The International Monetary Fund (IMF) was created. International Monetary Fund (IMF)
International Monetary Fund- This specialized institution United Nations (), created for the purpose of developing international financial cooperation and international stability in the monetary and financial sphere. The IMF also strives to promote international trade, high employment and sustainable economic growth, and poverty reduction worldwide. The IMF is governed by and accountable to the organization's 188 member countries. Although the IMF is a specialized agency of the United Nations and participates in the work of the Economic and Social Council UN, it operates independently and has its own charter, governance structure and finances.
History of the creation of the IMF
The idea for the creation of the IMF originated at the UN conference in Bretton Woods, New Hampshire, USA, in July 1944, when the 44 countries represented at this conference set out to form the basis for economic cooperation to avoid a repeat of the competitive devaluation that was one of the main causes of the Great Depression of the 1930s, and to promote international recovery financial system after the Second World War. The IMF was officially created in 1945 by 29 founding countries, and became, along with , one of two international financial organizations established as a result of the Bretton Woods Conference. Currently, the IMF and the World Bank cooperate in a variety of areas and also regularly hold joint meetings.
IMF mission
Goals and objectives of the IMF:
- To promote the development of international monetary and financial cooperation.
- To promote the process of expansion and balanced growth of international trade.
- Promote currency stability.
- Provide assistance in creating a multilateral settlement system.
- Make resources (subject to adequate guarantees) available to Member States experiencing balance of payments difficulties.
The IMF's primary mission is to ensure the stability of the international monetary and financial system, the system of exchange rates and international settlements that allows countries (and their citizens) to transact with each other. This objective involves preventing economic and financial crises, large fluctuations in economic activity, high inflation and excessive volatility of exchange rates and financial markets. As recent financial crises have shown, countries are becoming increasingly interdependent, and difficulties in one sector can lead to difficulties in other sectors and spread to other countries. Economic and financial stability requires attention at both the national and multilateral levels. The IMF, through its surveillance, technical assistance, and lending functions, helps countries pursue sound and appropriate economic policies. The Fund's mandate was updated in 2012 to cover the full range of macroeconomic and financial sector issues that impact global stability.
Economic supervision:
Every country that joins the IMF undertakes to open its economic and financial policies to outside scrutiny. international community. In order to maintain stability and prevent crises in the international financial system, the IMF is charged with monitoring economic and financial changes in the world. This process, known as “surveillance,” occurs both globally and at the level of individual countries and regions. Surveillance in its current form was introduced under Article IV of the IMF agreement, as amended in the late 1970s following the collapse of the Bretton Woods system of fixed exchange rates. Under Article IV, each member undertakes to cooperate with the IMF and other member countries in promoting stability. The IMF, on the other hand, has the responsibility to: 1) exercise control over the international monetary system to ensure its effective functioning; 2) monitor the fulfillment by each Member State of its obligations in relation to its policies.
Through its surveillance process, which operates at both the global and country levels, the IMF reviews whether member countries' policies are consistent with the goals of sustainable and balanced global economic growth, identifies possible risks to stability, and recommends necessary policy changes. , promoting economic stability. Thus, it helps the international monetary system to fulfill its main function, which is to facilitate the exchange of goods, services and capital between countries, which contributes to sustainable economic growth.
IMF economists constantly monitor the economies of member states. They visit member states (usually once a year) to exchange views with their governments and central banks and examine whether there are risks to domestic and global stability that may require changes in countries' economic or financial policies. During their visits, IMF specialists also typically meet with other stakeholders, such as parliamentarians legislative bodies, representatives of the business community, trade unions and civil society, which helps in assessing the economic policy and direction of the country's development. Upon returning to headquarters, staff present their report to the Executive Board for consideration. The Council's views are subsequently communicated to national authorities, concluding a process known as Article IV consultation. IN last years supervision is becoming more and more transparent. Almost all Member States now agree to the publication of press releases summarizing the views of the Executive Board and staff reports and accompanying analyses. Many countries also publish a Fund staff statement at the end of an IMF mission.
The IMF also monitors trends in global economy and regional economies and analyzes the effects of member states' policies on the global economy. The key tools of multilateral surveillance are its regular publications. The global outlook is assessed in the World Economic Outlook, financial markets in the Global Financial Stability Report, and changes in government finances in the Fiscal Monitor. The IMF also publishes a number of publications on regional economic development prospects. Twice a year the IMF prepares a list current issues global economic policy, which brings together the main findings and policy recommendations from the IMF's multilateral reports and sets the future agenda for the Fund and its members.
Financial aid:
IMF financing gives the organization's members the breathing space they need to overcome balance of payments problems. The country's authorities develop economic policy programs supported by IMF financing in close cooperation with the IMF, with continued financial support conditional on effective program implementation. In response to the global economic crisis of 2008, the IMF strengthened its lending capacity and approved a major overhaul of its financial assistance mechanisms in April 2009, followed by further reforms in 2010 and 2011. The IMF's lending tools have been enhanced to provide flexible crisis prevention tools for members with strong fundamentals. economic indicators, justified economic policy and reliable institutional foundations for such policies. The IMF also doubled borrowing limits and increased lending to the world's poorest countries.
Technical assistance:
The IMF provides technical assistance and training to help member countries strengthen their capacity to design and implement effective policies, including in the areas of tax policy and administration, expenditure management, monetary and exchange rate policies, and banking and financial system supervision and management. regulation, legislative framework, and statistics.
