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International Monetary Fund

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INTERNATIONAL MONATERY FUND
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IMF FUNCTIONS it works to foster global growth and economic stability by providing policy, advice and financing to members, by working with developing nations to help them achieve macroeconomic stability and reduce poverty The rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. Such market imperfections, together with balance-of-payments financing, provide the justification for official financing, without which many countries could only correct large external payment imbalances through measures with adverse economic consequences.The IMF provides alternate sources of financing.
Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate arrangements between countries,thus helping national governments manage their exchange rates and allowing these governments to prioritise economic growth, and to provide short-term capital to aid balance of payments. This assistance was meant to prevent the spread of international economic crises. The IMF was also intended to help mend the pieces of the international economy after the Great Depressionand World War II. As well, to provide capital investments for economic growth and projects such as infrastructure.
The IMF's role was fundamentally altered by the floating exchange rates post-1971. It shifted to examining the economic policies of countries with IMF loan agreements to determine if a shortage of capital was due to economic fluctuations or economic policy. The IMF also researched what types of government policy would ensure economic recovery The new challenge is to promote and implement policy that reduces the frequency of crises among the emerging market countries, especially the middle-income countries that are vulnerable to massive capital outflows. Rather than maintaining a position of oversight of only exchange rates, their function became one of surveillance of the overall macroeconomic performance of member countries. Their role became a lot more active because the IMF now manages economic policy rather than just exchange rates.
In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality] which was established in the 1950s. Low-income countries can borrow on concessional terms, which means there is a period of time with no interest rates, through the Extended Credit Facility (ECF), the Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF). Nonconcessional loans, which include interest rates, are provided mainly through Stand-By Arrangements (SBA), the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), and the Extended Fund Facility. The IMF provides emergency assistance via the Rapid Financing Instrument (RFI) to members facing urgent balance-of-payments needs

Surveillance of the global economy
The IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its member countries This activity is known as surveillance and facilitates international cooperation. Since the demise of the Bretton Woods system of fixed exchange rates in the early 1970s, surveillance has evolved largely by way of changes in procedures rather than through the adoption of new obligations. The responsibilities changed from those of guardian to those of overseer of members’ policies.
The Fund typically analyzes the appropriateness of each member country’s economic and financial policies for achieving orderly economic growth, and assesses the consequences of these policies for other countries and for the global economy.
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 General Data Dissemination System (GDDS) and the Special Data Dissemination Standard (SDDS).
The 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 primary objective of the GDDS is to encourage member countries to build a framework to improve data quality and statistical capacity building in order to evaluate statistical needs, set priorities in improving the timeliness, transparency, reliability and accessibility of financial and economic data. Some countries initially used the GDDS, but later upgraded to SDDS.
Some entities that are not themselves IMF members also contribute statistical data to the systems: * Palestinian Authority – GDDS * Hong Kong – SDDS * Macau – GDDS * EU institutions: * the European Central Bank for the Eurozone – SDDS * Eurostat for the whole EU – SDDS, thus providing data from Cyprus (not using any DDSystem on its own) and Malta (using only GDDS on its own)

Conditionality of loans
IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial resources The IMF does require collateral from countries for loans but also requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform. If the conditions are not met, the funds are withheld. Conditionality is perhaps the most controversial aspect of IMF policies. The concept of conditionality was introduced in a 1952 Executive Board decision and later incorporated into the Articles of Agreement.
Conditionality is associated with economic theory as well as an enforcement mechanism for repayment. Stemming primarily from the work of Jacques Polak, the theoretical underpinning of conditionality was the "monetary approach to the balance of payments"
Structural adjustment
Further information: Structural adjustment
Some of the conditions for structural adjustment can include: * Cutting expenditures, also known as austerity. * Focusing economic output on direct export and resource extraction, * Devaluation of currencies, * Trade liberalisation, or lifting import and export restrictions, * Increasing the stability of investment (by supplementing foreign direct investment with the opening of domestic stock markets), * Balancing budgets and not overspending, * Removing price controls and state subsidies, * Privatization, or divestiture of all or part of state-owned enterprises, * Enhancing the rights of foreign investors vis-a-vis national laws, * Improving governance and fighting corruption.
These conditions have also been sometimes labelled as the Washington Consensus.
Benefits
These loan conditions ensure that the borrowing country will be able to repay the IMF and that the country will not attempt to solve their balance-of-payment problems in a way that would negatively impact the international economy. The incentive problem of moral hazard—when economic agents maximize their own utility to the detriment of others because they do not bear the full consequences of their actions—is mitigated through conditions rather than providing collateral; countries in need of IMF loans do not generally possess internationally valuable collateral anyway.
Conditionality also reassures the IMF that the funds lent to them will be used for the purposes defined by the Articles of Agreement and provides safeguards that country will be able to rectify its macroeconomic and structural imbalances In the judgment of the IMF, the adoption by the member of certain corrective measures or policies will allow it to repay the IMF, thereby ensuring that the resources will be available to support other members.
As of 2004, borrowing countries have had a very good track record for repaying credit extended under the IMF's regular lending facilities with full interest over the duration of the loan. This indicates that IMF lending does not impose a burden on creditor countries, as lending countries receive market-rate interest on most of their quota subscription, plus any of their own-currency subscriptions that are loaned out by the IMF, plus all of the reserve assets that they provide the IMF.
REFERANCE: https://en.wikipedia.org/wiki/International_Monetary_Fund#Functions

