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% .
- 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