The International Monetary Fund provides loans for a period of time. Main functions of the International Monetary Fund
The International Monetary Fund is the most influential international organization regulating international macroeconomics.
Initially, the Fund lent primarily Western countries. In the mid-70s. industrialized and developing countries received from him approximately equal amounts, and since the 80s, the IMF has switched almost entirely to lending to the latter.
The IMF monitors and controls compliance by member countries with its Charter, which sets out the basic structural principles of the world monetary system.
No other international organization has been so harshly criticized by developing countries as the IMF. The Foundation provides strong impact on socio-economic processes in these regions, especially in conditions of the debt crisis. However, without the Fund's active intervention in the debt crisis, its consequences for developing countries and the global credit system would have been much more serious.
The first part of this test presents the main activities and goals of the international currency board, also the procedure for joining and participating in the IMF. The second part reveals the structure and functions of the IMF. The third part discusses the features credit policy IMF, main lending mechanisms for participating countries.
At the end of the work, conclusions are drawn.
1. Main activities and tasks of the International Monetary Fund
International Monetary Fund, IMF (InternationalMonetaryFund,IMF) - an intergovernmental organization designed to regulate monetary relations between member states and provide them with financial assistance in case of currency difficulties caused by balance of payments deficits by providing short- and medium-term loans in foreign currency. The Fund, a specialized agency of the UN, practically serves as the institutional basis of the world monetary system.
The IMF was established at the UN International Monetary and Financial Conference, held from July 1 to July 22, 1944 in Bretton Woods (USA, New Hampshire). The conference adopted the Articles of Agreement for the IMF, which is its Charter and entered into force on December 27, 1945; The Foundation began its practical activities on March 1, 1947.
In connection with the evolution of the world monetary system, the IMF Charter was revised three times:
In 1969, with the introduction of the SDR system; SDR- international payment and reserve funds issued by the IMF and used for non-cash international payments through entries in special accounts and as the IMF unit of account;
In 1976, with the creation of the Jamaican Monetary System;
In November 1992, with the inclusion of sanctions - suspension of the right to participate in voting - in relation to countries that have not repaid their debts to the Fund.
As of February 15, 1999, 182 states were members of the IMF (Appendix 1), i.e. most countries of the world. Switzerland remained outside the Fund for a long time, but in 1992 it joined the IMF. In the early 1990s, most former socialist countries, as well as China and Vietnam, became its members. Russia joined the IMF on July 1, 1992.
Each IMF member has a quota, calculated based on the relative economic and financial strength of the country. Quotas determine the size of financial contributions (subscriptions) of each member country, the number of votes assigned to it and the conditions for its access to the resources of the Fund. The quota is equal to 250 "basic" votes, which are allocated to each country participating in the Fund plus 1 vote for every 1,000,000 SDRs. A participating country is required to pay 25% of its subscription in SDRs or in the currencies of other participating countries, as determined by the IMF, according to the charter; The country pays the rest in its own currency.
As of January 31, 2003, the US share in the total resources of the IMF exceeded 18% (which gave this country the actual opportunity to veto any decision concerning the management of the Fund, the adoption of which requires at least 85% of all votes), Germany - 5.53%; Japan - 5.53%; Great Britain - 4.98%; France - 4.98%; Saudi Arabia- 3.45%; Italy - 3.09%; Russia - 2.90%. The share of 15 EU member countries is 28.8%, 29 industrialized countries (member countries of the Organization for Economic Cooperation and Development, OECD) have a combined 63.4% of votes in the IMF. The remaining countries, which make up over 84% of the Fund's members, account for only 36.6% of the votes. Subscription fees were initially paid partly in gold and partly in the national currency of the member country. For early members of the IMF, the contribution, payable in gold, was 25% of the quota, or 10% of the country's net official gold and dollar reserves as of September 12, 1946, whichever was less. The size of membership fees for countries that joined the IMF after 1948 was determined individually. In 1978, after gold ceased to play any role in the operations of the IMF, the process of gradually getting rid of gold began for the Fund. Currently, 25% of member countries' contributions are paid in freely convertible currency, the remaining 75% is still in national currency. The contribution, payable in local currency, can be made in the form of interest-free bonds of the government concerned, which the IMF can call in cash if necessary. As of January 1, 2004, membership fees, which make up the total amount of quotas in the IMF, reached SDR 145.4 billion, or almost $215 billion at current exchange rates.