The History of the IMF
The International Monetary Fund was founded in 1945 as the agency charged with overseeing the so-called Bretton Woods system (named after the town in New Hampshire where the summit establishing it was held), as well as promoting postwar global economic growth more generally. Common economic wisdom held at the time that a series of competitive currency devaluations was a significant contributor to the international contagion of the Great Depression (though later Depression scholarship has raised doubt about the importance of this factor). The Bretton Woods plan, by which the US would return to the gold standard and other participating countries would peg their currencies to the dollar, was meant to prevent such “beggarthy-neighbor” policies. In addition to its oversight and international coordination roles, the IMF also served as an international lender of last resort: any member country facing a balance of payments crisis could apply for a loan that would allow it to repay its sovereign debt on time (from a pool of funds backed by capital contributed by all the member countries). In the 1970s, rapid US inflation (brought about primarily by the Vietnam War) made the gold standard unsustainable, as the supply of dollars rapidly outstripped the Federal Reserve’s ability to maintain enough gold reserves to back them. The combination of the end of dollar-gold convertibility and the rapid increase in dollar supply (causing unexpected monetary-policy effects in the countries that pegged to the dollar) led to the abandonment of the Bretton Woods system. The IMF continues to serve as a “global credit union” as well as an organization for research and international economic cooperation. The Present IMF The IMF has a total of $1.3 trillion in resources at its disposal from its 188 member countries. As of August 9, 2012, it has $243 billion in loans committed, of which only $57 billion have actually been drawn. Thus, the IMF has more than $1 trillion in lending capacity still available. Even relative to the large magnitudes of assistance that will be needed to the various European countries, this is a very substantial asset base. Especially when this figure is combined with the resources of the ECB (see below regarding the current crisis), there is no reason to believe that the international community will be unable to backstop any European country needing assistance. An important aspect of IMF lending is that it virtually always comes with specific requirements attached, known as “conditionality.” Generally these requirements are meant to improve the quality of the borrowing country’s macroeconomic policy and resolve the underlying conditions of distress that led to the crisis in the first place. More recently, IMF conditionality has also begun to expand beyond macro policy to address International Monetary Fund Euro Crisis Simulation Phase I: IMF structural issues (such as privatization of government companies and competition in monopoly-dominated sectors) where it is clear that these are an important contributing factor, especially in developing countries. While countries often find it politically convenient to paint the IMF as imposing rigid outside conditions of its own devising (perhaps because such scapegoating can help with domestic politics), a more realistic account is to say that conditionality takes the form of a plan developed, discussed, and agreed upon by country officials in consultation and negotiation with IMF experts (as, indeed, in the present exercise). Some examples of specific plans undertaken to satisfy IMF conditionality provisions are provided in the case studies below.
REFERANCE: http://www.reed.edu/economics/parker/f12/341/Sim/rpts/IMF