Governance and organizational structure of the IMF:
The IMF's evolution has paralleled changes in the global economy throughout the organization's history, allowing it to maintain its leading role in the international financial system. The IMF is accountable to the governments of its member countries. Unlike, for example, General Assembly UN, in which each country has one vote, the IMF's decision-making process is designed to reflect the relative position of member states in the global economy. At the top level of its organizational structure is the Board of Governors, on which each of the IMF's member countries is represented by one governor and one deputy governor, usually from the Central Bank or the Ministry of Finance. The Board of Governors meets once a year at the IMF's Annual Meetings and World Bank. Twenty-four governors make up the International Monetary and Financial Committee (IMFC) and typically meet twice a year. The IMF's Executive Board, composed of 24 members, each representing a country or group of member countries, leads daily activities IMF at its headquarters in Washington; This work is led by the IMFC and supported by IMF staff. The current Council structure was established in 1992 following the expansion of the IMF to include former countries Soviet Union. Five executive directors are appointed by the member states with the five largest quotas (currently the United States of America, Japan, Germany, France and the United Kingdom), and 19 are elected by the remaining member states. The Managing Director of the IMF is both the Chairman of the IMF Executive Board and the IMF Chief of Staff. The Managing Director is assisted in his work by four Deputy Managing Directors. The Managing Director is appointed by the Executive Board for a renewable term of five years. The IMF's twenty-four governors and executive directors can nominate citizens of any member country of the Fund for this position.
IMF lending
One of the IMF's most important responsibilities is to provide credit to member countries facing actual or potential balance of payments difficulties. This financial assistance helps countries seeking to replenish their international reserves, stabilize their currencies, continue to pay for imports, and restore conditions for strong economic growth while taking steps to correct initial problems. Unlike development banks, the IMF does not provide loans for specific projects.
When can a country borrow funds from the IMF?
A member country may seek IMF financial assistance if it has a need (actual or potential) for balance of payments financing, that is, it cannot find sufficient financing on affordable terms to cover net international payments(for example, on imports, to pay off external debt) while maintaining sufficient reserves for the future. The IMF loan provides buffer capacity to facilitate the stabilization measures and reforms that the country must undertake to correct its balance of payments problem and restore conditions for strong economic growth.
The changing nature of IMF lending:
The volume of loans provided by the IMF has undergone significant fluctuations over time. Thus, the oil shock of the 1970s and the debt crisis of the 1980s were followed by a sharp increase in IMF loans. In the 1990s, transition in Central and Eastern Europe and crises in emerging market countries led to new surges in demand for IMF resources. Deep crises in Latin America kept demand for IMF resources high in the 2000s. IMF lending began to increase again in late 2008 after the global financial crisis.
IMF lending process:
Upon receipt of a member's request, IMF resources are typically provided under a “lending arrangement,” which, depending on the lending instrument used, may include specific policies and actions that the country agrees to undertake to address its balance of payments problem. The economic policy program underlying the arrangement is developed by the country in consultation with the IMF and, in most cases, is presented to the Fund's Executive Board in a Letter of Intent. Once the Board approves the arrangement, IMF resources are typically released in increments as the program progresses. Some arrangements provide countries with strong economic performance with one-time, immediate access to IMF financial resources and therefore do not require harmonization of policy requirements.
IMF lending instruments
In the course of its activities, the IMF has developed various credit instruments, which have been adapted to cope with the specific situations of different Member States. Low-income countries can borrow at concessional interest rates through the Extended Credit Facility (ECF), Stand-By Facility (SCF) and Rapid Credit Facility (RCF).
Non-concessional lending:
Non-concessional loans are provided primarily through stand-by arrangements (SBAs), flexible credit lines (FCLs), precautionary liquidity facilities (PLLs), and the extended lending facility (which is used primarily for medium- and longer-term needs). The IMF can also provide emergency assistance to all its members with urgent needs to resolve their balance of payments, using the Rapid Financing Instrument (RFI). All non-concessional arrangements are subject to the IMF's market-linked interest rate. This is called the “charge rate”, and for large loans (above certain limits) an additional fee is charged. The fee rate is based on the SDR interest rate, which is adjusted weekly to reflect changes in short-term rates in major international money markets. The amount a country can borrow from the IMF is known as the access limit and varies depending on the type of loan, but it is usually a multiple of the country's IMF quota. In exceptional circumstances this limit may be exceeded. The Stand-By Arrangement, Flexible Credit Line and Extended Credit Facility do not have a predetermined upper limit on access.
Stand-by loan arrangements (SBA):
From a historical perspective, the bulk of IMF non-concessional assistance is provided through the SBA. SBAs are intended to help countries overcome short-term balance of payments problems. The program's objectives are to address these problems, and disbursements are conditional on the achievement of these objectives ("conditions"). The validity period of the SBA is usually 12–24 months, the loan is repaid within 3.4–5 years from the date of actual provision. SBA loans may be provided on a precautionary basis (where countries choose not to use approved loans but retain the option to do so if the situation worsens). The SBA provides flexibility in terms of phasing, where appropriate, with a concentration of funds provided at the initial stage.
Flexible credit line (FCL):
The FCL is intended for countries with very good fundamental economic indicators, sound economic policies and successful experience implementation of policies. FCL arrangements are approved at the request of the relevant Member States for countries that meet pre-established access criteria. The validity period of the FCL is one or two years, with an interim review of eligibility after one year. Access is determined taking into account the specific situation, it is not subject to access limits, funds can be provided immediately in one payment, and not in stages. The actual disbursement of funds under the FCL is not conditional on the implementation of specific policy agreements, as is the case with the SBA, since countries eligible for the FCL have demonstrated positive results in implementing appropriate macroeconomic policies. It is possible to use the credit line at the time of its approval or consider it preventive. The repayment terms of the FCL are the same as under the SBA.
