INTERNATIONAL MONETARY FUND (IMF)

MEANING

       After the 1st world war , there arose a complete lack of monetary co-operation among various countries of the world. The political relation streamed as every country was trying to maximise it's exports and minimise imports. During the closing years of war, an international monetary conference was held at bretton woods in U.S.A . At this conference , the representatives of various countries discussed means to eliminate various causes of war.

        Final negotiations for establishment of IMG took place among the delegates of 29 nations gathered at bretton woods in July , 1944. Then it had 39 members by the end of 1946. The operations began in Washington D.C.

MEMBERSHIP 

     The communist countries like China and Russia earlier kept themselves away from membership. The membership is open to every country. Membership of IMF is a prerequisite for membership of World Bank. IMF had a membership of 182 counties as on 1st September , 2008.

RESOURCE

     Members quota is the main resource of IMF. Quotas are fixed for each country and it represents the subscription by member-country. Quota is also the basis for determining the draw of right initially, 25% of quota was paid in form of gold or U.S dollars of 75% in own currency and at present 25% is in form of SDR of foreign currencies. IMF cam supplement it's resources by borrowing.

ORGANISATION STRUCTURE

   IMF consist of : 

1. Board of governors, Executive Board, a Managing Director , Secretariat , interim and Development Committee.

2. The Board of Governors is the main decision making body of the fund. It is the highest body. The board consists of one Governor and one alternate Governor . Governor has the right to vote. They meet once in a year and make review on previous activities of the fund.

3. The Executive Board at present , has 21 directors , 5 major members are appointed by largest quotas. They have vast powers relating to regulatory, supervisory and financial services.

4. Managing Director is a non- voting chairman of board. The committee helps in advisory services to board of Governors.

OBJECTIVES

1. To promote international monetary co-operation through proper consultation on various problems.

2. To provide balanced growth of international trade and to promote higher levels of income of employment.

3. To promote exchange stability.

4. To provide funds temporarily to them for proper utilisation of resources.

5. To eliminate exchange control with a view to encourage the international trade.

6. To promote export of capital in underdeveloped and poor countries.

7. To minimise the imbalance in quantum and duration of external trade.

8. To develop multilateral system of payments in respect of various transactions.

FUNCTION

    The Articles of Agreement is amended by IMF to make appropriate changes in respect of exchange rates . It thus , performs the following set of functions:

1. It provides technical assistance to members countries with regard to fiscal and monetary policies.

2. IMF provides short term financial assistance to its members to remove BOP crisis.

3. Helps in adjustment of exchange rates.

4. It enables the members to borrow from other countries.

5. It conducts research studies and publishes various reports.

6. It also conducts short- term training courses on fiscal and monetary policies and other issues.

REFERENCE :

*Foreign exchange practice concept and control - C Jeevanandan, Fourth edition, 1997

*Export management - D.C kapoor, fourth edition , 2009