Important Points to know about International Monetary Fund (IMF)

    Important Points to know about International Monetary Fund (IMF)
    Important Points to know about International Monetary Fund (IMF):
    Important points that we have to know about the International Monetary Fund (IMF) were given here, which will be more helpful for the candidates those who are preparing for the upcoming exams.

    INTERNATIONAL MONETARY FUND

    1). TheInternational Monetary Fund (IMF) is an international organization of188countries working together to
    ·        Foster global monetary co-operation
    ·        Secure financial stability
    ·        Facilitate international trade
    ·        Promote high employment and sustainable economic growth
    ·        Reduce poverty around the world

    2). It was formed in1944 at theBretton Woods Conference

    3). Established on27th December 1945, with29 member countriesinitially

    4). Headquarters –Washington DC

    5). Managing Director –Christine Lagarde

    6). Regional offices –Paris andGeneva

    7). It was formed with the following objectives
    ·        To stabilize exchange rates
    ·        Assist the reconstruction of the world’s international payment system post theWorld War II

    8). Now the role of IMF is much more activemanaging the economic policy instead of just exchange rates

    9). Low income countries can borrow onconcessionalterms i.e., there is a period of time with no interest rates through the
    ·        Extended Credit Facility(ECF)
    ·        Standby Credit Facility(SCF)
    ·        Rapid Credit Facility(RCF)

    10). IMF also providesnon-concessional loanswhich has interest rates as follows
    ·        Standby Arrangements(SBA)
    ·        Flexible Credit Line(FCL)
    ·        Precautionary and Liquidity Line(PLL)
    ·        Extended Fund Facility(EFF)

    11). IMF provides emergency assistance to all its members facing urgent balance of payment needs through the newly introducedRapid Financing Instrument (RFI)

    12). To become a member of IMF, a country must apply and then be accepted by a majority of the existing188 members
    ·        Each member is assigned aquota based on its relative size of their economy upon joining
    ·        A member’s quota determines the maximum amount of financial resources
    ·        A member must pay its subscription –25% to be paid in the IMF’s own currency called asSpecial Drawing Rights(SDR) and the remaining75%in themember’s own currency

    13). Each member of IMF has250 Basic votes and one additional vote for eachSDR100,000 of quota.
    Top 5-members of IMF based on their voting power are as follows
    ·        United states –16.75%421,961 votes
    ·        Japan –6.23%157,022 votes
    ·        Germany –5.81%146,392 votes
    ·        France –4.29%108,122 votes
    ·        United kingdom –4.29%108,122 votes

    14). India has58,952 votes with2.34%voting power

    15). Palau is thelast member country having voting power of0.01% and281 votes

    16). The amount of finance that a member can obtain from IMF is based on its quota. There are two types of loans which are as follows
    ·        Stand-By  loans200% of its quota
    ·        Extended arrangements loans600% of its quota

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