Preventive Support and Liquidity Line (LPL):
The LPL is intended for countries with strong economic fundamentals, sound economic policies and a successful track record of implementing such policies. Eligible countries may have moderate vulnerabilities and may not meet FCL eligibility standards, but they do not require the major policy adjustments typically associated with SBAs. LPL combines eligibility criteria (similar to FCL) and targeted conditions that are designed to reduce remaining vulnerabilities. The duration of the LPL arrangement is six months or one to two years. Access under six-month LPL arrangements is limited to 250 percent of quota in the normal period, but this limit may increase to 500 percent of quota in exceptional circumstances when the need to finance the balance of payments is caused by exogenous shocks, including increased stress at the regional or global level. For LPL arrangements of one to two years, annual access is set at 500 percent of the quota, and for all LPL arrangements the total can be up to 1,000 percent of the quota. A country may receive funds from a credit line or consider it as a preventive mechanism. The repayment terms of the LPL are the same as under the SBA.
Extended Credit Facility (EFF):
This mechanism was created in 1974 to help countries overcome medium- and longer-term balance of payments problems caused by widespread distortions that require fundamental economic reforms. Its use has increased significantly during the recent crisis due to the structural nature of the balance of payments problems of some member states. As a rule, the term of agreements under the EFF is longer than under the SBA; usually it does not exceed three years at the time of approval. However, a maximum period of up to four years, conditioned by the presence of balance of payments financing needs beyond the three-year period, the prolonged nature of the adjustment necessary to restore macroeconomic stability, and the existence of sufficient guarantees regarding the ability and willingness of the member state to carry out deep and consistent structural reforms. Repayment period: 4.5–10 years from the date of actual provision of funds.
Rapid Financing Instrument (RFI):
The RFI was introduced to replace the previous emergency assistance mechanisms and expand their scope. It provides rapid financial assistance with limited conditions to all member states facing acute balance of payments needs. Access under the RFI is limited to an annual limit of 50 percent of the quota and a general access limit of 100 percent of the quota. For emergency loans, the same conditions apply as for FCL, LPL and SBA, repayment terms are 3.5–5 years.
Concessional lending:
New concessional facilities for low-income countries came into force in January 2010 under the Poverty Reduction and Growth Trust (PRGT) and are part of a broader reform to make IMF financial support more flexible and appropriate. different needs of low-income countries. Access limits and standards have been approximately doubled relative to pre-crisis levels. Financing conditions have become more favorable, and the interest rate is reviewed every two years. All mechanisms are designed to support countries' own programs aimed at achieving a sustainable macroeconomic position consistent with the objective of achieving durable and long-term poverty reduction and economic growth.
The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the IMF's main medium-term support tool for low-income countries experiencing prolonged balance-of-payments difficulties. Financing under the ECF currently carries a zero interest rate, with a grace period of 5.5 years and a full repayment period of 10 years.
The Stand-By Credit Facility (SCF) is used to provide financial support to low-income countries that are experiencing short-term balance of payments difficulties. The SCF has replaced the high access component of the External Shock Financing Facility (ESF) and can be used in a wide range of circumstances, including as a precautionary measure. SCF financing currently carries a zero interest rate, with a grace period of 4 years and a full repayment period of 8 years.
The Rapid Credit Facility (RCF) provides rapid financial assistance with limited conditions and is intended for low-income countries facing urgent balance of payments needs. The introduction of the RCF streamlines IMF emergency assistance to low-income countries, and it can be used flexibly in a wide range of circumstances. Financing under the RCF is currently carried out at a zero interest rate, with a grace period of 5.5 years and a full repayment period of 10 years.
Sources of IMF financial resources
The main source of financial resources of the IMF are the quotas of the organization's member states, which generally reflect the relative position of member states in the world economy. In addition, the IMF may resort to temporary borrowing to supplement its quota resources, allowing the Fund to provide exceptional financial support to its members during a global economic crisis. Financing of concessional loans and debt relief for low-income countries is provided through separate trust funds, the funds of which come from contributions. The IMF issues international reserve assets known as special drawing rights (SDRs), which can complement member countries' official reserves. SDRs are the unit of account of the IMF. IMF member countries can voluntarily exchange SDRs for currencies among themselves.
Quota system:
Quota contributions are the IMF's most important source of financial resources. Each IMF member country is assigned a quota that generally reflects its relative size in the world economy. This parameter defines maximum size the state's contribution to the financial resources of the IMF. When a country joins the IMF, it is assigned an initial quota in the same range as the quotas of existing member countries that are generally comparable to it in terms of economic size and characteristics.
The current quota formula is a weighted average (with a weight of 50 percent), openness (30 percent), economic volatility (15 percent) and international reserves (5 percent). A member state's quota determines its financial and organizational relationship with the IMF, including its access to financing (access limit). For example, under stand-by and extended lending arrangements, a member state can borrow up to 200 percent of its quota annually and up to 600 percent on a cumulative basis. However, in exceptional cases, access sizes may be increased. After joining the IMF, a country typically contributes up to one-quarter of its quota in the form of commonly accepted foreign currencies (such as the US dollar, euro, yen or pound sterling) or SDRs. The remaining three quarters are paid in the country's national currency.
The size of quotas is reviewed at least once every five years. Any changes to quotas must be approved by a majority of 85 percent of total number votes, and a member state's quota cannot be changed without its consent. In recent years, the quota and voting rights reform program has implemented special quota increases that have strengthened the representation of high-growth economies, many of which are emerging markets, through special quota increases for 54 member states. They also expanded the voting rights and participation of low-income countries by nearly tripling the number of basic votes. As a result, the volume of IMF quota resources has increased significantly.
Gold holdings:
Gold played a leading role in the international monetary and financial system until the collapse of the Bretton Woods system of fixed exchange rates in 1973. In the subsequent period, the role of gold gradually decreased. However, it still remains an important asset in the reserve holdings of a number of countries, and the IMF is the third largest official holder of gold in the world. The IMF's gold holdings amount to approximately 90.5 million troy ounces (2,814.1 metric tons). The Fund acquired its current gold holdings through four main types of transactions:
- When the IMF was established in 1944, it was decided that 25 percent down payments the quota and subsequent quota increases will be paid in gold. These receipts were the IMF's largest source of gold.
