IMF STRUCTURE ROLE IN GLOBAL AFFAIRS
IMF ROLE IN MACROECONOMIC INSTABILITY
IMF FORMATION CIRCUMSTANCES FUNCTION
IMF FUNCTION CHANGING ROLE:
International monetary fund(IMF) is an organization of 190 countries with a funding capacity of US$667 billion & one of the 2 institutions born out of the Brettonwoods conference, the other being international bank for reconstruction and development (IBRD) also known as the world bank under the Marshal plan.
Managing director (MD)/ chairwoman of the IMF – Kristalina georgieva (Bulgaria)
IMF FUNCTION CHANGING ROLE
Function: in the backdrop of Great Depression, IMF was created to help global trade by bringing about foreign exchange rate stability, since this function was not properly understood so the charter of IMF stated the following goals as being its focus.
Its stated mission is "working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
It was established at the Brettonwoods conference on 27th December, 1945
Role of IMF –
1945-1971 – Since IMF was created after World War II & therefore the impact of Great Depression hung heavy at the birth of IMF, accordingly following functions were assigned to IMF.
- To help countries adhere to the fixed exchange rate regime, where US$ was pegged to the gold, & other currencies were pegged to US$.
- To resolve short term balance of payment difficulties for member countries by fulfilling capital or other requirements.
- To avoid another depression.
IMF knowledge about the working of the global exchange rate system has altered its response to its policies towards exchange rate stabilization between 1945-1971. After 1971, introduction of floating exchange rates, the IMF role has altered appreciably.
Till the collapse of the soviet union, IMF focussed on bringing more countries in the capitalist fold adopt free trade policies & become part of GATT.
POST 1991 PHASE
With the competition from Communist Bloc gone, GATT rechristened WTO, more and more countries joining the capitalist bloc, IMF focus has changed to convince countries to open up their markets, particularly those which face macroeconomic issues.
IMF today focuses on the following,
- Helping nations fight Macroeconomic instability.
- Suggesting countries on policies to maintain stability of exchange rates.
- Lending to nations, under certain terms and conditions to overcome Macroeconomic instability.
IMF publication – World Economic Outlook
World Economic Outlook is the biannual publication of International monetary fund(IMF). The publication analyses and dwells on the global growth forecast of economies, sectors, regions and industries.