The International Monetary Fund (IMF) is the intergovernmental organization An intergovernmental organization, sometimes rendered as an international governmental organization and both abbreviated as IGO, is an organization composed primarily of sovereign states , or of other intergovernmental organizations. Intergovernmental organizations are often called international organizations, although that term may also include that oversees the global financial system The global financial system is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level. The main players are the global institutions, such as International Monetary Fund and Bank for International Settlements, national agencies and government by following the macroeconomic policies Macroeconomics (from prefix "macr-" meaning "large" + "economics") is a branch of economics that deals with the performance, structure, behavior and decision-making of the entire economy, be that a national, regional, or the global economy. Along with microeconomics, macroeconomics is one of the two most general of its member countries, in particular those with an impact on exchange rate In finance, the exchange rates between two currencies specifies how much one currency is worth in terms of the other. It is the value of a foreign nation’s currency in terms of the home nation’s currency. For example an exchange rate of 91 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that JPY 91 is worth the same as USD 1 and the balance of payments A balance of payments sheet is an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, and financial capital, as well as financial transfers. The BOP summarises international transactions for a specific period,. It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development through the enforcement of liberalising Neoliberalism is a market-driven approach to economic and social policy based on neoclassical theories of economics that maximise the role of the private business sector in determining the political and economic priorities of the state economic policies[1][2] on other countries as a condition for loans, restructuring or aid.[3] It also offers highly leveraged loans In finance, leverage refers to the use of debt to supplement investment. Companies usually leverage to increase returns to stock, as this practice can maximize gains (and losses). The easy but high-risk increases in stock prices due to levering at banks in the United States have been blamed for the unusually high rate of pay for top executives, mainly to poorer countries Developing country is a term generally used to describe a nation with a low level of material well being. There is no single internationally-recognized definition of developed country, and the levels of development may vary widely within so-called developing countries, with some developing countries having high average standards of living. Its headquarters is in Washington, D.C. Washington, D.C. , formally the District of Columbia and commonly referred to as Washington, the District, or simply D.C., is the capital of the United States, founded on July 16, 1790. The City of Washington was originally a separate municipality within the Territory of Columbia until an act of Congress in 1871 effectively merged the City and the, United States ^ b. English is the de facto language of American government and the sole language spoken at home by 80% of Americans age five and older. Spanish is the second most commonly spoken language.

Contents

Organization and purpose

IMF "Headquarters 1" in Washington, D.C. Washington, D.C. , formally the District of Columbia and commonly referred to as Washington, the District, or simply D.C., is the capital of the United States, founded on July 16, 1790. The City of Washington was originally a separate municipality within the Territory of Columbia until an act of Congress in 1871 effectively merged the City and the

The International Monetary Fund was created in July 1945, originally with 45 members,[4] with a goal to stabilize exchange rates and assist the reconstruction of the world's international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances (Condon, 2007). The IMF was important when it was first created because it helped the world stabilize the economic system. The IMF works to improve the economies of its member countries.[5]