- All payments of fees (interest on the use of IMF loans by member countries) are usually made in gold.
- A member state wishing to purchase the currency of another member state could obtain it by selling gold to the IMF. This provision was mainly used in the sale of gold to the IMF South Africa in 1970–1971.
- Member countries could also use gold to repay earlier IMF loans to them.
The IMF's articles of agreement severely limit the use of this gold. Subject to approval by a majority of 85 percent of the total voting rights of member countries, the IMF may sell gold or accept gold as payment from member countries, but the Fund is prohibited from purchasing gold or engaging in other transactions in gold.
There have been several occasions during the IMF's existence when the Fund voted to return gold to member countries or to sell part of its holdings. The reasons varied: between 1957 and 1970, the IMF sold gold several times to replenish its foreign exchange holdings. Around the same period, in order to generate income to cover operating deficits, part of the IMF's gold was sold to the United States, and the proceeds from the sale were invested in US government securities. In December 1999, the IMF Executive Board authorized up to 14 million ounces of off-market gold transactions to finance the IMF's participation in the Heavily Indebted Poor Countries Initiative. In September 2009, the IMF Executive Board approved the sale of 403.3 metric tons of gold, approximately one-eighth of the Fund's total gold holdings. Limited gold sales were conducted during 2009–2010 with strong safeguards to avoid market disruption, and all gold sales, including direct sales to interested central banks and other official holders, were made at market prices. Profits from the sale of SDR gold to the IMF, amounting to SDR 4.4 billion, were used to create an endowment fund, one component of the IMF's new revenue model, designed to put the institution's funding on a sustainable footing. Part of the proceeds from gold sales is used for concessional lending to low-income countries that meet the criteria for assistance.
IMF lending potential:
The IMF can allocate holdings received against quotas in the national currencies of countries characterized by strong financial situation, to finance lending. The IMF Executive Board selects such currencies every three months. Most of these currencies are issued by industrialized countries, but the list of currencies also included currencies from countries such as Botswana, China and India. The IMF's holdings of these currencies, along with its own holdings of SDRs, constitute the IMF's own usable resources. If necessary, the IMF may borrow funds on a temporary basis to replenish these resources.
The amount available to the IMF to immediately provide new (non-concessional) loans provides an indication of its potential for future commitments. This potential is determined by the Fund's available usable resources (including unused amounts under borrowing and note purchase agreements) and amounts available under two standing multilateral borrowing agreements, plus projected loan repayments over the coming twelve months, net of resources. , which the Fund has already promised to provide in accordance with existing loan agreements, and the prudential balance.
Loan agreements:
Borrowing agreements provide the IMF with additional resources and are the main insurance instrument in case of insufficient resources under quotas. The IMF has two standing multilateral borrowing agreements - the expanded New Arrangements to Borrow (NAB) and the General Agreements on Borrowings (GAB), under which it can currently borrow SDR 370 billion (approximately US$559 billion) . The IMF can trigger these agreements if it considers that its resources in the form of quotas may not be sufficient to meet the needs of member countries, for example in the event of a severe financial crisis.
Trust funds:
IMF financial assistance to low-income countries comes in two main forms: low-interest loans through the Poverty Reduction and Growth Trust and debt relief through the Heavily Indebted Poor Countries Initiative, the Debt Relief Initiative. multilaterally and post-disaster debt relief. These resources come from contributions from member countries and the IMF itself, rather than from quota contributions.
The Poverty Reduction and Growth Trust Fund was created to provide debt relief and subsidize loan rates under the program. The resources available for this trust fund consist of grants and deposits pledged by the IMF's 93 member countries, as well as contributions from the Fund itself. The bulk of IMF contributions come from off-market gold transactions conducted during 1999–2000.
Debt relief was provided through the MDRI-I and MDRI-II trust funds, which were established in early 2006 and financed from the IMF's own resources of SDR 1.5 billion in the Special Disbursements Account. The MDRI-I Trust Fund provided debt relief to countries with per capita incomes of US$380 per year or less (based on 2004 gross national income). The MDRI II Trust Fund provided debt relief to countries with per capita incomes above US$380 per year and was financed by SDR 1.12 billion in bilateral resources from the Poverty Reduction and Assistance Trust Fund. economic growth.
The Disaster Debt Relief Trust Fund was created in June 2010 to relieve the debt burden of countries affected by disasters and was initially financed from the IMF's own resources of SDR 280 million (equivalent to approximately US$422 million). It is expected to be replenished by future donor contributions as needed.
International currency board(IMF) was created to maintain stability in international monetary relations. Its official objectives, as set out in the IMF Charter, are cooperation in international monetary matters, assistance in stabilizing currencies, eliminating foreign exchange restrictions and creating a multilateral settlement system between countries, providing member countries with foreign exchange resources to eliminate temporary disturbances in their balance of payments. Since the beginning of the 80s. The IMF began to provide medium- and long-term loans (for 7-10 years) for “structural restructuring of the economy” to member countries carrying out radical economic and political reforms.
The IMF began its operations in March 1947 as a specialized agency of the UN. The location of the central office, Washington, has its branches and representative offices in a number of countries. The founders of the IMF were 44 countries; in 1999, its members were 182 states.