Initially, quotas for IMF member countries were determined, but not directly, according to the Bretton Woods formula. The main variables of this formula were such indicators as annual imports and exports, gold reserves and dollar balances, and national income. These indicators served as the basis for calculating quotas until the 60s. In 1963, the Bretton Woods formula was revised and new formulas were added.
Taken together, they were used as aids in determining the initial quotas of new members and increasing the quotas of old members. These formulas combine the economic indicators described above, as well as current income, current expenses, and indicators related to exports and imports.
In the early eighties, the IMF simplified quota calculation procedures and improved the economic data used in the formulas.
When a country is about to become a member of the IMF, the fund staff calculates a quota for it and compares the result with the quotas of countries already in the Fund with similar economic characteristics. The resulting quota value is discussed by the Membership Committee of the Executive Council. Once a country intending to join the Fund agrees to the terms of the membership agreement, the Executive Council (in in full force) prepares a resolution for the Board of Governors. Once all formal steps are completed, the country represented is invited to Washington to sign the Articles of Agreement.
The goals of the International Monetary Fund include the following:
Promoting international monetary cooperation through consultation and interaction on currency issues;
Promoting the expansion and balanced growth of international trade and, accordingly, the growth of employment and economic improvement of member countries;
Ensuring the functioning of the international monetary system by harmonizing and coordinating monetary policy and maintaining exchange rates and convertibility of the currencies of member countries; ensure orderly relations in the monetary field between member countries;
Determination of parities and exchange rates; prevent competitive currencies;
Assisting in the establishment of a multilateral system of payments for current transactions between member countries and in the elimination of foreign exchange restrictions;
Providing assistance to member countries by providing loans and credits in foreign currencies to settle balances of payments and stabilize exchange rates;
Reducing the duration and reducing the degree of imbalance in the international balances of payments of member countries;
Providing advisory assistance on financial and monetary issues to member countries;
Monitoring compliance by member countries with the code of conduct in international monetary relations.
2. Structure and functions of the IMF
Management at the IMF is carried out in accordance with the Articles of Agreement. The management structure of the IMF includes the Board of Governors, the Interim Committee, the Development Committee, the Executive Council, the IMF Committee on Balance of Payments Statistics, and the Manager (Managing Director).
Board of Governors - The highest governing body of the IMF, in which each member country is represented by a governor and a deputy governor, appointed for five years. These are usually finance ministers or central bankers. The Board of Governors usually meets in session once a year, but may meet or pass resolutions by postal vote or more frequently. The Council is responsible for resolving key issues of the Fund’s activities, such as amending the Articles of Agreement, admitting and expelling member countries, determining and revising the size of their shares in the capital, and electing executive directors. Decisions in the Board of Governors are usually made by a simple majority (at least half) of the votes, and on the most important issues of an operational or strategic nature - by a “special majority” (70% or 85% of the votes of member countries, respectively). The Board of Governors may delegate any of its functions to the Executive Board.
Interim Committee implements decisions of the Executive Council. Consists of 24 IMF governors, ministers, or other officials of comparable rank. The Temporary Committee meets twice a year and reports to the Board of Governors on the management and functioning of the international monetary system, and also makes proposals for changes to the Articles of Agreement.
Development Committee just as the Interim Committee consists of 24 IMF Governors, ministers, or other officials of comparable rank, makes recommendations and reports to the IMF Board of Governors. The Development Committee meets jointly with the Interim Committee to prepare reports and provide advice on all aspects of the transfer of real resources.