The IMF describes itself as "an organization of 187 countries (as of July 2010),[6][7] working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". With the exception of Cuba The Republic of Cuba (pronounced /ˈkjuːbə/ ; Spanish: República de Cuba, pronounced [reˈpuβlika ðe ˈkuβa] ( listen)) is an island country in the Caribbean. The nation of Cuba consists of the main island of Cuba, the Isla de la Juventud, and several archipelagos (left in 1964),[8] Taiwan The Republic of China , commonly known as Taiwan, is a state in East Asia comprising the islands of Taiwan, Penghu, Kinmen, Matsu and other minor islands located off the east coast of mainland China. Neighbouring states include the People's Republic of China (PRC) to the west, Japan to the northeast, and the Philippines to the south (expelled in 1980),[9] North Korea North Korea, officially the Democratic People's Republic of Korea (Chosongul: 조선민주주의인민공화국), is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea. The Amnok River and, Andorra Andorra /ænˈdɒrə/ , officially the Principality of Andorra (Catalan: Principat d'Andorra), also called the Principality of the Valleys of Andorra, (Catalan: Principat de les Valls d'Andorra), is a small country in southwestern Europe, located in the eastern Pyrenees mountains and bordered by Spain and France. It is the sixth smallest nation in, Monaco Monaco /ˈmɒnəkoʊ/ , officially the Principality of Monaco (French: Principauté de Monaco; Monégasque: Principatu de Múnegu; Italian: Principato di Monaco; Occitan: Principat de Mónegue), is a small sovereign city-state located in South Western Europe on the northern central coast of the Mediterranean Sea. It is surrounded on three sides by, Liechtenstein The Principality of Liechtenstein (pronounced /ˈlɪktənstaɪn/ LIK-tən-styen; German: Fürstentum Liechtenstein, [ˈfʏɐstəntuːm ˈliːçtənʃtaɪn] (help·info)) is a doubly landlocked alpine microstate in Western Europe, bordered by Switzerland to the west and south and by Austria to the east. Its area is just over 160 km² (about 61.7, Tuvalu Tuvalu ( /tuːˈvɑːluː/ too-VAH-loo or /ˈtuːvəluː/ TOO-və-loo), formerly known as the Ellice Islands, is a Polynesian island nation located in the Pacific Ocean, midway between Hawaii and Australia. Its nearest neighbours are Kiribati, Nauru, Samoa and Fiji. It comprises four reef islands and five true atolls. Its population of 12,373 and Nauru Coordinates: 0°31′38″S 166°56′12″E / 0.527288°S 166.936724°E Nauru (pronounced /nɑːˈʊəruː/ nah-OO-roo), officially the Republic of Nauru and formerly known as Pleasant Island, is an island nation in Micronesia in the South Pacific. Its nearest neighbour is Banaba Island in Kiribati, 300 km to the east. Nauru is the world's, all UN member states There are currently 192 United Nations member states, and each of them is a member of the United Nations General Assembly participate directly in the IMF. Member states are represented on a 24-member Executive Board (five Executive Directors are appointed by the five members with the largest quotas, nineteen Executive Directors are elected by the remaining members), and all members appoint a Governor to the IMF's Board of Governors.[10]

History

IMF "Headquarters 2" in Washington, D.C.

The International Monetary Fund was conceived in July 1944 during the United Nations Monetary and Financial Conference The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire to regulate the international monetary and financial order after the conclusion of World War II. The representatives of 45 governments met in the Mount Washington Hotel The Mount Washington Hotel opened in 1902 near Mount Washington, in the town of Carroll, New Hampshire. The area is better known as Bretton Woods, and includes the Bretton Woods ski resort nearby in the area of Bretton Woods, New Hampshire Bretton Woods is an area within the town of Carroll, New Hampshire, USA, whose principal points of interest are three leisure and recreation facilities. Being virtually surrounded by the White Mountain National Forest, its vista toward Mount Washington and most of the rest of the Presidential Range includes no significant artificial structures, United States ^ b. English is the de facto language of American government and the sole language spoken at home by 80% of Americans age five and older. Spanish is the second most commonly spoken language, with the delegates to the conference agreeing on a framework for international economic cooperation.[11] The IMF was formally organized on December 27, 1945, when the first 29 countries signed its Articles of Agreement. The statutory purposes of the IMF today are the same as when they were formulated in 1943 (see #Assistance and reforms).

The IMF's influence in the global economy steadily increased as it accumulated more members. The number of IMF member countries has more than quadrupled from the 44 states involved in its establishment, reflecting in particular the attainment of political independence by many developing countries Developing country is a term generally used to describe a nation with a low level of material well being. There is no single internationally-recognized definition of developed country, and the levels of development may vary widely within so-called developing countries, with some developing countries having high average standards of living and more recently the collapse of the Soviet bloc The term Eastern Bloc was used to refer to "the former communist states of eastern Europe", including members of the Warsaw Pact. Many sources consider Yugoslavia to be a member of the Eastern Bloc, while others consider it to not be a member after it broke with Soviet policy in the 1948 Tito-Stalin split. Yugoslavia and Albania severed. The expansion of the IMF's membership, together with the changes in the world economy, have required the IMF to adapt in a variety of ways to continue serving its purposes effectively.

