Membership: 189 countries Headquarters: Washington, D.C. Executive Board: 24 Directors each representing a single country or a group of countries Staff: Approximately 2,700 from 148 countries Total quotas: US$668 billion (as of 9/13/16) Additional pledged or committed resources: US$ 668 billion Committed amounts under current lending arrangements (as of 9/8/16): US$159 billion, of which US$144 billion have not been drawn (see table). Biggest borrowers (amounts outstanding as of 8/31/16): Portugal, Greece, Ukraine, Pakistan Biggest precautionary loans (amount agreed as of 9/8/16): Mexico, Poland, Colombia, Morocco Surveillance consultations: 130 consultations in 2013 and 132 in 2014, and 124 in 2015 Capacity development: 274 person years in FY2013, 285 in FY2014, and 288 in FY2015

Original aims: promote international monetary cooperation; facilitate the expansion and balanced growth of international trade; promote exchange stability; assist in the establishment of a multilateral system of payments; and make resources available (with adequate safeguards) to members experiencing balance of payments difficulties.

Formally created in 1945 by 29 member countries Stated goal was to assist in the reconstruction of world’s international payment system post World War II Countries contribute funds to a pool through a quota system from which countries with payment imbalances temporarily can borrow money and other resources.

Organization’s objectives as stated in the Articles of Agreement To promote international economic co-operation, To promote international trade, To promote employment and exchange-rate stability, Make financial resources available to member countries to meet balance of payments needs

Upon initial IMF formation, its two primary functions were: to oversee the fixed exchange rate arrangements between countries to provide short-term capital to aid balance of payments

IMF’s role was fundamentally altered after the floating exchange rates post 1971 Shifted to examining the economic policies of countries Researched what types of government policy would ensure economic recovery Its function became of surveillance of the overall macroeconomic performance of its member countries Now manages economic policy instead of just exchange rates + Promotes international trade Publishes surveys on world economy → World Economic Outlook

IMF Quota & Voting Rights Quotas was assigned to member countries reflecting their relative economic power & credit deposit to IMF Subscription was to be paid 25% in gold or currency convertible into gold (effectively the dollar, which was the only currency then, still directly gold convertible for central banks) and 75% in the member’s own currency Members were provided voting rights in proportion to their quota, hence member countries with higher quota have a higher say at IMF

Special Drawing Rights Special drawing rights (SDRs) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF) SDR is not a currency, instead represents a claim to currency held by IMF member countries for which they may be exchanged. The value of an SDR is defined by a weighted currency basket of four major currencies: the US dollar, the euro, the British pound, the Chinese Yuan and the Japanese yen Central bank of member countries held SDR with IMF which can be used by them to access funds from IMF in case of financial crises in their domestic market

Reverse Tansche A certain proportion of a member country’s quota is specified as its reserve tranche. The member country can access its reserve tranche funds at its discretion, and is not under an immediate obligation to repay those funds to the IMF. Member nation reserve tranches are typically 25% of the member’s quota.

IMF reform in quota IMF Executive board decides the Quota of each member based on various parameters including GDP & tariff barriers. Higher quota gives higher voting rights and borrowing permissions, But formula is designed in such way US has ~18% quota, G7 collectively own >40% while India and Russia have barely ~2.5% each. BRICS, G20 and emerging market economies are against this scheme especially after Subprime crisis and declined economic strength of USA & G7 2010: Board decided to increases quota of developing countries albeit mainly by decreasing the quota of poor countries.   Problem : 70% votes required to implement this reform, not 70 nations, & the nations who collectively own 70% quota- USA, Germany, Japan etc. Hence quota reform is pending.

IMF reform in governance Currently in Executive board, 5 out 24 directors are permanently decided by five largest quota holders. 2010: new reforms proposed: Board composition will be reviewed every 8 years + all directors to be elected, no permanent chairs.   Problem:  Requires 85% votes in favor, hence governance reform is pending as well.

Quotas Quota subscriptions are a central component of the IMF’s financial resources. Each member country of the IMF is assigned a quota, based broadly on its relative position in the world economy. Special Drawing Rights (SDR) The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Gold Gold remains an important asset in the reserve holdings of several countries, and the IMF is still one of the world’s largest official holders of gold. 

MCQs on International Monetary Fund Major functions of IMF are Oversee arrangements of fixed exchange rate providing short term capital Oversee arrangements of variable exchange rate both a and b both a and b

intergovernmental organization international organization Considering type of organizations, International Monetary Fund is classified as intergovernmental organization international organization interregional organization One state organization international organization

International Monetary Fund formal existence came into being in 12 May, 1944 27 July, 1944 27 December, 1945 27 September, 1945

International Monetary Fund is headquartered in Washington, United States New York City, United States Geneva, Switzerland Avenue Du Mont Blanc, Switzerland

a. Bolivia b. Venezuela c. Mexico d. Spain  Which country's socialist leader and president declared total independence from IMF and World Bank? a. Bolivia b. Venezuela c. Mexico d. Spain a. Bolivia