Question

What is IMF? Discuss its various objectives and functions.

Answer 1

The International Monetary Fund (IMF) is the central institution embodying the international monetary system and promotes balanced expansion of world trade, reduced trade restrictions, stable exchange rates, minimal trade imbalances, avoidance ofcurrency devaluations, and the correction of balance-of-payment problems. The IMF's goal is to prevent and remedy international financial crises by encouraging countries to maintain sound economic policies. Because of its size, the IMF is also a forum for discussion of global economic policies.
 
The IMF is headquartered in Washington, D.C., but has offices in Paris, Tokyo, New York, and Geneva.

OBJECTIVES. ..
To promote international monetary coope­ration through a permanent institution which provides the machinery for consolation and collaboration on international monetary problems.

II. To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objective of economic policy.

III. To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.

IV. To assist in the establishment of a multila­teral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.

V. To give confidence to members by making the general resources of the Fund tempo­rarily available to them under adequate safeguards, thus providing them with the opportunity to correct maladjustments in their balance of payments, without resor­ting to measures destructive of national or international prosperity.

VI. In accordance with the above, to shorten the duration and lessen the degree of dis­equilibrium in the international balance of payments of members.

Function. ....

The principal function of the IMF is to super­vise the international monetary system. Several functions are derived from this. These are: granting of credit to member countries in the midst of temporary balance of payments deficits, survei­llance over the monetary and exchange rate policy of member countries, issuing policy recommen­dations. It is to be noted that all these functions of the IMF may be combined into three.

These are: regulatory, financial, and consultative fun­ctions



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Answer 2

IMF is the organization which provides financial system support to the world economy.

EXPLANAITON: International Monetary fund (IMF) is also known as brettenwoods institution, as it was one of the outcome of the brettonwoods conference. It was found on 27 December, 1945. The headquarters of IMF is in Washington DC. Total number of member countries are 189. The managing director of IMF is Christine Laggard. IMF provides the economic and financial system support to the world economy.  

Following are the objectives of the IMF:

1. To promote international monetary cooperation.

2. To ensure exchange rate stability.

3. To promote Balanced international trade,

4. To eliminate exchange rate control.

5.To promote multilateral trade and payments.

6. To provide economic assistance to member countries for eliminating the adverse imbalance in Balance of Payment.  

IMF has 3 functions as follows:

1. Financial- Providing short term and middle term loan facilities to the countries facing crisis in balance of payment of adverse in BOP. It is also known as guardian of good conduct in area of BOP.

2. Consultative- it provides technical support.

3. Surviellance-  It assist with the monetary or financial support.

IMF has its own currency which is Special Drawing Rights (SDR). It is also known as paper gold.