The Board of Governors delegates most of its powers Executive Council, i.e. directorate, which is responsible for the conduct of the affairs of the IMF, which includes a wide range of policy, operational and administrative issues, in particular the provision of loans to member countries and the supervision of their exchange rate policies. The Executive Board resides permanently at the Foundation's headquarters in Washington and typically meets three times a week. The Executive Council is responsible for a wide range of administrative and operational issues, and also deals with issues related to the Fund's policies in relation to member countries. Since 1992, the number of executive directors has been increased to 24. Five of them were appointed, according to the charter, by the USA, Germany, Japan, Great Britain and France, i.e. the five countries that have the largest quotas in IMF capital; 3 - formally elected, but each representing one country - Saudi Arabia, Russia and China; 16 - elected from the remaining member countries, divided into a corresponding number of groups, formed taking into account the principle of geographical representation or on the basis of common interests. Appointments and elections of executive directors are held every two years. The director has the number of votes that the directors who elected him collectively enjoy. In most cases, decisions in the Executive Council are made not by formal voting, but by first reaching a consensus of its members.
IMF Committee on Balance of Payments Statistics, which includes representatives from industrialized and developing countries, develops recommendations for the wider use of statistics in the compilation of balances of payments, coordinates a basic statistical survey of portfolio investment, and conducts studies on the recording of flows associated with derivative funds.
Manager (director - managing director). Elected by the Executive Board, the IMF Governor chairs the Executive Board and is the organization's chief of staff. Under the direction of the Executive Board, the Governor is responsible for the day-to-day operations of the IMF. The manager is appointed for five years and may be re-elected for a further term. The Managing Director presides over the Directorate (without voting rights, except in cases where the votes are equally divided) and heads the administrative apparatus of the fund.
The functions of the managing director include managing day-to-day affairs and appointing officials IMF: its deputy, secretary, treasurer, heads of departments, general counsel of the legal department, heads of administrative services and fund headquarters.
The IMF's activities are based on a monetary approach to regulating economic activity, which is achieved through the organization performing the following main functions:
Supervision - function of the IMF, which provides for its right to monitor the policies of member countries in the field of setting exchange rates and related macroeconomic policies. Each country is required to provide the IMF, upon request, with information necessary for the supervision of its economic policies. It usually consists of detailed information on the real monetary, fiscal and external sectors, as well as on government structural policies (privatization, labor market, environment). Main goal supervision is to promptly identify potentially dangerous macroeconomic imbalances that could affect the stability of exchange rates, and, using the best international experience, provide the country's government with recommendations for correcting them.
Financial assistance- the use of IMF financial resources by member countries that are experiencing difficulties in financing the balance of payments and have submitted to the IMF a reform program showing the government’s intentions to overcome these difficulties. The IMF's financial resources consist of its own resources (each country's contribution to the IMF's authorized capital in accordance with the quota), interest income for the use of IMF resources, as well as a number of borrowed funds. An IMF loan represents the purchase of foreign currency for national currency; loan repayment - reverse exchange. IMF loans are issued in shares ( in tranches). The use of IMF financial resources provides for their allocation in parts as the country implements the economic reform program agreed with the IMF. Loan tranches (starting from the second) can be received only if the criteria established in this program are met. This property of IMF tranches is called conditionality of financing. All types of access to IMF financial resources are based on countries' fulfillment of certain conditions, which are developed jointly by IMF experts and the country's government as part of an economic reform program aimed at overcoming balance of payments difficulties.
Technical assistance - IMF assistance to member countries in the field of monetary, exchange rate policy and banking supervision, budget and tax policy, statistics, development of financial and economic legislation and personnel training. Technical assistance is provided through sending missions to central banks and ministries of finance and statistical bodies of countries that have requested such assistance, sending experts to these bodies for 2-3 years, and conducting an examination of legislative documents being prepared.
Issue of Special Drawing Rights - international reserve assets created by the IMF in 1969 and periodically distributed among member countries in proportion to their IMF quotas. IN international economy SDRs, accounting for approximately 2% of world reserves, serve as 1) international reserves along with gold and foreign exchange 2) a unit of account that is used by the IMF and some other international organizations,
3) currencies that fix exchange rates in some countries,
4) denominator of a number of private financial instruments.
