IMF Flashcards
Reports by IMF
World Economic Outlook
Global Financial Stability Report
Founding member of IMF - India there or not?
Yes. India is a founding member
Objectives of IMF
Exchange rate stability
International trade for growth
Balance of Payment crisis
Highest Body of IMF
Board of Governors.
Have one Governor + One alternate governor - FM + CBG
Board of Governor delegated most of Power to?
Executive Board
Executive Board powers?
Quota approval
SDR allocation
New members
Bye laws and agreement amendments
Board of Governors advised by?
IMFC
Development Committee
What is IMFC?
Consist 24 members - FM / CBG - meet 2 / year
Advise BoG - management of international and financial system
No formal decision making powers
What is Development Committee?
Formed in 1974. Has 25 members
What are Functions of IMF?
Lend during BoP crisis Surveillance of eco and fin system Policy advise Exchange rate policy appraisal Money laundering and terrorism
Benefits to members
Information on member economic policy
opportunity to influence members policies
digital, fiscal affairs, technical assistance
BoP assistance
Condition on joining
1/4 of Quota pay in widely accepted foreign currency
IMF Quota - what?
Member has to pay on joining
Based on share in World economy
Denomination - SDR
25% cash, 75% in securities
IMF quota guides what?
Subscription
Votes
Financing it can get
IMF quota review?
Every 5 Years
align size and composition of quota to share in world economy
Top 10 IMF countries
US UK IT FR GR JP BRIC
What is SDR?
Artificial currency of IMF started in 1969 by IMF
International reserve asset
A potential claim on freely usable currency of IMF member
Value of SDR based on?
5 international currency. Dollar > Euro > Yen > Pound > Yuan
Basket composition reviewed every 5 years
Can private parties hold / use SDR?
No.
Criteria for inclusion as basis of SDR?
Largest exporters
Freely usable currency
Widely traded in exchange market
What is Bancor?
Proposed by Keynes.
As global currency
Will create tensions
What are sources for lending under IMF?
Main funding source - Quota of members
Additional - general agreement to borrow
New agreement to borrow
What are instruments under IMF for lending?
Poverty reduction and growth facility
Exogenous Shock Facility
Stand By agreements
What is Exogenous Shock Facility
LIC facing global socks
Policy support + Financial assistance
What is Poverty Reduction and Growth Facility
Low income countries
Concessional Rates
What are Stand By agreements
Non Concessional. For those in BoP crisis
EFF - can take. change in economic policy
Not take EFF - funds used well, no need further assistance
IR for IMF loans?
Except for PGRD and ESF all IR are market related
What is Washington Consensus
IMF conditionalities in exchange of loans
Devalue currency Allow FDI Privatisation Flexible labour laws Trade liberalise Foreign part in Stock exchange Currency convertibility Increase rights of foreign investors Cutting expenditure
What is Austerity?
Cutting expenditure
Social protection under IMF?
Adequate cash transfers
Works with partner institutions for social protection
What is Money Laundering
Hiding link b/w financial and physical assets generated by criminal activity and illegal origins
Can discourage investment and distort international capital flow
What is FATF
International Org estb in Paris in 1989 by Ministers of member countries
Effective implementation of legal, operative measures for ML, TF
Help govt set up AML/CFT regimes
Decision making body of FATF?
FATF Plenary
Special Data Dissemination Standard
IMF. India part of it.
Country makes committee to observe global accounting standards in govt finance
Country provides info about their data and data dissemination practice
India and IMF
IMF -> India during BoP Crisis
India -> IMF during Eurozone crisis
India contributor to IMF as participant in Financial Transaction Plan
Why need to reform IMF
Conditionalities demand reduction in social sector expenditure
What is Chiang Mai Initiative
Initiative among - ASEAN PRC (HK) JP SK
Currency Pooling arrangement
Draw from foreign exchange reserve pool launched in 2010
What is BRICS CRA?
Contingent reserve arrangement
Pool of foreign currency
each member contribute to poor
draw from it during BoP crisis
Can borrow only part of its contribution before going to IMF
Objective of BRICS CRA
Objective - protection against global liquidity pressure when national currency affecting by international financial pressure
What is G10?
Participate in general agreements to borrow
if IMF resources not enough - can be activated to meet member needs
What is G15?
at 9th Nam Belgrade 1989
Enhance growth and prosperity
Cooperation in - Trade, Investment, Technology
Expanded to 17 but same name
What is G20?
After 1999 Asian financial crisis
FMs. CBGs
1st HoState level in 2008
IMF MD + WB MD + IMFC Ch + DC Ch
What is G24?
in 1971, emerging market and developing countries
meet 2/ear before IMFC and DC meet
intenrational mgt and development of financial issues
ensure international adequate met
Member limited to 24, any of G77 can pariticipate
What is G77?
1964 at end of 1st session of UNCTAD in geneva
promote collective economic interest
Chair - 2019 Palestine