IMF MEMBERS Member | Effective Date of Membership | Belgium1 | December 27, 1945 | Bolivia1 | December 27, 1945 | Canada1 | December 27, 1945 | China1 | December 27, 1945 | Colombia1 | December 27, 1945 | (Czechoslovakia)1,2,3 | (December 27, 1945) | Egypt1 | December 27, 1945 | Ethiopia1 | December 27, 1945 | France1 | December 27, 1945 | Greece1 | December 27, 1945 | Honduras1 | December 27, 1945 | Iceland1 | December 27, 1945 | India1 | December 27, 1945 | Iraq1 | December 27, 1945 | Luxembourg1 | December 27, 1945 | Netherlands1 | December 27, 1945 | Norway1 | December 27, 1945 | Philippines1 | December 27, 1945 | South Africa1 | December 27, 1945 | United Kingdom1 | December 27, 1945 | United States1 | December 27, 1945 | (Yugoslavia)1,4,5 | (December 27, 1945) | Dominican Republic1 | December 28, 1945 | Ecuador1 | December 28, 1945 | Guatemala1 | December 28, 1945 | Paraguay1 | December 28, 1945 | Iran, Islamic Republic of (Iran)1 | December 29, 1945 | Chile1 | December 31, 1945 | Mexico1 | December 31, 1945 | Peru1 | December 31, 1945 | Costa Rica1 | January 8, 1946 | (Poland)1, 6 | (January 10, 1946) | Brazil1 | January 14, 1946 | Uruguay1 | March 11, 1946 | (Cuba)1, 7 | (March 14, 1946) | El Salvador8 | March 14, 1946 | Nicaragua8 | March 14, 1946 | Panama8 | March 14, 1946 | Denmark8 | March 30, 1946 | Venezuela, República Bolivariana de8 | December 30, 1946 | Turkey | March 11, 1947 | Italy | March 27, 1947 | Syrian Arab Republic (Syria) | April 10, 1947 | Lebanon | April 14, 1947 | Australia | August 5, 1947 | Finland | January 14, 1948 | Austria | August 27, 1948 | Thailand (Siam) | May 3, 1949 | Pakistan | July 11, 1950 | Sri Lanka (Ceylon) | August 29, 1950 | Sweden | August 31, 1951 | Myanmar (Burma) | January 3, 1952 | Japan | August 13, 1952 | Germany | August 14, 1952 | Jordan | August 29, 1952 | Haiti | September 8, 1953 | (Indonesia)9 | (April 15, 1954) | Israel | July 12, 1954 | Afghanistan, Islamic Rep. of (Afghanistan) | July 14, 1955 | Korea | August 26, 1955 | Argentina | September 20, 1956 | Vietnam (Viet Nam) | September 21, 1956 | Ireland | August 8, 1957 | Saudi Arabia | August 26, 1957 | Sudan | September 5, 1957 | Ghana | September 20, 1957 | Malaysia (Malaya) | March 7, 1958 | Tunisia | April 14, 1958 | Morocco | April 25, 1958 | Spain | September 15, 1958 | Libya | September 17, 1958 | Portugal | March 29, 1961 | Nigeria | March 30, 1961 | Lao People's Democratic Republic (Laos) | July 5, 1961 | New Zealand | August 31, 1961 | Nepal | September 6, 1961 | Cyprus | December 21, 1961 | Liberia | March 28, 1962 | Togo | August 1, 1962 | Senegal | August 31, 1962 | Somalia | August 31, 1962 | Sierra Leone | September 10, 1962 | Tanzania (Tanganyika) | September 10, 1962 | Kuwait | September 13, 1962 | Jamaica | February 21, 1963 | Côte d'Ivoire (Ivory Coast) | March 11, 1963 | Niger | April 24, 1963 | Burkina Faso (Upper Volta) | May 2, 1963 | Cameroon | July 10, 1963 | Central African Republic | July 10, 1963 | Chad | July 10, 1963 | Congo, Republic of | July 10, 1963 | Benin (Dahomey) | July 10, 1963 | Gabon | September 10, 1963 | Mauritania | September 10, 1963 | Trinidad and Tobago | September 16, 1963 | Madagascar (Malagasy Republic) | September 25, 1963 | Algeria | September 26, 1963 | Mali | September 27, 1963 | Uganda | September 27, 1963 | Burundi | September 28, 1963 | Congo, Democratic Republic of the (Zaïre) | September 28, 1963 | Guinea | September 28, 1963 | Rwanda | September 30, 1963 | Kenya | February 3, 1964 | Malawi | July 19, 1965 | Zambia | September 23, 1965 | Singapore | August 3, 1966 | Guyana | September 26, 1966 | Indonesia9 | February 21, 1967 | Gambia, The | September 21, 1967 | Botswana | July 24, 1968 | Lesotho | July 25, 1968 | Malta | September 11, 1968 | Mauritius | September 23, 1968 | Swaziland | September 22, 1969 | (Yemen, People's Democratic | | Republic of (Southern Yemen))10 | (September 29, 1969) | Equatorial Guinea | December 22, 1969 | Cambodia | December 31, 1969 | (Yemen Arab Republic)10 | (May 22, 1970) | Barbados | December 29, 1970 | Fiji | May 28, 1971 | Oman | December 23, 1971 | Samoa (Western Samoa) | December 28, 1971 | Bangladesh | August 17, 1972 | Bahrain | September 7, 1972 | Qatar | September 8, 1972 | United Arab Emirates | September 22, 1972 | Romania | December 15, 1972 | Bahamas, The | August 21, 1973 | Grenada | August 27, 1975 | Papua New Guinea | October 9, 1975 | Comoros | September 21, 1976 | Guinea-Bissau | March 24, 1977 | Seychelles | June 30, 1977 | São Tomé and Príncipe | September 30, 1977 | Maldives | January 13, 1978 | Suriname | April 27, 1978 | Solomon Islands | September 22, 1978 | Cape Verde | November 20, 1978 | Dominica | December 12, 1978 | Djibouti | December 29, 1978 | St. Lucia | November 15, 1979 | St. Vincent and the Grenadines | December 28, 1979 | Zimbabwe | September 29, 1980 | Bhutan | September 28, 1981 | Vanuatu | September 28, 1981 | Antigua and Barbuda | February 25, 1982 | Belize | March 16, 1982 | Hungary | May 6, 1982 | St. Kitts and Nevis | August 15, 1984 | Mozambique | September 24, 1984 | Tonga | September 13, 1985 | Kiribati | June 3, 1986 | Poland1,6 | June 12, 1986 | Angola | September 19, 1989 | Yemen, Republic of10 | May 22, 1990 7 | (Czechoslovakia)1,2,3 | (September 20, 1990) | Bulgaria | September 25, 1990 | Namibia | September 25, 1990 | Mongolia | February 14, 1991 | Albania | October 15, 1991 | Lithuania | April 29, 1992 | Georgia | May 5, 1992 | Kyrgyz Republic (Kyrgyzstan) | May 8, 1992 | Latvia | May 19, 1992 | Marshall Islands | May 21, 1992 | Estonia | May 26, 1992 | Armenia | May 28, 1992 | Switzerland | May 29, 1992 | Russian Federation | June 1, 1992 | Belarus | July 10, 1992 | Kazakhstan | July 15, 1992 | Moldova | August 12, 1992 | Ukraine | September 3, 1992 | Azerbaijan | September 18, 1992 | Uzbekistan | September 21, 1992 | Turkmenistan | September 22, 1992 | San Marino | September 23, 1992 | Bosnia and Herzegovina5 | December 14, 1992 | Croatia5 | December 14, 1992 | Macedonia, former Yugoslav Republic of5 | December 14, 1992 | Slovenia5 | December 14, 1992 | Serbia5 | December 14, 1992 | Czech Republic3 | January 1, 1993 | Slovak Republic3 | January 1, 1993 | Tajikistan | April 27, 1993 | Micronesia, Federated States of | June 24, 1993 | Eritrea | July 6, 1994 | Brunei Darussalam | October 10, 1995 | Palau | December 16, 1997 | Timor-Leste (East Timor) | July 23, 2002 | Montenegro5 | January 18, 2007 | Kosovo | June 29, 2009 | Tuvalu | June 24, 2010 | South Sudan | April 18, 2012 |

