Write five functions of IMF. Do you think that functioning of IMF is really democratic?
Answers
Functions of IMF
1. The International Monetary Fund provides the machinery for the orderly adjustments of exchange rates.
2. It functions as a short term credit institution.
3. It provides a machinery for international consultations
4. It is a lending institution in foreign exchange. It grants loans for financing current transactions only and not capital transactions.
5. It acts as a reservoir of the currencies of all the member countries. Here the borrower nation can borrow the currency of other nations.
It does not function on democratic lines. It is financed by the participating countries. Each country's contribution is fixed in terms of quotas according to the relative importance of its prevailing national income and international trade. The contributed quota of a country determines its borrowing rights and voting strength.