3. IMF lending activities
The Fund’s Charter uses two concepts to identify its lending activities:
1) transaction (transaction) - provision of foreign currency to countries from its resources: 2) operation (operation) - provision of intermediary financial and technical services using borrowed funds. The IMF carries out lending operations only with official bodies - treasuries, central banks , stabilization funds.
There are different types of loans to cover the balance of payments deficit and to support the structural adjustment of economic policy with T wound members.
In practice, the Fund receives loan requests primarily from countries with non-convertible currencies. As a result, the IMF, as a rule, provides foreign currency loans to member states as if “secured” by the corresponding amounts of non-convertible national currencies.
The IMF charges borrowing countries a one-time commission fee of 0.5% of the transaction amount and a certain charge, or interest rate, for the loans it provides, which is based on market rates. After a specified period of time, the member country is obliged to carry out the reverse operation - to buy back the national currency from the Fund , returning the funds to him SDR or foreign currencies.
Re agreements h ervnoy credit, or with O sayings " stand-by " provide the member country with a guarantee that it will be able to receive foreign currency from the IMF in exchange for national currency in accordance with the agreement at any time, provided that the country complies with the agreed conditions.
The basis for a country's request to the IMF for a loan under the Extended Credit Facility may be a serious imbalance in the balance of payments caused by structural disturbances in production, trade or the price mechanism.
In order to expand its credit h opportunities, the IMF practices the creation of special funds (eng. faci l ity - device, mechanism, fund). They differ in the purposes, conditions and cost of the loan.
1. Compensatory and Contingency Loan Fund intended for lending to IMF member countries whose balance of payments deficit is due to external factors beyond their control. These include: natural disasters, an unexpected drop in world prices, industrial decline and the introduction of protectionist restrictions in importing countries, the emergence of substitute goods, etc.
2. Created in June 1969 Buffer (Reserve) Stock Lending Fund to assist countries participating in the creation of such commodity stockpiles in accordance with international agreements if this worsens their balance of payments.
3. Operating since 1989 Fund for financial support of operations to reduce and service external debt. This is explained by the active role of the IMF in resolving the debt crisis of developing countries in the 80s.
4. In April 1993, the IMF established Structural Change Support Fund. This fund is focused on countries transitioning to a market economy through radical economic and political reforms.
In addition to the currently functioning four special funds, the IMF periodically creates temporary credit funds in order to solve acute problems of international monetary relations. To form them, borrowed funds are attracted from various external official sources. Temporary special funds include:
1) Oil fund in the amount of 6.9 billion. SDR, or 8 billion dollars (1974-1976). provided loans to IMF member countries to cover additional costs caused by the increase in the cost of imports of oil and petroleum products. The resources necessary for this were lent primarily by oil exporting countries. Developing countries quantitatively predominated among recipients of loans, but their share was small (1/3) compared to developed countries. The conditions for providing loans from the oil fund were strict: relatively high interest rates (at least 7.2% per annum); mandatory implementation of IMF recommendations when implementing national energy and monetary policy. As a result, the access of developing countries to the resources of the oil fund was limited: due to its cre ditov they covered only 1/3 of the additional costs of importing increased oil prices;
2) Trust fund- in the amount of 4 billion. SDR, or 4.9 billion dollars (1976-1981); created mainly from profits from the sale at auctions of part of the IMF's gold reserves. The recipients of loans from this fund were the least developed countries. Us l The benefits of these loans were relatively preferential: the borrowing countries did not pay And whether the IMF has the equivalent of the funds received in national currency, the interest rate is low 0.5%, the loan term is 10 years. These conditions are at their greatest n They met the requirements of developing countries. 55 countries received SDR 3 billion from the trust fund. The rest was transferred to developing countries in proportion to their quotas.