In 2008, faced with a shortfall in revenue, the International Monetary Fund's executive board agreed to sell part of the IMF's gold reserves Gold reserves are held by central banks as a store of value. In 2006, it was estimated that all the gold ever mined totaled 158,000 tonnes. One tonne of gold equated to a value of US$30.27 million as of February 14, 2009 ($941.35/troy ounces). The total value of all gold ever mined would be US$4.78 trillion at that price.[note 1]. On April 27, 2008, IMF Managing Director Dominique Strauss-Kahn Dominique Strauss-Kahn, often referred to as DSK, is a French economist, lawyer, and politician, member of the Socialist Party (PS). He was selected as the new Managing Director of the International Monetary Fund (IMF) on 28 September 2007 welcomed the board's decision of April 7, 2008 to propose a new framework for the fund, designed to close a projected $400 million budget deficit over the next few years. The budget proposal includes sharp spending cuts of $100 million until 2011 that will include up to 380 staff dismissals.[12]

At the 2009 G-20 London summit The G-20 Leaders' Summit on Financial Markets and the World Economy was held in London on 2 April 2009 at the ExCeL Centre. It followed the first G-20 Leaders Summit on Financial Markets and the World Economy, which was held in Washington, D.C. on 14–15 November 2008. Heads of government or heads of state from the Group of Twenty Finance, it was decided that the IMF would require additional financial resources to meet prospective needs of its member countries during the ongoing global financial crisis The late-2000s recession is an economic recession that began in the United States in December 2007 (and with much greater intensity since September 2008, according to the National Bureau of Economic Research). It spread to much of the industrialized world, and has caused a pronounced deceleration of economic activity. This global recession has. As part of that decision, the G-20 The Group of Twenty Finance Ministers and Central Bank Governors is a group of finance ministers and central bank governors from 20 economies: 19 countries plus the European single currency. Their heads of government or heads of state have also periodically conferred at summits since their initial meeting in 2008. Collectively, the G-20 economies leaders pledged to increase the IMF's supplemental cash tenfold to $500 billion, and to allocate to member countries another $250 billion via Special Drawing Rights.[13][14]

As of August 2010 Romania Romania (pronounced /roʊˈmeɪniə/ roe-MAY-nee-ə; dated: Rumania; Romanian: România [romɨˈni.a] ( listen)) is a country located at the crossroads of Central and Southeastern Europe, north of the Balkan Peninsula, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea. Almost all of the Danube Delta is located ($13.9 billion), Ukraine Ukraine (pronounced /juːˈkreɪn/ ew-KRAYN; Ukrainian: Україна, transliterated: Ukrayina, [ukrɑˈjinɑ]), with its area of 600,000 sq km, is the second largest country in Eastern Europe. It is bordered by the Russian Federation to the east and northeast, Belarus to the northwest, Poland, Slovakia and Hungary to the west, Romania and ($12.66 billion) and Hungary Hungary /ˈhʌŋɡəri/ (Hungarian: Magyarország [ˈmɒɟɒrorsaːɡ] ( listen)), officially the Republic of Hungary (Magyar Köztársaság listen (help·info)), is a landlocked country in the Carpathian Basin in Central Europe, bordered by Austria, Slovakia, Ukraine, Romania, Serbia, Croatia, and Slovenia. Its capital is Budapest. Hungary is a ($11,7 billion) are the largest borrowers of the fund.[15]

Data dissemination systems

IMF Data Dissemination Systems participants: IMF member using SDDS IMF member, using GDDS IMF member, not using any of the DDSystems non-IMF entity using SDDS non-IMF entity using GDDS no interaction with the IMF

In 1995, the International Monetary Fund began work on data dissemination standards with the view of guiding IMF member countries to disseminate their economic and financial data to the public. The International Monetary and Financial Committee (IMFC) endorsed the guidelines for the dissemination standards and they were split into two tiers: The GDDS and the SDDS.

The International Monetary Fund executive board approved the SDDS and GDDS in 1996 and 1997 respectively and subsequent amendments were published in a revised "Guide to the General Data Dissemination System". The system is aimed primarily at statisticians and aims to improve many aspects of statistical systems in a country. It is also part of the World Bank Millennium Development Goals and Poverty Reduction Strategic Papers.

The IMF established a system and standard to guide members in the dissemination to the public of their economic An economy consists of the economic system of a country or other area, the labor, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution, and consumption of goods and services of that area. A given economy is the end result of a process that involves its technological evolution, and financial Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money, and risk and how they are interrelated. It also deals with how money is spent and budgeted data. Currently there are two such systems: General Data Dissemination System (GDDS) and its superset Special Data Dissemination System (SDDS), for those member countries having or seeking access to international capital markets A capital market is a market for securities , where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (.

