IMF

IMF and How it Effects the INTERNATIONAL RELATIONS or the states

1. INTRODUCTION to IMF Maryam Mobin

2. What is the IMF? T he intergovernmental organization that oversees the global financial system. IMF organizes the conduct of international monetary affairs.

3. An international monetary conference was held at Bretton Woods in U.S.A. in July which lead to: Establishment of I. M. F. Setting up of World Bank History of IMF

4. The International Monetary Fund was created in July 1944, originally with 45 members, with a goal to stabilize exchange rates and assist the reconstruction of the world international payment system.

5. Members of IMF

6. 188 Members of IMF

7. Types of Membership Original membership: All those countries whose representatives took part in Bretton Woods conference Who agreed to be the members of the fund prior to 31st December,1945 . Ordinary membership: All those who became its members subsequently . BANK has the authority to suspend any member and similarly every member is free to resign.

8. Obligations Of Membership Agree to the code of conduct found in the IMF Articles of Agreement Pay a quota subscription Refrain from restrictions on exchange of foreign currency Strive for openness in economic policies affecting other countries.

9. Resources of IMF

10. Quotas and Fixation When a country joins IMF, it is assigned a quota which determines its maximum contribution to the IMF’s financial resources. It based on the country's relative size in the world economy, its voting power and drawing rights.

11. Borrowing arrangements IMF has signed a number of bilateral loan and note purchase agreements to supplement its quota resources. It maintains two standing multilateral borrowing arrangements: The expanded New Arrangements to Borrow (NAB) The General Arrangements to Borrow (GAB)

12. The IMF’s gold holdings amount to about 90.5 million troy ounces (2,814.1 metric tons), making the IMF one of the largest official holders of gold in the world. The IMF’s Articles of Agreement strictly limit the use of gold. Gold holdings

13. The IMF currently provides two primary types of financial assistance to low-income countries: Low-interest loans under the Poverty Reduction and Growth Trust (PRGT) Debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative and  the Catastrophe Containment and Relief (CCR) Trust . IMF concessional lending and debt relief

14. Functions of IMF Tehseen Khalid

15. Three Major Functions of IMF Surveillance Gathering the data and gives advices in making policies of the country .

16. 2.Technical Assistant Strengthening the human skills and institutional skills of the country. 3 .Financial Assistant Lending to countries to support reforms

17. The IMF also plays an important role in the fight against Money Laundering and Terrorism

18. Structure of IMF

19. Structure of IMF IMF is Governed by FOUR main Bodies: 1: Governing Body 2: Executive Board 3: Managing Director 4: IMF Staff

20. The Governing Body All powers of the  IMF  are  Vested  in its Board of Governors, all the members of countries are represented.(187) Ministry of finance or President of central bank Governor and Alternate Governor Meet once in a year in Washington DC

21. December 2002, the United States governor was Secretary of the Treasury Paul O'Neill,and the alternate,  Federal Board Ch.  Alan Greenspan.

22. Voting Power Each member nation is required to contribute funds according to its E conomic size and S trength

23. Special Drawing Rights(SDR) A unit for the amount of foreign currency member states can draw on Currencies including: Euro , Pound Sterling , Japanese yen and US Dollar

24. Advisers of the GB It is being advised by TWO Committees: International Monetary & Financial Committee ( IMFC ) The Development Committee

25. International Monetary & Financial Committee ( IMFC ) IMFC has 24 Members Meets twice a year ( Spring , Annual ) M atters of common concern affecting the global economy Communiqués provide guidance for the IMF's work program

26. The Development Committee 24 Members A joint committee, tasked with advising IMF & World Bank Issues related to Economic development Developmental issues

27. 2. Executive Board 24 Executive Directors 5 are appointed by the countries having Largest Quotas US, UK, Japan, Germany, France 19 are appointed by Regional Groups of remaining members Fund General Operation Function in Continuous Session

28. 3. IMF Managing Directors Headed by Executive Board Managing Director is chosen by E.B It is responsible for the conduct of the ordinary business of the Fund Manager appointed for 5-Years M ay not serve concurrently

29. 4. IMF Staff It has staff of about 2,600 economists, statisticians, research scholars, experts in public finance and taxation and in finance systems and banking, linguists, writers and editors, and support personnel. Most headquartered in Washington, DC.