1 "Original members" (Article II, Section 1), which signed the Articles of Agreement by December 31, 1945. Costa Rica, Poland, Brazil, Uruguay, and Cuba signed the Articles by that date but their membership became effective upon deposit of their respective instruments of acceptance.
2 Czechoslovakia became a member of the Fund on December 27, 1945 and ceased to be a member, effective December 31, 1954; Czechoslovakia was readmitted as a member of the Fund on September 20, 1990, and ceased to be a member, effective January 1, 1993.
3 The Czech Republic and the Slovak Republic succeeded to the membership of Czechoslovakia on
January 1, 1993.
4 The Socialist Federal Republic of Yugoslavia ceased to be a member, effective December 14, 1992.

5 Croatia (on January 15, 1993), Slovenia (on January 15, 1993), the former Yugoslav Republic of Macedonia (on April 21, 1993), Bosnia and Herzegovina (on December 20, 1995), and the Federal Republic of Yugoslavia (on December 20, 2000) succeeded to the membership in the Fund of the former Socialist Federal Republic of Yugoslavia, in each case, effective December 14, 1992. The Federal Republic of Yugoslavia was later renamed Serbia and Montenegro. In June 2006, Serbia and Montenegro, separated to become the Republic of Serbia and the Republic of Montenegro. Serbia succeeded to the membership of Serbia and Montenegro.
6 Poland became a member of the Fund on January 10, 1946 and withdrew from membership, effective
March 14, 1950; Poland was readmitted as a member of the Fund on June 12, 1986.
7 Cuba withdrew from the Fund, effective April 2, 1964.
8 Countries that joined the Fund under the provisions for original members as extended to December 31, 1946 by Board of Governors Resolution IM-9.
9 Indonesia became a member of the Fund on April 15, 1954 and withdrew from membership, effective August 17, 1965; Indonesia was readmitted as a member of the Fund on February 21, 1967.
10 The Republic of Yemen succeeded to the membership of the Yemen Arab Republic and of the People's Democratic Republic of Yemen on May 22, 1990.