IN governing bodies votes are determined according to the size of quotas. Each country has 250 votes plus 1 vote for every 100 thousand SDR units of its quota. Decisions are made by a simple majority (at least half) of votes, and on the most important issues - by a special majority (85% of votes are of a strategic nature, and 70% of an operational nature). Since the leading Western countries have the largest number of quotas in the IMF (USA - 17.5%, Japan - 6.3, Germany - 6.1, Great Britain and France - 5.1 each, Italy - 3.3%), and in general 25 economically developed countries- 62.8%, then these countries control and direct its activities in their interests. It should be noted that the United States, as well as EU countries (30.3%) can veto key decisions of the Fund, since their adoption requires a qualified majority of votes (85%). The role of other countries in decision-making is small, given their small quotas (Russia - 3.0%, China - 3.0%, Ukraine - 0.69%).
Authorized capital The IMF is formed from contributions from member states in accordance with a quota established for each country, which is determined based on the economic potential of the country and its place in the world economy and foreign trade.
In addition to its own capital, the IMF raises borrowed funds to expand its lending activities. To replenish credit resources, the IMF uses the following “mechanisms”:
General agreement on loans;
new loan agreements;
borrowing funds from IMF member states.
In 1962, the Fund signed with 10 economically developed countries (USA, Germany, UK, Japan, France, etc.) General agreement on loans, which provided for the provision of revolving loans to the Fund. This agreement was initially concluded for 4 years, and then began to be renewed every 5 years. The credit limit was initially set at $6.5 billion CIIIA, and in 1983 increased to SDR 17 billion ($23.3 billion). In order to overcome financial emergencies, the IMF Executive Board (Directorate) expanded the Fund's borrowing capabilities by approving in 1997 New Borrowing Agreements, under which the IMF can attract up to 34 billion SDR (about 45 billion US dollars). The IMF also resorts to obtaining loans from central banks (in particular, it has received a number of loans from the national banks of Belgium, Saudi Arabia, Japan and other countries).
The Fund, in turn, provides the funds received on loan terms for a certain period with payment of a certain percentage.
The most important activity of the Fund is its credit operations. According to the Charter. The IMF provides loans to member countries to restore equilibrium in their balance of payments and stabilize exchange rates. The IMF carries out lending operations only with official bodies of member countries: treasuries, central banks, stabilization funds.
A country in need of foreign currency or SDRs purchases them from the Fund in exchange for an equivalent amount in domestic currency, which is credited to the IMF account at the central bank of that country. Upon expiration of the established loan period, the country is obliged to perform the reverse operation, i.e., buy back the national currency in the special account from the Fund and return the received foreign currency or SDR. These types of loans are given for a period of up to 3 years and less often - 5 years. For the use of loans, the IMF charges a commission fee of 0.5% of the loan amount and an interest rate for the use of the loan, the amount of which is set on the basis of market rates in effect at the relevant time (most often it is 6-8% per annum). If the national currency of a debtor country held by the IMF is purchased by any member state, this is considered as repayment of debt to the Fund.
The size of loans provided by the Fund and the possibility of obtaining them are related to the fulfillment by the borrowing country of a number of conditions that are not always acceptable to these countries.
IMF since the early 50s. began to enter into agreements with member countries standby loan agreements, or stand-by agreements. Under such an agreement, a member country has the right to receive foreign currency from the IMF in exchange for national currency at any time, but on terms agreed with the Fund.
In order to provide assistance to IMF member countries experiencing difficulties in economic development for reasons beyond their control, as well as to assist in solving extensive problems of an economic and social nature. The Fund has created a number of special mechanisms that provide funds on foreign exchange terms. These include:
Compensatory and emergency financing mechanism, funds of which are allocated in connection with natural disasters that have befallen the country, unforeseen changes in world prices and other reasons;
Mechanism for financing buffer (reserve) stocks of raw materials created in accordance with international agreements;
External Debt Reduction and Service Facility, which provides funds to developing countries facing external debt crises;
A structural change support mechanism that focuses on countries transitioning to a market economy through radical economic and political reforms.
In addition to these currently functioning mechanisms, the IMF created temporary special funds that were designed to help overcome crisis currency situations that arose for various reasons (for example, an oil fund - to cover additional expenses due to a significant increase in prices for oil and petroleum products; a trust fund - to provide assistance to the poorest countries using proceeds from the sale of gold from the IMF reserves, etc.).
Russia became a member of the IMF in 1992. In terms of the size of the allocated quota (SDR 4.3 billion, or 3%) and the number of votes (43.4 thousand, or 2.9%), it took 9th place. Over the past years, Russia has received various types of loans from the Fund (reserve loans - stand-by, to support structural adjustment, etc.). In March 1996, the IMF Board of Governors approved the provision of an extended loan to Russia in the amount of $10.2 billion, which has already been used for the most part, including to repay the Fund's debt on previously provided loans. The total amount of Russia's debt to the Fund as of January 1, 1999 was $19.7 billion.
The World Bank Group includes the International Bank for Reconstruction and Development (IBRD) and its three affiliates - the International Development Association (MAP), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
Headed by a single leadership, each of these institutions independently, at the expense of its own funds and on various conditions, finances investment projects and promotes the implementation of economic development programs in a number of countries.
The International Monetary Fund (IMF) was established simultaneously with the World Bank at a conference of economists from central banks and other government officials of the major trading powers at Bretton Woods (USA) in July 1944. The governments of 29 countries signed the IMF Agreement on December 27, 1945. The foundation began its activities on March 1, 1947. Has the status of a UN specialized agency.
The organization was created to restore international trade and create a stable global monetary system. The first country to receive IMF assistance on May 8, 1947, was France - it was allocated $25 million to stabilize the financial system that suffered during the German occupation.
Currently, the main tasks of the fund are coordinating the monetary and financial policies of member countries, providing them with short-term loans to settle balances of payments and maintain exchange rates.