3) Replenish the fund T individual lending or foundation Witteveen- named after the Managing Director of the IMF; duration 1979-1984 The purpose of this fund is to provide, through borrowed funds, additional loans with T wounds, is n those experiencing particularly severe and protracted balance of payments crises and having exhausted the limits of conventional IMF lending. The resources of the Witteveen Fund (SDR 7.8 billion, over $10 billion) were formed through loans 13 pages A n-members of the IMF, as well as the Swiss National Bank. Credit T 26 countries received funds from this fund.
4) IMF Extended Access Fund; successor to the additional lending fund, operated in 1981-1992. The purpose of the fund is to provide additional loans to member countries whose balance of payments imbalances are disproportionately large compared to the size of their quotas. This fund was used in cases where the country needed funds for large sizes than it could obtain from the IMF under the four lending shares and the extended lending system, and for a longer period to implement corrective economic measures with a longer loan repayment period. Is T the source of the fund's resources were own funds The IMF, attracted in the form of subscriptions, and borrowings from other countries. Due to the increase in quota T member countries of the IMF, this fund ceased its activities in November 1992;
5) Background d structural n restructuring(since March 1986): n provides concessional loans to the poorest developing countries , experiencing a chronic balance of payments crisis in order to implement medium-term macroeconomic and structural adjustment programs. As of September 1993, 36 countries (out of 61 eligible countries) had received these concessional loans amounting to $1.5 billion. SDR, or about 2.1 billion dollars. Loan terms: 0.5% per annum: repayment within 10 years; t rational period up to 5"/2 years. Loan limit - up to 50% of the quota. Source of resources (SDR 2.7 billion) - repayment of loans provided by the trust fund;
6) Expanded Structural Adjustment Fund; since December 1987, it has been providing loans from both unused resources of the structural adjustment fund and special loans and donations (SDR 6 billion). In terms of its goals and functioning mechanism, this fund is the successor to the structural adjustment fund. In addition to the 61 countries, 11 more countries, including Albania and Mongolia, were granted the right to receive loans from this fund in April 1992. 29 countries had used this right by September 1993 in the amount of SDR 3.2 billion (actually 2.4 billion . SDR.) . A member country has the opportunity to receive these loans for a period of 3 years up to 190% of the quota, sometimes in exceptional circumstances up to 255% of the quota. Initially, the deadline for concluding loan agreements was set to November 1990; it was subsequently extended several times (until February 28, 1994). At the end of 1993, a new expanded structural adjustment fund was formed - the successor to the previous one. The volume of the new fund is SDR 5 billion (about $7 billion) to provide preferential loans for a period of three years and SDR 2 billion (about $3 billion) to subsidize interest rates on these loans. By May 1994, 43 countries had agreed to participate in the formation of this fund. The economic restructuring programs that will be implemented with the assistance of the new fund will pay more attention to social protection of the population and improving the structure of government spending. The new expanded structural adjustment fund is valid until the end of 1996, and funds under the concluded agreements will be provided to borrowing countries until the end of 1999.
The formation of additional special funds within the IMF by borrowing resources from other member countries is one of the manifestations of the process of adapting the system of interstate lending and currency regulation to the changing conditions of the world economy. The IMF acts as an intermediary in the redistribution of loan capital from more prosperous creditor countries to countries , those in need of loans. Simultaneously , exerting a forceful influence on economic policy borrowing countries. He acts as a guarantor of the return of these funds.
Conclusion
Over the course of its existence, the IMF has become a truly universal organization , has achieved wide recognition as the main supranational body regulating international monetary relations, an authoritative center for international lending, a coordinator of interstate credit flows and a guarantor of solvency borrowing countries. At the same time, it begins to play an important role in the implementation of the decisions of the “seven” leading Western states, becomes a key link in the emerging system of regulation of the world economy, international coordination , harmonization of national macroeconomic policies. The Fund has established itself as an actively functioning global monetary institution and has accumulated extensive and useful experience.
