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INTERNATIONAL MONETARY FUND (IMF)

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INTERNATIONAL MONETARY FUND (IMF)

WHY IN NEWS ?

  • The International Monetary Fund (IMF) expects GDP growth in Saudi Arabia to slow further from the currently forecast 1.9% .

ABOUT IMF:

  • The International Monetary Fund (IMF) was established on 27th December 1945 with 29 member countries with the objectives of boosting economic growth and eradicating poverty across the world.
  • Eventually, the IMF evolved to be a lender of last resort to governments of countries that had to deal with severe currency crises.

Some of the major objectives of the International Monetary Fund (IMF) are discussed below:

  • Global Monetary Cooperation: One of the major objectives of the IMF is to promote international monetary cooperation with the support of its members.
  • Financial Stability: IMF aims to ensure economic stability by removing or mitigating the risks engaged in exchange rate fluctuations.
  • Employment: The objective of the IMF is to promote employment generation through economic assistance and sustainable growth.
  • International trade: The foremost aim is to furnish a balanced international trade.
  • Poverty: Eradication of poverty across the world is one of the primary objectives of the IMF.

HOW DOES IMF HELP THE NATIONS ?

  • The IMF basically lends money, often in the form of special drawing rights (SDRs).

  • SDRs simply represent a basket of five currencies, namely the U.S. dollar, the euro, the Chinese yuan, the Japanese yen, and the British pound.
  • The IMF carries out its lending to troubled economies through a number of lending programs such as the extended credit facility, the flexible credit line, the stand­by agreement, etc.
  • Countries receiving the bailout can use the SDRs for various purposes depending on their individual circumstances.
  • Currently, both Sri Lanka and Pakistan are in urgent need for U.S. dollars to import essential items and also to pay their foreign debt.
  • So any money that they receive from the IMF is likely to go towards addressing these urgent issues.

SYLLABUS: MAINS, GS-2, INTERNATIONAL ORGANISATIONS

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