IMF played important role in maintaining the functioning of the Bretton Woods agreements, which consisted of a fixed price for gold and fixed exchange rates to the dollar (freely exchangeable for gold). In the first decades, the IMF most often issued loans to European countries to maintain a trade balance with the United States: Great Britain, France, Germany and other countries had to buy the dollar at a greatly inflated price due to its peg to gold (backing the dollar with gold for 25 years after the end of World War II war decreased from 55 to 22%). In particular, in 1966, the UK received $4.3 billion to prevent the devaluation of the pound sterling, but on November 18, 1967, the British currency still depreciated by 14.3%, from $2.8 to $2.4 per pound.
In 1971, the United States, due to growing military costs, abolished the free exchange of dollars for gold for foreign governments: the Bretton Woods system ceased to exist. It was replaced by a new principle based on free trade in currency (the Jamaican Monetary System). After this, Western Europe no longer had to buy the dollar, which was overvalued relative to gold, and resort to the help of the IMF to correct the trade balance. In this situation, the IMF switched to issuing loans to developing countries. The reasons were the crises of oil importers after the crises of 1973 and 1979, subsequent crises of the world economy and the transition to a market economy of the former socialist countries.
Beginning in the 1970s, the IMF began to actively put forward demands on borrowing countries to carry out structural economic reforms (the very possibility of making demands was introduced back in 1952). Among the typical conditions for the allocation of loans was a reduction in government funding Agriculture and industry, removal of barriers to imports, privatization of enterprises. IMF experts stated that these reforms would help states build an effective market economy, but the UN Conference on Trade and Development, as well as many experts, pointed out that the fund’s actions only worsened the situation of states, in particular, leading to a significant decrease in food production and hunger. For a long time, Argentina was considered a model for the effective implementation of IMF recommendations, which began borrowing money from the fund in 1985, but in 2001 the state’s economic policy led to a default and a protracted crisis.
The main sources of financial resources of the IMF are quotas from member states of the organization. For domestic payments, the IMF has been issuing a global reserve payment unit known as special drawing rights (SDR) since 1967. It has a non-cash form, is used to regulate the balance of payments and can be exchanged for currency within the organization. The main source of financing for the IMF is the quotas of member countries, which are transferred upon joining the organization and can subsequently be increased. The total resource of quotas is 238 billion SDR, or about $368 billion, of which Russia’s share is 5.95 billion SDR (about $9.2 billion), or 2.5% of the total volume of quotas. The largest share belongs to the United States - 42.12 billion SDR (about $65.2 billion), or 17.69% of the total quotas.
In 2010, G20 leaders agreed in Seoul to revise quotas in favor of developing countries. As a result of the 14th revision of quotas, their total size will be doubled, from 238.4 billion SDR to 476.8 billion SDR, in addition, more than 6% of quotas will be redistributed from developed countries to developing ones. So far, this revision of quotas has not been ratified by the United States.
The highest body of the IMF is the Board of Governors, which consists of two people (the governor and his deputy) from each member country of the organization. Typically these positions are held by finance ministers or central bankers. Traditionally, the Board of Governors meets once a year. Currently, the representative of the Russian Federation on the council is the head of the Russian Ministry of Finance, Anton Siluanov.
Administrative functions and day-to-day management are entrusted to the Managing Director (since 2011, this post has been held by Christine Lagarde) and the Board of Executive Directors, which consists of 24 people (eight directors are appointed from the USA, Germany, Japan, Great Britain, France, China, Saudi Arabia and RF, the rest represent groups of states (for example, Northern Europe, north and south South America etc.). Each director has a certain number of votes depending on the size of the country's economy and its quota in the IMF. The Council is re-elected every 2 years. The Russian Federation has 2.39% of the total votes, the United States has the most votes - 16.75%.
As of August 2014, the largest IMF borrowers are Greece (received loans worth about $4.5 billion), Ukraine (about $3 billion) and Portugal (about $2.3 billion). In addition, loans to support the stability of the national economy were approved for Mexico, Poland, Colombia and Morocco. At the same time, Ireland has the largest debt to the IMF, about $30 billion.
Russia in last time received money from the IMF in 1999. In total, from 1992 to 1999, the IMF allocated $26.992 billion to Russia. The full repayment of Russia's debt to the IMF was announced on February 1, 2005.
The number of IMF employees is about 2.6 thousand in 142 countries.
The organization's headquarters are located in Washington, DC.
The International Monetary Fund (IMF) is a special agency of the United Nations established by 184 countries. The IMF was created on December 27, 1945 after the signing of an agreement by 28 countries developed at the UN Monetary and Financial Conference in Bretton Woods on July 22, 1944. In 1947 the foundation began its activities. The headquarters of the IMF is located in Washington, USA.
The IMF is an international organization that unites 184 countries. The Fund was created to ensure international cooperation in the monetary field and maintain the stability of exchange rates; supporting economic development and employment levels in countries around the world; and providing additional in cash economy of a particular state in short term. Since the IMF was created, its objectives have not changed, but its functions - which include monitoring the state of the economy, financial and technical assistance to countries - have evolved significantly to meet the changing goals of its member countries as actors in the global economy.
Growth of IMF membership, 1945 - 2003
(number of countries)
The objectives of the International Monetary Fund are:
- Ensure international cooperation in the monetary field through a network of permanent institutions that advise and take part in solving many financial problems.
- To promote the development and balanced growth of international trade, and to contribute to the promotion and maintenance of high levels of employment and real incomes and the development of productive forces in all member countries of the Fund, as the primary objects of economic policy.
- Ensure the stability of exchange rates, maintain correct exchange agreements between participants and avoid various discrimination in this area.
- Help build a multilateral payments system for ongoing transactions between member countries and to remove restrictions on currency exchanges that impede the growth of international trade.
- Provide support to fund member states by providing funds from the fund to solve temporary problems in the economy.
