IMF

The IMF was organised in 1946 and

commenced operations in March,
1947.
• The International Monetary Fund (IMF) is an
organization of 188 countries, working to foster
global monetary cooperation, secure financial
stability, facilitate international trade, promote
high employment and sustainable economic
growth, and reduce poverty around the world.
• Created in 1945, the IMF is governed by and
accountable to the 188 countries that make up its
near-global membership.
Why the IMF was created and how it works
The IMF, also known as the Fund, was conceived at a UN
conference in Bretton Woods, New Hampshire, United States,
in July 1944. The 44 countries at that conference sought to
build a framework for economic cooperation to avoid a
repetition of the competitive devaluations that had
contributed to the Great Depression of the 1930s.
The IMF's responsibilities: 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 each
other. The Fund's mandate was updated in 2012 to include all
macroeconomic and financial sector issues that bear on global
stability.
• The fundamental objective of the IMF was the
avoidance of competitive devaluation and
exchange control that had characterized the era
of 1930s. It was set up to administer a “code of
fair practice”, in the field of foreign exchange and
to make short-term loans to member nations
experiencing temporary deficits in their balance
of payments, to enable them to meet these
payments without resorting to devaluation or
exchange control, while at the same time
following’ international policies to maintain
domestic income and employment at high levels.
Thus, basically there are three general
objectives of the IMF:
(i) The elimination or reduction of existing
exchange controls,
(ii) The establishment and maintenance of
currency convertibility with stable exchange
rates, and
(iii) The widest extension of multi-lateral trade
and payments.
The following are the major functions
of the IMF:
1. It functions as a short-term credit institution.
2. It provides machinery for the orderly
adjustments of exchange rates.
3. It is a reservoir of the currencies of all the
member countries from which a borrower
nation can borrow the currency of other
nations.
4. It is a sort of lending institution in foreign exchange.
However, it grants loans for financing current transactions
only and not capital transactions.
5. It also provides machinery for altering sometimes the
par value of the currency of a member country. In this
way, it tries to provide for an orderly adjustment of
exchange rates, which will improve the long-term balance
of payments position of member countries.
6. It also provides machinery for international
consultations.
• In fine, the Fund contributes to the promotion and
maintenance of high levels of employment and real
income and to the development of the productive
resources of all member nations.
• The Fund is an autonomous organisation affiliated to
the UNO. IMF’s constitution represents a departure in
the formation of an international organisation. It is
financed by the participating countries, with each
country’s contribution fixed in terms of quotas
according to the relative importance of its prevailing
national income and international trade.
• Thus, the quota assigned to a country is determined by
its contribution to the capital of the Fund. The quotas
of all the countries taken together constitute the total
financial resources of the Fund. Moreover, the
contributed quota of a country determines its
borrowing rights and voting strength.
• India being one of the largest quota-holders (600
million dollars) has the honour of having a permanent
seat on the Board of Executive Directors. Each member
nation of the IMF is required to subscribe its quota
partly in gold and partly in its own currency.
• Specifically, a member nation must contribute
gold equal to 25 per cent of its quota or 10 per
cent of its gold stock and U.S. dollar holdings,
whichever is less. The portion of subscription
paid in a nation’s own currency is generally paid
in the form of deposit balance in favour of the
IMF held in the nation’s central bank. Thus, the
Fund gets a pool of foreign currencies to lend,
together with gold enables it to acquire
additional amounts of currencies whenever its
initial supply of some currencies becomes
depleted.
• Since each member contributes gold to the
extent of 25 per cent of its quota, the Fund
freely permits a member to draw up to the
amount of its gold contribution. Additional
drawings are permitted only after certain
careful and strict scrutinizes. Since the
purpose of the Fund is to make temporary and
long-term loans, it expects repayment of loans
within 3 to 5 years.
• The International Development Association (IDA) is an
international financial institution which offers concessional loans
and grants to the world's poorest developing countries. The IDA is a
member of the World Bank Group and is headquartered in
Washington, D.C., United States. It was established in 1960 to
complement the existing International Bank for Reconstruction and
Development by lending to developing countries which suffer from
the lowest gross national income, from troubled creditworthiness,
or from the lowest per capita income. Together, the International
Development Association and International Bank for Reconstruction
and Development are collectively generally known as the World
Bank, as they follow the same executive leadership and operate
with the same staff.
Formation 1960

Type Development finance institution

Legal status Treaty

Development assistance, Poverty

Purpose
reduction

Headquarters Washington, D.C

Membership 173 countries

President of the World Bank Jim Yong Kim

Parent organization World Bank Group

Website worldbank.org/ida
• The association shares the World Bank's mission of reducing
poverty and aims to provide affordable development financing to
countries whose credit risk is so prohibitive that they cannot afford
to borrow commercially or from the Bank's other programs. The
IDA's stated aim is to assist the poorest nations in growing more
quickly, equitably, and sustainably to reduce poverty. The IDA is the
single largest provider of funds to economic and human
development projects in the world's poorest nations. From 2000 to
2010, it financed projects which recruited and trained 3 million
teachers, immunized 310 million children, funded $792 million in
loans to 120,000 small and medium enterprises, built or restored
118,000 kilometers of paved roads, built or restored 1,600 bridges,
and expanded access to improved water to 113 million people and
improved sanitation facilities to 5.8 million people.
• The IDA has issued a total $238 billion USD in
loans and grants since its launch in 1960.
Thirty-six of the association's borrowing
countries have graduated from their eligibility
for its concessional lending. However, eight of
these countries have relapsed and have not
re-graduated.
Motto Working for a World Free of Poverty
Formation July 1944; 71 years ago
Monetary International Financial
Type
Organization
Legal status Treaty
Purpose Crediting
Headquarters Washington, D.C., United States
Region Worldwide
188 countries (IBRD)[1]
Membership
172 countries (IDA)
Key people Jim Yong Kim, president
Parent organization World Bank Group
Website www.worldbank.org
 John Maynard Keynes (right) and Harry Dexter
White, the "founding fathers" of both the World
Bank and the International Monetary Fund (IMF)
• The World Bank is an international financial institution that
provides loans to developing countries for capital
programs. It comprises two institutions: the International
Bank for Reconstruction and Development (IBRD), and the
International Development Association (IDA). The World
Bank is a component of the World Bank Group, which is
part of the United Nations system.
• The World Bank's official goal is the reduction of poverty.
However, according to its Articles of Agreement, all its
decisions must be guided by a commitment to the
promotion of foreign investment and international trade
and to the facilitation of Capital investment
 World Bank Group