REFERENCE: https://www.imf.org/external/np/sec/memdir/memdate.htm
LEADERSHIP
Organizational Structure of the International Monetary Fund (IMF)
There are three primary decision-making bodies within the International Monetary Fund: The Board of Governors, the Executive Board, and the Managing Director.
IMF Board of Governors
The International Monetary Fund Board of Governors is comprised of all states within the IMF, which is currently at 188 members. They meet every year to discuss matters related to the IMF, whereas Governor committees meet bi-annually (Weiss, 2014). Depending on how big their economy is, as well as their financial contributions to the IMF, every state receives a voting “quota” (how many votes each state has) (Mountford, 2008). Thus, states with larger economies, as well as those that provide larger economic contributions to the IMF have a larger quota. In the case of the United States, their have roughly 17 percent of the total vote weight in the IMF, which is more than any other country (Mountford, 2008). What is also particularly interesting about the role of the United States in terms of the International Monetary Fund is the “veto” power of the US Congress. This stems from the early formation and stipulations of the International Monetary Fund, where“The U.S. Senate agreed to the ratification (by the President) of the Fund and the Bank Agreements in July 1945. U.S. Participation in both organizations is authorized by the United States Bretton Woods Agreement Act, as amended (Bretton Woods Act). Unique among the founding members, the United States, in the Bretton Woods Act, requires specific congressional authorization to change the U.S. quota or “shares” in the Fund or for the United States to vote to amend the Articles of Agreement of the IMF or the World Bank. The U.S. Congress, thus has veto power over major decisions at both institutions” (Weiss, 2014: 1-2)
At the Board of Governors, each state in the IMF can choose their own representation, or governor. There is also a chairperson, which changes yearly, and is based on a rotating system based on regions (Mountford, 2008). As Mountford (2008) explains
“The Board of Governors is the ultimate political authority in the Fund. The Governors have two types of power: those that are explicitly conferred on them by the Articles of Agreement, and a much larger number that are implied. The explicit powers, which may not be delegated include: acceptance of new members and establishment of their quotas; suspension of membership; general ad hoc increases in the quotas of existing members; and amendment of the Articles of Agreement. The governors have explicit powers to appoint, or nominate and elect the executive directors. They have the power to increase, for the purpose of a regular election, the number of executive directors, and they determine the executive directors’ remuneration and benefits. The Articles also specify the governors’ role in cases where a member appeals against an interpretation of the Articles that is made by the Executive Board” (6).
For these sorts of special decisions to pass through the Board of Governors (and Executive Board), it usually needs either 70 percent or 85 percent approval. Again, states have various voting quotas, and can use all of their votes when casting their position (Mountford, 2008). However, for every-day decisions, there is not a vote, but rather, a system of consensus that they try to reach (Mountford, 2008). And thus, many have downplayed the importance of voting percentages when discussing the International Monetary Fund.
In addition to these yearly meetings, and the ability to vote on matters as they relate to the International Monetary Fund, the Board of Governors can also form advisory committees: there are a number of advisory committees currently in existence in the IMF. For example, there is the International Monetary Fund and Finance Committee (IMFC), which, among other responsibilities, is
•”… supervising the management and adaptation of the international monetary system, including the continuing operation of the adjustment process, and in this connection reviewing developments in global liquidity and the transfer of real resources to developing countries;
• … considering proposals by the executive directors to amend the Articles of Agreement; and
• …dealing with sudden disturbances that might threaten the [international monetary] system” (Resolution 54-9, in Mountford, 2008:8).
The IMFC provides guidance and opinions to both the Board of Governors and the Executive Board. While the IMFC deals with matters of great importance, they do not actually vote on any issues in the committee (Mountford, 2008); the voting is done in the Board of Governors.
IMF Executive Board
The Board of Executive Directors is a group within the International Monetary Fund that meets almost daily (multiple times a week) in many cases in order to manage IMF activities. Similar to the Board of Directors, financial contributions to the IMF do matter. The five top states have representation through an Executive Director (three of them (Saudia Arabia, China, and Russia) don’t need additional votes other than their own (Mounford, 2008; Weiss, 2014)). Other states with lower financial contributions are chosen by other states every two years (Mountford, 2008), although the IMF is moving towards a purely elected system for their Executive Board (Weiss, 2014) In addition, the IMF Executive Board also chooses the Managing Director, who is both the chair and CEO, and her/his assistants (Weiss, 2014: 5). The Managing Director, which usually serves the position anywhere from 2-4 years (Mounford, 2008) plays a key role in running the IMF’s daily workings, supervising thousands of employees, as well as preparing loan and other documents before being presented to the Executive Board (Weiss, 2014: 5)
REFERENCE: http://internationalrelations.org/international-monetary-fund-imf/
IMF 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. A member country’s quota determines its maximum financial commitment to the IMF, its voting power, and has a bearing on its access to IMF financing.

When a country joins the IMF, it is assigned an initial quota in the same range as the quotas of existing members of broadly comparable economic size and characteristics. The IMF uses a quota formula to help assess a member’s relative position.
The current quota formula is a weighted average of GDP (weight of 50 percent), openness (30 percent), economic variability (15 percent), and international reserves (5 percent). For this purpose, GDP is measured through a blend of GDP—based on market exchange rates (weight of 60 percent)—and on PPP exchange rates (40 percent). The formula also includes a “compression factor” that reduces the dispersion in calculated quota shares across members.
Quotas are denominated in Special Drawing Rights (SDRs), the IMF’s unit of account. The largest member of the IMF is the United States, with a current quota of SDR 42.1 billion (about $59 billion), and the smallest member is Tuvalu, with a current quota of SDR 1.8 million (about $2.5 million).