- In accordance with the above, shorten the duration and reduce the degree of imbalance in the international balances of the accounts of its members.
The role of the International Monetary Fund
The IMF helps countries develop their economies and implement individual economic projects through three main functions - lending, technical assistance and surveillance.
Providing loans. The IMF provides financial assistance to low-income countries experiencing balance of payments problems under the Poverty Reduction and Growth Facility (PRGF) programs and, for temporary needs arising as a result external influences, by the Exogenous Shocks Facility (ESF) program. The interest rate on PRGF and ESF is concessional (0.5 percent only) and loans are repaid over a period of 10 years.
Other functions of the IMF:
- promoting international cooperation in monetary policy
- expansion of world trade
- stabilization of monetary exchange rates
- consulting debtor countries
- development of international financial statistics standards
- collection and publication of international financial statistics
Basic lending mechanisms
1. Reserve share. The first portion of foreign currency that a member country can purchase from the IMF within 25% of the quota was called “golden” before the Jamaica Agreement, and since 1978 - the reserve share (Reserve Tranche). The reserve share is defined as the excess of the quota of a member country over the amount in the account of the National Currency Fund of that country. If the IMF uses part of a member country's national currency to provide credit to other countries, that country's reserve share increases accordingly. The outstanding amount of loans provided by a member country to the Fund under the loan agreements of the NHS and NHS constitutes its credit position. The reserve share and the lending position together constitute the “reserve position” of an IMF member country.
2. Credit shares. Funds in foreign currency that can be acquired by a member country in excess of the reserve share (if fully used, the IMF's holdings in the country's currency reach 100% of the quota) are divided into four credit shares, or tranches (Credit Tranches), each constituting 25% of the quota . Member countries' access to IMF credit resources within the framework of credit shares is limited: the amount of a country's currency in the IMF's assets cannot exceed 200% of its quota (including 75% of the quota contributed by subscription). Thus, the maximum amount of credit that a country can receive from the Fund as a result of using reserve and credit shares is 125% of its quota. However, the charter gives the IMF the right to suspend this restriction. On this basis, the Fund's resources are in many cases used in amounts exceeding the limit fixed in the charter. Therefore, the concept of “Upper Credit Tranches” began to mean not only 75% of the quota, as in early period activities of the IMF, and amounts exceeding the first credit share.
3. Stand-by Arrangements (since 1952) provide the member country with a guarantee that, within a certain amount and during the term of the agreement, subject to the specified conditions, the country can freely receive foreign currency from the IMF in exchange for national currency. This practice of providing loans is the opening of a line of credit. While the use of the first credit share can be carried out in the form of an outright purchase of foreign currency after the Fund approves its request, the allocation of funds for the account of the upper credit shares is usually carried out through arrangements with member countries for reserve credits. From the 50s to the mid-70s, agreements on stand-by loans had a term of up to a year, since 1977 - up to 18 months and even up to 3 years due to the increase in balance of payments deficits.
4. The Extended Fund Facility (since 1974) supplemented the reserve and credit shares. It is intended to provide loans for longer periods and in larger amounts in relation to quotas than within the framework of conventional loan shares. The basis for a country's request to the IMF for a loan under expanded lending is a serious imbalance in the balance of payments caused by adverse structural changes in production, trade or prices. Extended loans are usually provided for three years, if necessary - up to four years, in certain portions (tranches) at specified intervals - once every six months, quarterly or (in some cases) monthly. The main purpose of stand-by loans and extended loans is to assist IMF member countries in implementing macroeconomic stabilization programs or structural reforms. The Fund requires the borrowing country to fulfill certain conditions, and the degree of their severity increases as they move from one loan share to another. Certain conditions must be met before receiving a loan. The obligations of the borrowing country, providing for the implementation of relevant financial and economic activities, are recorded in the “Letter of intent” or Memorandum of economic and financial policy (Memorandum of Economic and Financial Policies) sent to the IMF. The progress in fulfilling obligations by the country receiving the loan is monitored by periodically assessing the special performance criteria provided for in the agreement. These criteria can be either quantitative, relating to certain macroeconomic indicators, or structural, reflecting institutional changes. If the IMF considers that a country is using a loan in conflict with the goals of the Fund and is not fulfilling its obligations, it may limit its lending and refuse to provide the next tranche. Thus, this mechanism allows the IMF to exert economic pressure on borrowing countries.
Unlike the World Bank, the IMF's activities focus on relatively short-term macroeconomic crises. The World Bank provides loans only to poor countries, the IMF can provide loans to any of its member countries that lack foreign exchange to cover short-term financial obligations.
Structure of governing bodies
The highest governing body of the IMF is the Board of Governors, in which each member country is represented by a governor and his deputy. These are usually finance ministers or central bankers. The Council is responsible for deciding key issues activities of the Fund: amendments to the Articles of Agreement, admission and exclusion of member countries, determination and revision of their shares in the capital, election of executive directors. Governors usually meet in session once a year, but may hold meetings and vote by mail at any time.
The authorized capital is about 217 billion SDR (as of January 2008, 1 SDR was equal to approximately 1.5 US dollars). It is formed by contributions from member states, each of which usually pays approximately 25% of its quota in SDRs or in the currencies of other members, and the remaining 75% in its own national currency. Based on the size of quotas, votes are distributed among member countries in the governing bodies of the IMF.
The Executive Board, which sets policy and is responsible for most decisions, consists of 24 executive directors. Directors are appointed by the eight countries with the largest quotas in the Fund - the United States, Japan, Germany, France, the United Kingdom, China, Russia and Saudi Arabia. The remaining 176 countries are organized into 16 groups, each of which elects an executive director. An example of such a group of countries is the unification of the countries of the former Central Asian republics of the USSR under the leadership of Switzerland, which was called Helvetistan. Often groups are formed by countries with similar interests and usually from the same region, such as French-speaking countries in Africa.
