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    History & Purpose of Establishment

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    Raz Aslam
    The IMF was formed in 1945 in response to the economic challenges of the Great Depression and World War II. Its initial goals were to promote international monetary cooperation, facilitate balanced global trade, promote exchange rate stability, and provide loans to countries experiencing economic difficulties. Today the IMF has 189 member countries and works with governments to provide loans and technical assistance in exchange for commitments to implement economic reforms. Key events include providing support to countries like Brazil, East Asian nations during financial crises, and European countries struggling with debt issues in the late 2000s. Looking ahead, the IMF faces challenges in reforming some of its policies and governance to better represent the growing role of emerging market economies.

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    History & Purpose of Establishment

    Uploaded by

    Raz Aslam
    111 views3 pages
    The IMF was formed in 1945 in response to the economic challenges of the Great Depression and World War II. Its initial goals were to promote international monetary cooperation, facilitate balanced global trade, promote exchange rate stability, and provide loans to countries experiencing economic difficulties. Today the IMF has 189 member countries and works with governments to provide loans and technical assistance in exchange for commitments to implement economic reforms. Key events include providing support to countries like Brazil, East Asian nations during financial crises, and European countries struggling with debt issues in the late 2000s. Looking ahead, the IMF faces challenges in reforming some of its policies and governance to better represent the growing role of emerging market economies.

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    The IMF was formed in 1945 in response to the economic challenges of the Great Depression and World War II. Its initial goals were to promote international monetary cooperation, facilitate balanced global trade, promote exchange rate stability, and provide loans to countries experiencing economic difficulties. Today the IMF has 189 member countries and works with governments to provide loans and technical assistance in exchange for commitments to implement economic reforms. Key events include providing support to countries like Brazil, East Asian nations during financial crises, and European countries struggling with debt issues in the late 2000s. Looking ahead, the IMF faces challenges in reforming some of its policies and governance to better represent the growing role of emerging market economies.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    111 views3 pages

    History & Purpose of Establishment

    Uploaded by

    Raz Aslam
    The IMF was formed in 1945 in response to the economic challenges of the Great Depression and World War II. Its initial goals were to promote international monetary cooperation, facilitate balanced global trade, promote exchange rate stability, and provide loans to countries experiencing economic difficulties. Today the IMF has 189 member countries and works with governments to provide loans and technical assistance in exchange for commitments to implement economic reforms. Key events include providing support to countries like Brazil, East Asian nations during financial crises, and European countries struggling with debt issues in the late 2000s. Looking ahead, the IMF faces challenges in reforming some of its policies and governance to better represent the growing role of emerging market economies.

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    © All Rights Reserved
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    HISTORY & PURPOSE OF ESTABLISHMENT

    The IMF was formed in 1945 primarily by the ideas of John Maynard Keynes
    & Harry Dexter White. During the great depression, countries sharply raised
    barriers to trade in an attempt to improve their falling economies. This lead to
    decline of national currencies and a decline in world trade. This breakdown in
    international monetary cooperation created a need for oversight. The
    representatives of 45 governments met at the Bretton Woods Conference, to
    discuss the postwar international economic cooperation and how to rebuild
    Europe. Initially it had 29 members and a primary objective of reconstructing
    the international payment system. By 1946 the members grew to 39. The IMF
    began its financial operations on 1 March 1947 and on 8th May France became
    the first country to borrow from it.
    Today the primary objectives of the IMF are
    ● 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 for members experiencing balance of payments
    difficulties.

    ORGANISATION

    International Monetary Fund (IMF) has 189 members with its headquarters in
    Washington.

    On 28 June 2011, Christine Madeleine Odette Lagarde, a French lady was


    named as the 11th Managing Director of the IMF for a five-year term, starting on 5
    July 2011 . She was re-elected by consensus for a second five-year term, starting 5
    July 2016.

    The emblem of IMF has blue shield placed in a thin circle, holds two opposite side
    views of the globe supported by an olive branch with three leaves and two olive
    fruits. The name ‘International Monetary Fund’ in capital circumvents the shield,
    which is duly divided by a pair of five pointed stars. This logo strives to depict its
    stated aims symbolically.

    The projection of globe shows all the beneficiary countries of the world.
    The Olive branch signifies the good of charity and its leaf signifies the truth of
    faith. It may symbolise the business in which IMF is in – giving loans under strict
    conditions and recovering thence.

    Contributions to the World


    For many countries the IMF has been the organization to turn to during difficult economic times.
    However, unlike development banks, the IMF does not provide loans for specific projects.
    Following a request for aid, the IMF staff team holds talks with the government to assess the
    economic and financial situation. A country’s government must agree on a programme of
    economic policies before the IMF provides loans. This is known as policy conditionality.
    The IMF has been working consistently with a nmber of countries in Sub Saharan Africa. When
    Jordan was impacted by wars with Israel, civil war and a major economic recession, in 1989,IMF
    came to its assistance. The country agreed to the 5 year reforms that began with the IMF.
    In 1998-99, Brazil suffered from a financial crisis. Its currency collapsed in 1999. The IMF came
    to its rescue.

    The Asian financial crisis gripped much of East Asia, raising the fears of a global economic
    meltdown. Indonesia, South Korea and Thailand were the most affected by the crisis. The IMF
    stepped in to initiate a $40 billion programme to stabilize the currencies of these countries.

    The IMF played a key role in supporting the crumbling economies of Italy, Greece and Ireland
    not only by provided financial aid but by laying down a strict roadmap for revamping their
    economic policies to help grapple with the severe financial mess they had landed themselves in.

    The IMF is working with countries to improve health, education and in helping the UN in the
    fight against AIDS. It provides technical assistance to boost healthy spending.

    IMF AND INDIA

    India joined the IMF on Dec27,1945, as one of the IMF’s original member.

    While India has not been a frequent user of the IMF resources, IMF credit has been instrumental
    in helping India respond to the emerging balance of payments problems on two occasions. As of
    December 2017, the percentage share of India’s debt from the IMF stood at 5,666 million US $
    which is only 1.1% of its total external long term debt.

    In India, the focus of the IMF’s work is to facilitate the flow of information between the
    government of India, the reserve bank and IMF. It trains the officials from RBI, and national and
    state governments. In recent years the Fund has provided India with technical assistance in a
    number of areas including the development of the government securities market, foreign
    exchange market reforms, public expenditure management, tax and customs administration etc.
    The IMF institute at New Delhi has been providing training to Indian officials in national
    accounts, tax administration, balance of payments compilation, monetary policy and other areas.
    In the recent world economic report released by the IMF, it has ranked india as the fastest
    growing economy, faster than even China. It has projected a growth rate of 7.6% for the FY
    2019-20

    FUTURE CHALLENGES OF THE IMF

    Since being set up in 1944 at the Bretton Woods Conference along with the World Bank, the
    IMF has played a critical and at times controversial role in stabilising the global economy.

    IMF loan agreements usually require severe cut-backs in government spending - austerity with a
    capital 'A' - tax reform, pensions reforms and a crackdown on corruption. The Fund rarely leaves
    a country with more friends as these conditions are difficult to adhere to and many countries in
    the developing economies feel that indirectly the European countries are trying to dominate.

    As per their rules every IMF managing director must be a European, which needs to be changed.
    Last year, saw the arrival of the New Development Bank - now known as the Brics Bank - whose
    members include Brazil, Russia, Indian, China and South Africa and whose stated aim is to
    foster greater financial and development cooperation along the emerging market countries.
    Hence there is need to make some organisational modifications.

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