Quotas play several key roles in the IMF:
A member's quota determines that country’s financial and organizational relationship with the IMF, including:

Subscriptions. A member's quota subscription determines the maximum amount of financial the member is obliged to provide to the IMF. A member must pay its subscription in full upon joining the Fund: up to 25 percent must be paid in SDRs or widely accepted currencies (such as the U.S. dollar, the euro, the yen, or the 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’s votes are comprised of basic votes plus one additional vote for each SDR 100,000 of quota. The 2008 reform fixed the number of basic votes at 5.502 percent of total votes. The current number of basic votes represents close to a tripling of the number prior to the implementation of the 2008 reforms.

Access to financing. The amount of financing a member can obtain from the IMF (its access limit) is based on its quota. For example, under Stand-By and Extended Arrangements, a member can borrow up to 200 percent of its quota annually and 600 percent cumulatively. However, access may be higher in exceptional circumstances.

How quota reviews work
The IMF's Board of Governors conducts general quota reviews at regular intervals (usually every five years). Any changes in quotas must be approved by an 85 percent majority of the total voting power, and a member’s quota cannot be changed without its consent. There are two main issues addressed in a general quota review: the size of an overall increase and the distribution of the increase among the members.
First, a general quota review allows the IMF to assess the adequacy of quotas both in terms of members’ balance of payments financing needs and in terms of its own ability to help meet those needs. Second, a general review allows for increases in members’ quotas to reflect changes in their relative positions in the world economy. Ad hoc increases outside general reviews do not occur often, but the increases in quotas for 54 member countries approved under the 2008 Reform are a recent example.

REFEERNCE: https://www.imf.org/external/np/exr/facts/quotas.htm

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...Summary Today’s society consists of a crises where there is a need for crisis management, however critics argue there is not enough being done to assist all nations from this organization. There is little attention from the International Monetary Fund (IMF) for developing countries trying to work on their financial situation. The IMF is focusing their attention on developed countries with the expensive plans and rescue operations. There is speculation that short term crisis management has too many negatives including it is too costly, responses are not quick enough decisions that are made are often incorrect, and more. There will be much discussion on the debt crisis and the exchange rate. IMF The International Monetary Fund The is an association of 187 countries, employed to foster global monetary collaboration, secure financial stability, facilitate global trade, encourage high percentages of employment, reach for economic growth between many different nations, and reduce poverty around the world, without discriminating against different countries. Many critics believe this establishment to be positive for the many responsibilities they take care of. For example the International Monetary Fund will provide assistance in areas including giving training and technology to developing countries to help with their own economic structure so they can work on their own eventually. IMF works closely with many different nations and the members included and are involved in the......

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International Monetary Fund

...International Monetary Fund The International Monetary Fund was established, along with the World Bank, at a conference in Bretton Woods, New Hampshire, USA, in July 1944, the closing stages of World War II. The participants represented 44 countries including the countries which were soon to win the war against fascism. They were concerned about the rebuilding of Europe and of the global economic system after a devastating war and enhance economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s. Currently with 188 members it gathers funds through a quota system which stood up to USD1.0 trillion from which countries with payment imbalances can borrow funds temporarily. The IMF’s Executive Board which comprises of 24 members control the fund and considers options to enhance multilateral, financial, and bilateral surveillance and efficient allocation of monetary resources across member countries. The Managing Director is the head of the IMF staff and Chairman of the Executive Board, and is assisted by four Deputy Managing Directors. Currently Christine Madeleine Odette Lagarde heads the IMF as managing director. To maintain stability and prevent crises in the international monetary system, the IMF reviews country policies, as well as national, regional, and global economic and financial developments through a formal system known as surveillance. Under the surveillance......

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International Monetary Fund

...IMF Working Paper © 1998 International Monetary Fund This is a Working Paper and the author(s) would welcome any comments on the present text. Citations should refer to a Working Paper ofthe International Monetary Fund The v i e w s e x p r e s s e d a r e t h o s e o f the a u t h o r ( s ) a n d d o n o t necessarily represent those of the Fund. WP/98/68 INTERNATIONAL MONETARY FUND Policy Development and Review Department Inflation, Disinflation, and Growth Prepared by Atish Ghosh and Steven Phillips1 Authorized for distribution by Timothy Lane May 1998 Abstract Although few would doubt that very high inflation is bad for growth, there is much less agreement about moderate inflation's effects. Using panel regressions and a nonlinear specification, this paper finds a statistically and economically significant negative relationship between inflation and growth. This relationship holds at all but the lowest inflation rates and is robust across various samples and specifications. The method of binary recursive trees identifies inflation as one the most important statistical determinants of growth. Finally, while there are short-run growth costs of disinflation, these are only relevant for the most severe disinflations, or when the initial inflation rate is well within the single-digit range. JEL Classification Numbers: E31, 040. Keywords: inflation, growth determinants, growth regressions, robustness. Authors' E-Mail Addresses: Aghosh@imf.org;......

