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By,

Arpita Chakraborty (6)

Sachin Chaudhary (7)

Dinesh Chaudhary (8)

Neha Chokhani (9)

Ismail Choudhary (10)

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Post war international monetary institution.

Breakdown of gold standard.

Need for international cooperation in economic, trade andBoP affairs.

US treasury, in 1943, proposed for International

Stabilisation Fund.

UK, at same time, proposed for International Clearing

Fund.

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Joint plan, in 1944, resulted in InternationalMonetary Fund.

Agreement at Brettenwoods conference, newHampshire.

Promote economic and financial cooperation.

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1945 1965 1985 2005

no. of countries

In the beginning, 44member countries

Today,187 membercountries

24-member ExecutiveBoard

Headquarters inWashington, D.C.

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Promote international monetary cooperation, exchangestability, and orderly exchange arrangements.

Foster economic growth and high levels of employment.

Facilitate expansion of balanced growth of internationaltrade.

Establish multilateral system of payments.

Lend confidence to members by making funds available.

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Reduces tariffs and other trade restrictions.

IMF looks at the performance of the economy as a whole

(macroeconomic performance)

Financial sector policies

Technical advice.

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Short term financial assistance.

Conducts research studies and publishes report.

Monitoring economic and financial developments andpolicies.

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IMF's main resources: subscriptions (quotas)

Countries pay 25 percent of their quota subscriptions inSpecial Drawing Rights (SDRs) or major currencies

IMF can call on the remainder, payable in the member's own

currency, to be made available for lending as needed

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Quotas,-Determine the amount of financing that each countrycan receive from the IMF-Are the main determinant of countries' voting power in

the IMF.-Broadly reflect members' relative size in the worldeconomy

The United States of America, the world's largest

economy, contributes most to the IMF, 17.5 percent oftotal quotas

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To provide a pool of money for short-term borrowing ofthe troubled country.

To adjust the balance-of-payment and exchange rate ofthose countries

Help to reduce imports andboost exports.

Crisis Management by IMFCrisis Management by IMF

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Mexican Currency Crisis of 1995Mexican Currency Crisis of 1995

Mexican peso pegged against Dollar.

The need to maintain exchange rate.

Mexican producer prices rises by 45%more.

1994-Trade Deficit of $17billion.

Rapid expansion in public and

private-sector debt.

Pesos dollar peg$1=3.5peso.

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The Role of IMF to control this crisisThe Role of IMF to control this crisis

Force the Mexican Government to adopt stringentfinancial policies to limit growth in money supply.

Gave $50bn to stabilize peso and payment of debt

amount. Insisted tight monetary policy

Cuts in public spending

Push the country in deep recession

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Russian Ruble CrisisRussian Ruble Crisis

From Jan.1992 to Apr.1995from $1=R125 to$1=R130.

1992inflation rate =3000%

1993inflation rate = 900%

Massive unemployment

Budget deficit-printing of money

Political opposition$1=R3926

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The Role of IMF to control this crisisThe Role of IMF to control this crisis

Feb.1996-approval of loan of $10bn to Russia

Russia to limit growth in money supply, reduce public-

sector debt, increase govt. tax revenues, and peg theruble to dollar.

An additional $11.2bn to preserve rubles stability.

Russia to raise personal loans, improve tax collections,and cut govt. spending.

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The Asian CrisisThe Asian Crisis

The Investment Boom:-

Export-led growth

Investment boom in real-estate sector.

Excess Capacity:-

Quality of investments declined

Prices plunged.

The Debt Bomb:-

Huge debt burdens.

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The Role of IMF to control this crisisThe Role of IMF to control this crisis

Thailand

On 11 August 1997, the IMF unveiled a rescue package forThailand with more than $17 billion.

The IMF approved on 20 August 1997, another bailoutpackage of $3.9 billion.

Indonesia

The IMF came forward with a rescue package of $23 billion.

South Korea

IMF Crisis

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Provides financial and technical assistance

Made up of two development institutions

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Provides low-interest loans

Loans to institutions

Reduce poverty

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Outcome of the Bretton WoodsConference held in 1944.

France to be the first recipient of World Bank

Not a bank in the common sense of the word

Based in Washington, D.C.

Expanded to group of five

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Build capacity

Infrastructure creation

Development of Financial Systems

Combating corruption

Research, Consultancy and Training

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(IBRD) has 186 member

(IDA) has 168 members

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United States (15.85%)

Japan (6.84%)

China (4.42%)

Germany (4.00%)

The United Kingdom (3.75%)

France (3.75%)

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IMF

Protect international

trade

Loan to debtornations

Quite unpopular

WORLD BANK

Promote economic

development

Loans fordevelopment projects

Popular than IMF

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