International Monetary Fund and It's Great Objective For World-
The International Monetary Fund (IMF) is the intergovernmental organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development through the enforcement of liberalising economic policies on other countries as a condition for loans, restructuring or aid. It also offers highly leveraged loans, mainly to poorer countries. Its headquarters are in Washington, D.C., United States. The IMF's relatively high influence in world affairs and development has drawn heavy criticism from some sources.
Organization and purpose-
The International Monetary Fund was conceived in July 1944 originally with 45 members and came into existence in December 1945 when 29 countries signed the agreement, with a goal to stabilize exchange rates and assist the reconstruction of the world's international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances (Condon, 2007). The IMF was important when it was first created because it helped the world stabilize the economic system. The IMF works to improve the economies of its member countries. The IMF describes itself as "an organization of 187 countries (as of July 2010), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty".
Members of the IMF are 186 of the UN members and Kosovo.
Former members are: Cuba (left in 1964), and Taiwan (expelled in 1980 due to political reasons),
The other non-members are: North Korea, Andorra, Monaco, Liechtenstein, Nauru, Vatican City and the rest of the states with limited recognition.
All member states participate directly in the IMF. Member states are represented on a 24-member Executive Board (five Executive Directors are appointed by the five members with the largest quotas, nineteen Executive Directors are elected by the remaining members), and all members appoint a Governor to the IMF's Board of Governors.
All members of the IMF are also IBRD members, and vice versa.
The International Monetary Fund was conceived in July 1944 during the United Nations Monetary and Financial Conference. The representatives of 45 governments met in the Mount Washington Hotel in the area of Bretton Woods, New Hampshire, United States, with the delegates to the conference agreeing on a framework for international economic cooperation. The IMF was formally organized on December 27, 1945, when the first 29 countries signed its Articles of Agreement. The statutory purposes of the IMF today are the same as when they were formulated in 1943 (see #Assistance and reforms).
The IMF's influence in the global economy steadily increased as it accumulated more members. The number of IMF member countries has more than quadrupled from the 44 states involved in its establishment, reflecting in particular the attainment of political independence by many developing countries and more recently the collapse of the Soviet bloc. The expansion of the IMF's membership, together with the changes in the world economy, have required the IMF to adapt in a variety of ways to continue serving its purposes effectively.
In 2008, faced with a shortfall in revenue, the International Monetary Fund's executive board agreed to sell part of the IMF's gold reserves. On April 27, 2008, IMF Managing Director Dominique Strauss-Kahn welcomed the board's decision of April 7, 2008 to propose a new framework for the fund, designed to close a projected $400 million budget deficit over the next few years. The budget proposal includes sharp spending cuts of $100 million until 2011 that will include up to 380 staff dismissals.
At the 2009 G-20 London summit, it was decided that the IMF would require additional financial resources to meet prospective needs of its member countries during the ongoing global financial crisis. As part of that decision, the G-20 leaders pledged to increase the IMF's supplemental cash tenfold to $500 billion, and to allocate to member countries another $250 billion via Special Drawing Rights.
On October 23, 2010, the Ministers of Finance of G-20, governing most of the IMF member quotas, agreed to reform IMF and shift about 6% of the voting shares to major developing nations and countries with emerging markets. As of August 2010 Romania ($13.9 billion), Ukraine ($12.66 billion) and Hungary ($11.7 billion) are the largest borrowers of the fund.
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IMF GOVERNANCE REFORM
IMF Board Approves Far-Reaching Governance Reforms-
IMF Survey online
The IMF’s Executive Board has approved far-reaching reforms of the way the IMF is run, a week before the Leaders of the Group of Twenty (G-20) industrialized and emerging market economies are due to meet in Seoul, Korea, to discuss how best to strengthen the global recovery.
“Taken together, it’s a big shift in quotas and accordingly in voting power. It’s a very important increase in the voice and representation of the emerging market and developing countries ... it is a historical reform of the IMF,” Strauss-Kahn told journalists at a press conference immediately following the Board’s decision.
