The International Monetary and Financial Committee has 24 members and monitors developments in global liquidity and the transfer of resources to developing countries. On the other hand, the switch to the floating exchange rate system coincided with the deteriorating economic conditions in the industrialised countries.
In addition, technical assistance is also given by the Fund.
However, such granting of credit is subject to strict conditionality. The PRGF that replaced the ESAF in November provides concessional lending to help the poorest member countries with the aim of making poverty reduction and economic growth —the central objectives of policy programmes.
The first 25 p. Several functions are derived from this. The following are the major functions of the IMF: To create international liquidity. Imf objectives and policies [ edit ] The IMF provided two major lending packages in the early s to Argentina during the — Argentine great depression and Uruguay after the Uruguay banking crisis.
With the breakup of the Soviet Union ina new category of countries, especially the erstwhile communist countries, joined the IMF.
This is known as the Nixon Shock. Mexico a Latin American country announced its failure to honour debt obligations. It includes credits and loans to member countries with balance of payments problems to support policies of adjustment and reform.
The Fund emphasises fiscal discipline—cuts in government expenditures and subsidies—so as to pursue a free market economy philosophy.
In other words, the demise of the Bretton Woods System made room for the floating exchange rate regime, requiring changes in the role of the IMF. Meanwhile, many LDCs faced serious BOP deficits because of a world recession, the first oil shock in the form of ricocheting fuel prices, and a falling exports of LDCs.
The Executive Director representing the largest constituency of 22 countries accounts for 1. Average incomes in sub-Saharan Africa actually contracted. Secondly, the costs of adjusting to greater openness of the LDC economy are shouldered mainly by the poor.
It shifted its focus of attention to the developing countries in the late s. Special Drawing Rights SDRs —an artificial currency—were created in as foreign exchange reserves to benefit the developing countries in particular. Total quotas at the end-August were SDR Similarly, the Fund may ask a member enjoying a persistent surplus position to revalue its currency and set things right.
Average incomes in sub-Saharan Africa actually contracted. Rate of interest that is charged is only 0. All these comprised the introduction of capitalism in Russia and other former Soviet-bloc countries and hence a shift from the state-led development to market-led development.
This debt burden also caused severe BOP crises in many countries. First, we state the achievements of the Fund. It sells gold to member countries to replenish currency holdings. The IMF Articles of Agreement clearly state that the resources of the Fund are to be used to give temporary assistance to members in financing BOP deficit on current account.
The most important objective of the Fund is to establish international monetary co-operation amongst the various member countries through a permanent institution that provides the machinery for consultation and collaborations in various international monetary problems and issues.
Drawings on this account since stand at over 50 billion dollar in SDRs. It is entitled to borrow even from international capital market.IMF –OBJECTIVES AND POLICIES Introduction The International Monetary Fund—also known as the “IMF” or the “Fund”—was conceived at a United Nations conference convened in Bretton Woods, New Hampshire, U.S.
in July The Office will be preparing policy memoranda on individual IMF loan proposals to assess their quality and conformity with U.S. policy objectives. Key G-7 policies will include the continuation of the “Strategic Review” of IMF operations, with a near term a focus on options for IMF debt relief.
The IMF's main business. The IMF’s job is to promote a stable international monetary system, in which member countries can achieve high rates of employment, low inflation, and sustainable economic growth. the IMF’s functions, policies, and operations.
The Handbook draws heavily on IMF documents and, for accuracy, the language is kept as close as possible to the originals. The IMF has used conditionality to exact major changes, called ” structural adjustments,” in borrowing countries’ fiscal and monetary policies, including such issues as banking regulations, government deficits, and pension policy.
The IMF's objectives focus on macroeconomic performance and policies, while the World Bank focuses on long-term economic development and poverty-reduction issues.
The IMF works actively with the World Bank, the World Trade Organization, the United Nations, and other international bodies that share an interest in international trade.Download