Of course, like any international organization, the IMF is an arena not only of partnership, but also of competition between national, economic and political interests. The United States lost the ability to monopolize the Fund's policy. They are forced to coordinate their line of behavior with the main states of Western Europe and Japan.
At the same time, the influence of developing countries in Asia, Africa and Latin America, defending their interests, is increasing in the IMF. Former CMEA member countries are also beginning to actively declare themselves, especially Russia and other CIS countries. From this there is a need for a more effective mechanism for comparing, taking into account and reconciling conflicting interests within the IMF for the benefit of the entire world community, the need to improve both the institutional structures of the Fund and the policy programs it implements.
References
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Appendix 1
List of IMF member states
| Australia Azerbaijan Antigua and Barbuda Argentina Afghanistan Bahamas Bangladesh Barbados Belarus Bulgaria Bosnia and Herzegovina Botswana Brazil Burkina Faso United Kingdom Venezuela Guatemala Guinea-Bissau Germany Honduras Dominica | Dominican Republic Zimbabwe Indonesia Jordan Ireland Iceland Cape Verde Kazakhstan Cambodia Kiribati Colombia Comoros Costa Rica Ivory Coast Kyrgyzstan Liechtenstein Luxembourg Mauritius Mauritania Madagascar Macedonia Malaysia | Marshall Islands Mozambique Mongolia Netherlands Nicaragua Norway Pakistan Papua New Guinea Paraguay Portugal Republic of Korea Russian Federation Salvador San Marino Sao Tome and Principe Saudi Arabia Swaziland Saint Vincent and the Grenadines Saint Kitts and Nevis Saint Lucia Singapore Slovakia | Slovenia United States of Micronesia Solomon Islands Sierra Leone Tajikistan Tanzania Trinidad and Tobago Turkmenistan Uzbekistan Philippines Finland Croatia Central African Republic Switzerland Sri Lanka Equatorial Guinea |
Gerchikova I.G. "International economic organizations." / M.: Publishing house. JSC "Consultbanker" – 2003, p.354.
Gerchikova I.G. "International economic organizations." / M.: Publishing house. JSC "Consultbanker" – 2003, p. 358. Send a request indicating the topic right now to find out about the possibility of obtaining a consultation.
Evgeny Borodin, consultant
General information
The International Monetary Fund (IMF) is a specialized UN agency established at the world monetary and financial conference in Bretton Woods (USA, New Hampshire) in July 1944, at which its participants adopted the articles of agreement of the IMF, which serve as its charter. The foundation began its practical activities in May 1946 - it included 39 countries. The USSR took part in the Bretton Woods Conference, but due to the outbreak of the Cold War, the articles of the IMF agreement were not ratified. For the same reason, Poland, Czechoslovakia and Cuba left the IMF in the 50-60s.
During “perestroika,” the G7 made a decision: the European Union coordinates assistance to the countries of Eastern Europe, and the IMF directly coordinates assistance to the USSR (then to Russia and the CIS countries). On June 1, 1992, Russia signed the articles of agreement of the IMF, and it officially became a member of this organization.
Today, the IMF includes 185 countries, almost all UN member countries except Cuba, North Korea, Andorra, Liechtenstein, Monaco, Nauru and Tuvalu.
The goal of the IMF is to regulate the monetary and credit relations of member states and provide them with assistance in case of balance of payments deficit by providing short- and medium-term loans in foreign currency.
The highest governing body of the IMF is the Board of Governors, in which each member country is represented by a governor and his deputy. All managers meet once a year at the Annual Meetings of the IMF and the World Bank.
The IMF's policies are controlled by the International Monetary and Financial Committee (IMFC), whose 24 members are the finance ministers or central bank governors of countries and groups of countries represented on the Executive Council.
The IMF Executive Board is responsible for most decisions and consists of 24 executive directors. Russia is represented by Mozhin A.V. and Lushin A.. The eight countries with the largest quotas in the Fund - the USA, Japan, Germany, France, Great Britain, China, Russia and Saudi Arabia - appoint their directors. The remaining 176 member states are organized into 16 groups, each of which elects one Executive Director.