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International Monetary Fund

...International monetary fund was established in Bretton woods after World War 2 in 1944 after creating the World Bank. IMF was created to return equilibrium to countries that were suffering from economic deficit. Countries that are facing economic and financial problems, and are affected with the economic crisis, should be supported by the IMF, but there are some conditions in order to take that support and help, as well as the IMF have policies that works through. Members of IMF are 188 countries; these countries have the right to get helped from the program. IMF track the situations of the member companies and if they find any economic difficulties they help the country financially to achieve economic stability. IMF is lending some companies that are suffering from financial troubles for many reasons, the main role of IMF lending are handling the countries that are suffering from financial problems, settling their economies as well as helping the sustainable economic growth to retain. Helping countries financially helps those avoiding adverse shocks, which was caused by the global financial crisis, so IMF is needed to prevent countries from financial crisis. IMF also helps the suffered countries that work with short-trade in order to help them avoid some trade shocks by supporting their adjustments and the balance of payments. Examples of adjustments to shocks is disruptive economic adjustment which will have bad economic and financial effects on the country itself and on......

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International Monetary Fund

...According to the International Monetary Fund, inequality could lead to civil disorder. This is further emphasized by the Occupy protests, demonstrating the rising negative emotions that inequality has gone too far. Besides, inequality is economically damaging and inefficient as it limits the overall amount of growth in the market and depresses demand. Ancient social beliefs where ‘money equals power’ leads to unequal social standards due to inequality. This could pose as a threat to meaningful democracy. Furthermore, inequality undermines societies, resulting in lesser social mobility where the poor stays poor while the rich gets richer. Other than these, inequality is also linked to violence, mental health, crime and obesity. The scarce resources being monopolised by only the richest few could also result in an unsustainable future. Hence, inequality is environmentally unaffordable and destructive. A few doable actions that could be taken to tackle inequality includes paying a decent wage for decent wage. It is also important for the people to know that there is a safety net to help them and their family when they are facing certain financial problems. It is the government’s responsibility to ensure that there is free public services and good quality education for all to further reduce inequality. Certain rules and regulations should be enforced on taxation, especially the tracking down on tax avoidance and tax evasion. Progressive taxation is a must to reduce inequality......

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Predict Trends for the International Monetary Fund

...Predict Trends For The International Monetary Fund Introduction Global prosperity, as we know it, has resulted from the rapid integration of global trade and capital flows springing from the inter-linkage of diverse economies worldwide. However, the evolution of the world economy has occurred so rapidly that it has outpaced its regulators (Schwab, 2012). The International Monetary System, in accordance with its mayor international currencies, has been faced with a myriad of challenges. In this era of free global trade, the present dollar-based system is being forced to change (Schwab, 2012). With much speculation and evolving ideals, the most plausible solution has been the multipolar currency system based on the euro, dollar, and RMB (Schwab, 2012). In order to ensure a crisis-proof economic system, however, some economists believe this tripolar system must be backed by a Central Bank, an improvement in monetary regulations, and perhaps an induction of gold as a hedge and safe-haven asset. Introducing a World Central Bank within a three-currency monetary union: would this lead to greater stabilization and coordination of Macroeconomic Policies among countries? Some countries such as Germany have expressed interest in researching new alternatives to the existing rate regime, considering that neither of the two poles (fixed or flexible) are completely appropriate (Belke, Bernoth and Fichtner, 2011). According to Belke et al,......

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International Monetary Fund Decision Making

...Pamphlet Series No. 53 Governance of the IMF Decision Making, Institutional Oversight, Transparency, and Accountability Leo Van Houtven INTERNATIONAL MONETARY FUND 2002 Pamphlet Series No. 53 Governance of the IMF Decision Making, Institutional Oversight, Transparency, and Accountability Leo Van Houtven INTERNATIONAL MONETARY FUND Washington, D.C. 2002 ISBN 1-58906-130-6 ISSN 0538-8759 August 2002 The views expressed in this pamphlet, including any legal aspects, are those of the author and should not be attributed to Executive Directors of the IMF or their national authorities. Cover design and typesetting: IMF Graphics Section Please send orders to: International Monetary Fund, Publication Services 700 19th Street, N.W., Washington, D.C. 20431, USA Tel.: (202) 623-7430 Telefax: (202) 623-7201 E-mail: publications@imf.org Internet: http://www.imf.org Contents Preface ............................................................................................... List of Abbreviations ........................................................................ I. II. Introduction ........................................................................... Quotas and Voting Power in the IMF: A System That Calls for Greater Equity ................................................... Role of Quotas and the Debate on the Quota Formula............ Further Work Toward Correcting Distortions and Enhancing Equity in Voting Power .....................

