Following the Bretton Woods Conference, the year before, the IMF was formally established in 1944. It was founded, along with its sister organisation, the World Bank, to prevent economic disasters like the Great Depression. It is a United Nations specialised organisation that is governed by its 190 member countries. Any country that conducts foreign policy and adopts the organization’s statutes is eligible to join.
The International Monetary Fund (IMF) is in charge of creating and maintaining the international monetary system, which is the system that allows countries to make international payments. It establishes a standardised framework for foreign exchange transactions in order to encourage investment and build a more balanced global economy.
The IMF focuses and advises on a country’s macroeconomic policies, which affect its exchange rate, governmental budget, money, and credit management, in order to attain these aims. The IMF will assess a country’s financial sector and regulatory policies, as well as macroeconomic structural policies affecting the labour market and employment.
- Member governments pay quota subscriptions to the IMF, which are used to fund the organisation. The economic size of each member determines the size of each quota.
- The quota, in turn, determines each country’s weight inside the IMF—and thus its voting rights—as well as the amount of IMF financing it can get.
- Twenty-five percent of each country’s quota is paid in special drawing rights (SDRs), which are claims on IMF members’ freely useable currencies.
- The Bretton Woods system used to be based on a fixed exchange rate, and it was thought that there would not be enough reserves to support global economic expansion if SDRs were not introduced.
As a result, the IMF introduced SDRs in 1969, which are a type of international reserve asset. They were created to supplement the international reserves of gold and the US dollar at the time.
- Member states pledge to honoring their responsibilities to utilize and accept SDRs, which gives SDRs their worth. Each member country is given a specific number of SDRs based on the amount of money it contributes to the IMF (which is determined by the size of the country’s GDP).
DIFFERENT TYPES OF IMF LOANS
- A Stand-By Arrangement (SBA) is a loan that allows you to finance a short-term payment amount (typically 12 to 24 months, but no longer than 36 months).
- The Extended Fund Facility (EFF) is a medium-term lending facility that permits governments to borrow a predetermined amount of money over a four to ten-year period.
- To address structural concerns, financial and tax reform, as well as the privatisation of state-owned enterprises, are used.
- The Poverty Reduction and Growth Facility.
- The interest rates on loans are extremely low.
The IMF provides support through surveillance, which it conducts on an annual basis for specific nations, regions, and the global economy as a whole.
However, if a country finds itself in an economic crisis, whether due to a sudden shock to the economy or inadequate macroeconomic planning, it may request financial aid.
A financial crisis will lead to a significant depreciation of the country’s currency or a significant depletion of the country’s foreign reserves. A country is normally expected to embark on an IMF-monitored economic reform programme, also known as Structural Adjustment Programs, in exchange for IMF assistance (SAPs).
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
If you are interested in participating in the same, do let me know.
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We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.
We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge