reserve Bank of India had to airlift 47 tons of gold to the Bank of England and 20 tons of gold to the Union Bank of Switzerland to raise $600 million Result A program of economic policy reform 1991 has since been put in place which has yielded very satisfactory results so far.
- 25. SRI LANKA TO USE IMF LOAN TO REFORM ECONOMY AFTER CONFLICT $2.6 BILLION LOAN GRANTED. Sri Lanka had been running high budget deficits for several years and had borrowed to finance these deficits internationally on short terms which left the country exposed to a sudden reversal of this borrowing. When the global financial crisis hit, there was a sudden stop in financing from international markets and the central bank intervened to prevent the exchange rate from depreciating. This, in turn, put pressure on Sri Lanka’s international currency reserves, which still remain at very low levels. Protection for poor, assisting the most vulnerable are key goals
- 26. Thank you