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International Monetary Fund Intervention and Relevance

...difficult for local governments to serve. The funds inability to keep pace with an expanding global economy suggest redefining itself with a more modest role that is fitting for such an international monetary system may be the best approach, As opposed to expanding the funds activities. Table of contents 1. Introduction page 1 2. Objectives page 1 3. Rationale page 1 4. Literature review page 2 4.1 The Mandate page 2 4.2 Consequences of IMF Programme Implementation page 2 4.3 IMF Relevance page 6 5. Conclusion page 9 6. Reference 1. Introduction This literature review will examine the effectiveness of intervention by the International Monetary Fund (IMF). It will challenge the results of IMF programs and attempt to derive whether the Fund still serves a meaningful role in today's global economy. The International Monetary Fund was formed during a United Nations conference at Bretton Woods, New Hampshire in July 1944. At its inception the Funds founding fathers signed off on an expansive mandate with its key role being the oversight of the world’s international payment system post World War II. The......

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International Monetary Fund

...The IMF's primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with one other. This system is essential for promoting sustainable economic growth, increasing living standards, and reducing poverty. The Fund’s mandate has recently been clarified and updated to cover the full range of macroeconomic and financial sector issues that bear on global stability. The IMF was established at the Bretton Woods conference in 1944 to provide short term financial assistance to countries experiencing problems with their trade deficit or other Balance of Payments issues, so they could maintain stability in exchange rates i.e. stay fixed to USD value (i.e. gold value).  Otherwise in case of a major trade deficit or Balance of Payments issues, countries may be tempted to print more money and devalue currency. In 1971 the dollar de-linked from gold and subsequently in the Jamaica Agreement in 1976, the IMF acknowledged its new role which was an evolution from protecting fixed exchange rates to surveillance of currency floats and managing economic stability.  The IMF promotes clean floating i.e. there is minimal government intervention in establishing exchange rates and the market determines rates.  As compared to “managed” (rates influenced by government intervention) or “dirty” floats (unfair government intervention). IMF conditionality refers to the......

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Functions of International Monetary Fund, World Bank, General Agreement on Tariffs and Trade and World Trade Organization

...Functions of the International Monetary Fund The function of the Monetary Fund (IMF) is to provide loans to its members. It hereby uses different programs to supply a short, medium and long term solution. For entering, each member is charged a fee or quota. IMF main role is to intercede when there is an invitation, but also when a country can’t realize their international debts. The own currency of the IMF is the special drawing right (SDR). In order to provide fundamental changes in governmental relationships it though needs a borrower. That’s why its resources for dealing with crises are limited. Functions of the World Bank After World War II the original purpose of the World Bank was to assist helping the implementation of the Marshall plan - providing financing aid and programs to support the rebuilding of Europe. Soon its financials were insufficient. For these reasons it shifted towards backing up the development of nonindustrial countries and their economics. Functions of the General Agreement on Tariffs and Trade In the beginning there was the International Trade Organization (ITO) with its purpose to reduce tariffs. When it died in 1948, the General Agreement on Tariffs and Trade (GATT) has risen instead, focusing on bringing down trade barriers progressively. Therefore, countries will meet periodically and negotiate. It has been very successful thus far, but ignored the sectors of agriculture, textiles and apparel. One indicator given is “that......

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Role of the Imf

...The initial idea to form the International Monetary Fund originated in the year 1944, when members of 45 countries gathered for a meeting in the town of Bretton Woods in New Hampshire in the United States. The objective of this meeting was to agree on a structure for economic cooperation between countries after the Second World War in order to avoid the negative impacts caused by the economic policies in the past which resulted in the Great depression of the 1930s.The International Monetary Fund was formally established in December in the year 1945 with 29 countries signing an agreement. Its membership gradually increased during the 1950s and 1960s with most of the African countries joining the International Monetary Fund after gaining independence. Currently, the International Monetary Fund has evolved to become an organization which consists of 188 member countries working with common objectives of promoting worldwide monetary cooperation, providing financial strength to countries, promoting international trade between countries, reducing unemployment and poverty in the world. The new countries who became members of the International Monetary Fund between the years 1945 and 1971 gave their consent to keep their respective exchange rates fixed at rates that can only be changed to revise a significant inequality in the balance of payments, and could only be done so with the consent of the International Monetary Fund. This system was referred to as the par value system or......

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