30. Importance of IMF Sibgha Saleem

31. The importance of IMF can be explained for its following works : To bring about international monetary cooperation .

32. To promote and establish system of multinational trade and payments system . To help member nations to achieve balanced economic growth .

33. To ensure stability in foreign exchange rates . To reduce the disequilibrium in the balance of payments . To offer special aids or loans to member countries in solving their economic problem .

34. Strengths of imf

35. IMF can be seen as lender of last resort. T he IMF can provide crucial loans to stabilize the economy and prevent a collapse of confidence. Its most important function is its ability to provide loans to member nations in need of a bailout. Stabi lize Economy at the time of Need

36. IMF can impose necessary reforms on an economy such as privatization, fiscal responsibility etc. These policies may cause short term pain but are essential for preventing future crisis and long term development . IMF guarantees long term development

37. It provides an external assessment of the economy, which helps the government to implement popular ideas while focusing on its core macroeconomic and financial areas of responsibility. IMF Provides an External Aid

38. The IMF assists member nations in several different capacities. If a country has a balance of payments deficit, the IMF can step in to fill the gap. IMF fills the gap to balance payments

39. The World Bank . The regional development banks . The World Trade Organization . United Nations agencies . International bodies . IMF Collaboration with Institutions

40. It serves as a council and adviser to countries attempting a new economic policy. It is also known for providing a forum for discussion and consultation among member countries. IMF as an Economic Adviser

41. Weaknesses of IMF Abeer Fatim a

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43. Fixed and RigiD Policies for All IMF implies same inflexible set of economic policies for all its members regardless of the situation For example, Policies of privatization may work better in developed countries in the West but are more difficult to implement in the developing world

44. Exacerbate Poverty and Economic Problems L oans with high interest rates Country stays in debt unable to provide for its people ~ Poverty and Unemployment

45. Discriminating Treatment

46. As voting power is determined by the amount of money that each country pays into the IMF's quota system Dominated by the perspective of the G8 industrialized nations The U.S. is the largest shareholder of IMF. Germany, Japan, France, Great Britain, and the US combined control about 38 percent of shares.

47. Hinder Social Security and Social Development

48. S tructural adjustment policies (SAPs) Cut social development budgets like education, health, food and transportation budgets etc. Make exports cheaper Privatize national assets Cut down wages of employees

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50. 21-Dec-15 Template copyright 2005 www.brainybetty.com Disregard National Sovereignty

51. Foreign bodies have great influence over key economic issues and resource management and investments in IMF debt countries. For example, Jamaica argues that the IMF takes away the ability for countries to decide national policy.

52. 21-Dec-15 Template copyright 2005 www.brainybetty.com 59 Promote Gender Discrimination at National Level

53. IMF policies hurt WOMEN the most in IMF debt countries by following means: Difficult to meet families' basic needs First to be drawn out of schools due to high education fee as suggested by SAPs More exploited as sweatshops abuses increase with long working hours, less wages and non-existent facilities

54. 21-Dec-15 Template copyright 2005 www.brainybetty.com 61 Violate Labor Rights

55. The IMF advises countries to attract foreign investors by weakening their labor laws For example, In Haiti, the government was told to eliminate a statute in their labor code that allowed increases in the minimum wage on 10% inflation. Workers in rich countries are also hurt this.

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57. 21-Dec-15 Template copyright 2005 www.brainybetty.com 64 Trigger Environment Al Degradation

58. IMF policies promote natural resource exploitation and Unsustainable liquidation on a staggering scale Environmental ministries are not included in policy making For example, in Africa the Ivory Coast's increased reliance on cocoa exports has led to a loss of two-thirds of the country's forests

59. Moral Hazard Many member countries of IMF like Italy and Greece, have been accused of unsustainable budgets and unplanned investments etc. because they believed that IMF would come to their rescue 66

60. CONCLUSION

61. All that glitters is not gold More dangerous than beneficial Economically control the world Only useful for Developed Countries