• The World Bank is not to be confused with the World

Bank Group, an extended family of five international
organizations:
• International Bank for Reconstruction and
Development (IBRD)
• International Development Association (IDA)
• International Finance Corporation (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment
Disputes (ICSID)
The World Bank Group headquarters
bldg. in Washington, D.C.
• Jim Yong Kim, the current President of the
World Bank Group
IFC
• WE WORK WITH THE PRIVATE SECTOR IN
DEVELOPING COUNTRIES TO HELP CREATE
OPPORTUNITY FOR ALL.
• IFC, a member of the World Bank Group, is the largest global development
institution focused exclusively on the private sector in developing
countries.
• We utilize and leverage our products and services—as well as products
and services of other institutions in the World Bank Group—to provide
development solutions customized to meet clients’ needs. We apply our
financial resources, technical expertise, global experience, and innovative
thinking to help our partners overcome financial, operational, and political
challenges.
• Clients view IFC as a provider and mobilizer of scarce capital, knowledge,
and long-term partnerships that can help address critical constraints in
areas such as finance, infrastructure, employee skills, and the regulatory
environment.
• IFC is also a leading mobilizer of third-party resources for its projects. Our
willingness to engage in difficult environments and our leadership in
crowding-in private finance enable us to extend our footprint and have a
development impact well beyond our direct resources.
 WHAT WE BRING

Innovation:
For more than half a century, IFC has innovated to strengthen private
sector development wherever it’s needed most.
Influence:
As the world’s largest global development institution focused on the
private sector, IFC plays a significant role in influencing the course of
private sector development.
Demonstration:
We have a long history of setting a good example—of demonstrating
the rewards of investing in challenging markets.
Impact:
We go wherever we are needed most, and deploy our resources
wherever they will achieve the greatest impact.
International Bank for Reconstruction
and Development
• The International Bank for Reconstruction and Development was
created in 1944 to help Europe rebuild after World War II. Today,
IBRD provides loans and other assistance primarily to middle
income countries.
• IBRD is the original World Bank institution. It works closely with the
rest of the World Bank Group to help developing countries reduce
poverty, promote economic growth, and build prosperity.
• IBRD is owned by the governments of its 188 member countries,
which are represented by a 25-member board of 5 appointed and
20 elected Executive Directors.
• The institution provides a combination of financial resources,
knowledge and technical services, and strategic advice to
developing countries, including middle income and credit-worthy
lower income countries. Specifically, IBRD:
• Supports long-term human and social development
that private creditors do not finance
• Preserves borrowers' financial strength by providing
support in times of crisis, when poor people are most
adversely affected
• Promotes key policy and institutional reforms (such as
safety net or anti-corruption reforms)
• Creates a favorable investment climate to catalyze the
provision of private capital
• Facilitates access to financial markets often at more
favorable terms than members can achieve on their
own
• IBRD’s Services
• The World Bank Group works with middle income countries
simultaneously as clients, shareholders, and global actors.
As this partnership evolves, IBRD is providing innovative
financial solutions, including financial products (loans,
guarantees, and risk management products) and
knowledge and advisory services (including on a
reimbursable basis) to governments at both the national
and subnational levels.
• IBRD finances projects across all sectors and provides
technical support and expertise at various stages of a
project.
• IBRD’s financial products and services help countries build resilience
to shocks by facilitating access to products that mitigate the
negative impact of currency, interest rate, and commodity price
volatility, natural disasters and extreme weather.
• Unlike commercial lending, IBRD’s financing not only supplies
borrowing countries with needed financing, but also serves as a
vehicle for global knowledge transfer and technical assistance.
• Advisory services in public debt and asset management help
governments, official sector institutions, and development
organizations build institutional capacity to protect and expand
financial resources.
• IBRD supports government efforts to strengthen not only public
financial management, but to also improve the investment climate,
address service delivery bottlenecks, and other policy and
institutional actions.
 How IBRD Is Financed

• IBRD raises most of its funds in the world's financial markets. In

fact, in these markets, IBRD is known simply as the World Bank. This
practice has allowed IBRD to provide more than $500 billion in
loans to alleviate poverty around the world since 1946, with its
shareholder governments paying in about $14 billion in capital.
• IBRD has maintained a triple-A rating since 1959. Its high credit
rating allows it to borrow at low cost and offer middle-income
developing countries access to capital on favorable terms -- in
larger volumes, with longer maturities, and in a more sustainable
manner than world financial markets typically provide.
• IBRD earns income every year from the return on its equity and
from the small margin it makes on lending. This pays for IBRD's
operating expenses, goes into reserves to strengthen the balance
sheet, and provides an annual transfer of funds to IDA, the fund for
the poorest countries.