The largest number of votes in the IMF (as of June 16, 2006) are: USA - 17.08% (16.407% - 2011); Germany - 5.99%; Japan - 6.13% (6.46% - 2011); Great Britain - 4.95%; France - 4.95%; Saudi Arabia - 3.22%; China - 2.94% (6.394% - 2011); Russia - 2.74%. The share of 15 EU member countries is 30.3%, 29 member countries of the Organization for Economic Cooperation and Development have a combined 60.35% of votes in the IMF. The share of other countries, making up over 84% of the Fund's membership, accounts for only 39.65%.
The IMF operates on the principle of a “weighted” number of votes: the ability of member countries to influence the Fund’s activities through voting is determined by their share in its capital. Each state has 250 “basic” votes, regardless of the size of its contribution to the capital, and an additional one vote for every 100 thousand SDR of the amount of this contribution. If a country bought (sold) SDRs received during the initial issue of SDRs, the number of its votes increases (decreases) by 1 for every 400 thousand purchased (sold) SDRs. This adjustment is made by no more than 1/4 of the number of votes received for the country's contribution to the capital of the Fund. This arrangement ensures a decisive majority of votes for the leading states.
Decisions in the Board of Governors are usually made by a simple majority (at least half) of the votes, and on important issues of an operational or strategic nature - by a “special majority” (70 or 85% of the votes of member countries, respectively). Despite some reduction specific gravity US and EU votes, they can still veto key decisions of the Fund, the adoption of which requires a maximum majority (85%). This means that the United States, together with leading Western countries, has the opportunity to exercise control over the decision-making process in the IMF and direct its activities based on their interests. With coordinated action, developing countries are also able to prevent decisions that do not suit them. However, achieving consistency a large number heterogeneous countries is difficult. At the Fund's April 2004 meeting, the intention was expressed to "enhance the ability of developing countries and countries with economies in transition to participate more effectively in the decision-making machinery of the IMF."
Significant role in organizational structure The IMF plays the International Monetary and Financial Committee (IMFC). From 1974 until September 1999, its predecessor was the Interim Committee on the International Monetary System. It consists of 24 IMF governors, including from Russia, and meets twice a year. This committee is an advisory body of the Board of Governors and has no power to make policy decisions. However, he does important functions: directs the activities of the Executive Council; develops strategic decisions related to the functioning of the global monetary system and the activities of the IMF; submits to the Board of Governors proposals for amendments to the IMF's Articles of Agreement. A similar role is also played by the Development Committee - the Joint Ministerial Committee of the Boards of Governors of the World Bank and the Fund (Joint IMF - World Bank Development Committee).
Board of Governors (1999) The Board of Governors delegates many of its powers to the Executive Board, a directorate that is responsible for the conduct of the affairs of the IMF, which includes a wide range of political, operational and administrative issues, in particular the provision of loans to member countries and overseeing their exchange rate policies.
The IMF Executive Board elects a Managing Director for a five-year term, who heads the Fund's staff (as of March 2009 - about 2,478 people from 143 countries). Typically it represents one of European countries. Managing Director (since July 5, 2011) - Christine Lagarde (France), her first deputy is John Lipsky (USA). The head of the IMF permanent mission in Russia is Odd Per Brekk.
International Monetary Fund, IMF(International Monetary Fund, IMF) is a specialized agency of the United Nations, headquartered in Washington, USA.
At the United Nations Monetary and Financial Affairs meeting on July 22, 1944, the basis of the agreement was developed ( IMF Charter). The most significant contributions to the development of the IMF concept were made by the head of the British delegation, and Harry Dexter White- A senior official at the US Treasury Department. Final version The first 29 states signed the agreement on December 27, 1945 - the official date of the creation of the IMF. The IMF began operations on March 1, 1947, as part of Bretton Woods system. In the same year, France took out its first loan. Currently, the IMF unites 188 countries, and its structures employ 2,500 people from 133 countries.
The IMF provides short- and medium-term loans at balance of payments deficit and the states. The provision of loans is usually accompanied by a set of conditions and recommendations.
The IMF's policies and recommendations regarding developing countries have been repeatedly criticized, the essence of which is that the implementation of recommendations and conditions are ultimately not aimed at increasing the independence, stability and development of the national economy of the state, but only at tying it to international financial flows.
Objectives of the IMF International Monetary Fund
The International Monetary Fund (IMF) has the following goals:
- Promote the development of international cooperation in the monetary and financial field within the framework of a permanent institution providing a mechanism for consultation and collaboration over international monetary and financial problems.
- To promote the expansion and balanced growth of international trade and thereby contribute to the achievement and maintenance of high levels of employment and real incomes, as well as the development of the productive resources of all Member States, considering these actions as the primary objectives of economic policy.
- Maintain stability and orderliness currency regime among member states, and to avoid currencies in order to gain a competitive advantage.
- Assist in the establishment of a multilateral current account settlement system among member countries, as well as in the removal of foreign exchange restrictions that impede the growth of world trade.
- By temporarily making the general resources of the fund available to member states, subject to adequate guarantees, create confidence among them, thereby ensuring that imbalances in their balance of payments without resorting to measures that could be detrimental to welfare at the national or international level.
- In accordance with the above, reduce the duration of imbalances in the external balances of payments of member states, as well as reduce the scale of these imbalances.
Goals and role of the IMF:
Main functions of the IMF of the International Monetary Fund
- Promoting international cooperation in monetary policy;
- Expansion of world trade;
- Lending;
- Stabilization of monetary exchange rates;
- Consulting debtor countries;
- Development of standards for international financial statistics;
- Collection and publication of international financial statistics.
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