The primary objective of the GDDS is to encourage IMF member countries to build a framework to improve data quality and increase statistical capacity building. This will involve the preparation of meta data describing current statistical collection practices and setting improvement plans. Upon building a framework, a country can evaluate statistical needs, set priorities in improving the timeliness, transparency, reliability and accessibility Accessibility is a general term used to describe the degree to which a product, device, service, or environment is accessible by as many people as possible. Accessibility can be viewed as the "ability to access" and possible benefit of some system or entity. Accessibility is often used to focus on people with disabilities and their right of financial and economic data.

Some countries initially used the GDDS, but lately upgraded to SDDS 'Sony Dynamic Digital Sound' is a cinema sound system developed by Sony. Digital sound information is recorded on both outer edges of the 35 mm film release print. The system supports up to 8 independent channels of sound: 5 front channels, 2 surround channels and a sub-bass channel. Only Cinerama and Cinemiracle have used as many sound tracks.

Some entities that are not themselves IMF members also contribute statistical data to the systems:

Members

Membership qualifications

The application will be considered first by the IMF's Executive Board. After its consideration, the Executive Board will submit a report to the Board of Governors of the IMF with recommendations in the form of a "Membership Resolution." These recommendations cover the amount of quota A quota share is a specified number or percentage of the allotment as a whole , that is prescribed to each individual entity (see Non-tariff barriers to trade) in the IMF, the form of payment of the subscription, and other customary terms and conditions of membership.[16] After the Board of Governors has adopted the "Membership Resolution," the applicant state needs to take the legal steps required under its own law to enable it to sign the IMF's Articles of Agreement and to fulfill the obligations of IMF membership. Similarly, any member country can withdraw from the Fund, although that is rare. For example, in April 2007, the president of Ecuador Ecuador (pronounced /ˈɛkwədɔr/ ), officially the Republic of Ecuador (Spanish: República del Ecuador, pronounced [reˈpuβlika ðel ekwaˈðor]), literally, "Republic of the equator") is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to, Rafael Correa Rafael Vicente Correa Delgado is the President of the Republic of Ecuador and the current President pro tempore of the Union of South American Nations. An economist educated in Ecuador, Belgium and the United States, he briefly served as his country's Finance Minister in 2005. He was elected President in late 2006 and took office in January 2007 announced the expulsion of the World Bank representative in the country. A few days later, at the end of April, Venezuelan president Hugo Chavez announced that the country would withdraw from the IMF and the World Bank. Chavez dubbed both organizations as "the tools of the empire" that "serve the interests of the North".[17] As of June 2009, both countries remain as members of both organizations. Venezuela was forced to back down because a withdrawal would have triggered default clauses in the country's sovereign bonds.

A member's quota in the IMF determines the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of Special Drawing Rights (SDRs). A member state cannot unilaterally increase its quota—increases must be approved by the Executive Board of IMF and are linked to formulas that include many variables such as the size of a country in the world economy. For example, in 2001, the People's Republic of China was prevented from increasing its quota as high as it wished, ensuring it remained at the level of the smallest G7 economy (Canada).[18] In September 2005, the IMF's member countries agreed to the first round of ad hoc quota increases for four countries, including China. On March 28, 2008, the IMF's Executive Board ended a period of extensive discussion and negotiation over a major package of reforms to enhance the institution's governance that would shift quota and voting shares from advanced to emerging markets and developing countries. Under existing arrangements, the industrialised countries hold 57 per cent of the IMF votes. But the financial crisis has tilted control away from heavily indebted mature economies, such as the United States and the United Kingdom, in favour of the fast-growing, cash-rich, so-called “BRICS ” economies of Brazil, Russia, India and China. Since the United States has by far the largest share of votes (approx. 17%) amongst IMF members (see table below), it has little to lose relative to the Europeans. At the 2009 G-20 Pittsburgh summit, the US raised the possibility that some European countries would reduce their votes in favour of increasing the votes for emerging economies. However, both France and Britain were particularly reluctant as an increase in China's votes would mean China now has more votes than the UK and France. At a subsequent IMF meeting in Istanbul Turkey the same month as the Pittsburgh Summit, IMF managing director Jean Claude Trichet then highlighted that "If we don't correct them, we'll have the recipe for the next major crisis."[19] Citing the seriousness of the issue to be tackled.

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How has India benefited from the IMF and the world bank? Give two examples?
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A. IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery the last decade. Substantial macroeconomic reforms since 2000, most notably at privatizing the banking sector have helped the economy.
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