“It means we now have the top 10 shareholders that really represent the top 10 countries in the world, namely the United States, Japan, the four main European countries, and the four BRICs. The ranking of the countries is now really the ranking they have in the global economy,” he said.
More voting power to dynamic emerging markets and developing countries:
The core of the reforms will be a doubling of IMF quotas that will produce a shift of 6 percent of quota shares to the dynamic emerging market and developing countries.
“One-half of the shift comes from advanced economies, mostly European advanced economies, but the United States also played a part. One third comes from oil producers, countries like Saudi Arabia for instance. So altogether, 80 percent of the shift comes from advanced countries and oil producers,” Strauss-Kahn said. “Only 20 percent comes from other emerging countries,” he added.
“The bottom line is that 110 countries out of 187 will see their quota share increased or maintained. When you look at who those 110 are, you have 102 which are emerging or developing countries. That gives a clear picture of what has happened,” he said.
Doubling of quotas:
Member countries’ quotas, the IMF’s principal source of financial resources, will double under the 14th General Review of Quotas to SDR 476.8 billion (about $755.7 billion at current exchange rates) from SDR 238.4 billion agreed under the 2008 quota and voice reform.
As part of the agreement, the New Arrangements to Borrow (NAB), a backstop arrangement between the IMF and a group of IMF members to provide additional lending resources to the Fund, will be rolled back.
The Board also agreed that a new formula for calculating quotas should be decided by January 2013, and that the next quota review should be completed by January 2014, two years ahead of schedule.
The Board of Governors, the IMF’s highest decision-making body, must ratify the new agreement by an 85 percent majority of votes cast before it comes into effect.
IMF Concludes Visit to The Gambia for the Seventh Review of the Program Under the Extended Credit Facility-
A mission from the International Monetary Fund (IMF) led by Mr. David Dunn visited Banjul October 29–November 11 to assess performance for the seventh review of The Gambia’s economic program supported by the IMF under the Extended Credit Facility (ECF). The mission met with the Secretary General, Dr. Njogou Bah; Minister of Finance, Mr. Abdou Kolley; Minister of Economic Planning and Industrial Development, Mr. Mambury Njie; and Governor of the Central Bank of The Gambia (CBG), Mr. Momodou Bamba Saho, as well other senior members of government and representatives of the private sector, development partners, and civil society.
“The Gambia continues to face a heavy debt burden. Interest on debt consumes about 20 percent of government revenues, mostly in interest on domestic debt. To generate fiscal savings that could be used for other spending priorities—such as a possible stepping-up of infrastructure investment under the government’s forthcoming Programme for Accelerated Growth and Employment—preparations for the 2011 budget have focused on reducing T-bill yields by minimizing government’s domestic financing needs. At the same time, strong ongoing efforts to improve budgeting procedures and public financial management would help achieve greater value-for-money from government spending. Building upon the success of the Ministry of Basic and Secondary Education, which has made excellent progress toward achieving the Millennium Development Goals, the government intends to pilot a medium-term expenditure framework in some line ministries in 2011.
“The mission welcomes the Gambian authorities’ corrective actions for the missed end-March 2010 performance criterion on the basic fiscal balance, notably by making difficult adjustments to execute a more balanced budget. Looking ahead, the mission very much encourages the authorities to continue the good performance, which should yield dividends for the budget and for the Gambian economy as a whole. On this basis, the IMF’s Executive Board could consider the completion of the seventh review of the ECF in early 2011.”
Members' quotas and voting power, and board of governors-
Major decisions require an 85% supermajority. The United States has always been the only country able to block a supermajority on its own. The following table shows the top 20 member countries in terms of voting power (2,220,817 votes in total). The 27 member states of the European Union have a combined vote of 710,786 (32.07%).
On October 23, 2010, the Ministers of Finance of G-20, governing most of the IMF member quotas, agreed to reform IMF and shift about 6% of the voting shares to major developing nations and countries with emerging markets.