The Executive Board elects a managing director for a five-year term (since September 2007 - Dominique Strauss-Kahn, France).
By agreement between the countries that are the founders of the Fund, the managing director must be a representative of one of European countries, and the director of the World Bank is a US citizen.
The IMF has approximately 2,700 staff and is headquartered in Washington.. The Foundation has representative offices in more than 80 countries around the world, including in Russia.
The IMF receives income from interest and fees on loans and uses the income to cover financing costs, pay administrative expenses, and accumulate insurance balances. In 2007 financial year income was SDR 111 million below expenses. The net revenue shortfall primarily reflects a significant decline in IMF lending outstanding, from a peak of SDR 70 billion in September 2003 to SDR 7.3 billion at the end of fiscal year 2007, and due to low demand for new IMF loans as well as the early repayment of loans by some member states in recent years.
Record-breaking volumes of borrowing from the IMF - $120 billion - occurred in 1997-1999. The largest recipients of financial assistance during this period were the countries most affected by financial crises: South Korea, Indonesia, Brazil, and Russia.
Conditions for membership in the IMF and lending mechanisms
Upon joining the IMF, each member country pays a subscription fee called a “quota.” Countries pay 25% of their quota in the form of reserve assets, so-called. SDR, or the main currency (US dollar, euro, Japanese yen, pound sterling). If necessary for lending purposes, the IMF may request from a member country the balance, payable in its own currency. The quota size is reviewed every 5 years. The total amount of contributions from member countries forms the authorized capital of the IMF, which is used to provide temporary assistance to countries experiencing financial difficulties.
The quota is calculated based on data on the volume of a country's GDP, as well as on the basis of a country's existing gold and foreign exchange reserves, and determines the amount that it can borrow from the IMF and its voting rights. The total amount of quotas in the IMF is equivalent to SDR 217.4 billion. The United States has the largest quota of 37.149 billion SDRs or 371,743 (16.77%) votes, Russia has 5.945 billion SDRs or 59,704 (2.69%) votes. However, the new managing director of Strauss-Kann, who was not supported by Russia during his appointment, proposes to reduce Russia's quota to 1.7–1.8% and transfer its influence to the level of the Persian Gulf countries, Thailand and Argentina. Taken together, the United States and the countries of the European Union currently have 50% of the total quota when voting in the IMF and, in fact, can carry out any decision regardless of the opinions of other countries taken together, therefore the reduction of Russia’s quota, according to by and large, has no practical significance.
Basic mechanisms and terms of lending Credit mechanism (year of introduction)
Target Terms Step-by-step purchases and monitoring
Credit Tranches and the IMF Extended Credit Facility Stand-By Arrangements (1952) Medium-term assistance to countries experiencing short-term balance of payments difficulties. Adopting a policy to provide confidence that a member's balance of payments difficulties will be resolved within a reasonable period. Quarterly purchases (actual payments) subject to compliance with sales criteria and other conditions. IMF Extended Facility (1974) (Extended Facility Arrangements) Longer-term assistance to support member states' structural reforms to overcome long-term balance of payments difficulties. Adoption of a 3-year program that includes structural adjustments, with annual detailed policy presentation for the next 12 months. Quarterly or semi-annual purchases (actual payments), subject to compliance with sales criteria and other conditions. Supplementary Reserve Financing Facility (1997) Short-term assistance in overcoming balance of payments difficulties associated with crises of market confidence. Available only in connection with stand-by or extended lending arrangements with associated program and enhanced policy measures to restore lost market confidence. The mechanism is provided for one year with a concentration of access at the beginning of the period and two or more purchases (actual payments). Compensatory Financing Mechanism (1963) Medium-term assistance to overcome temporary export shortages or excessive grain import costs. Provided only if the deficit/surplus is beyond the control of the authorities and the member state has agreed to the conditions imposed under the upper credit tranches, or if the position of its balance of payments, in addition to the specified deficit/surplus, is satisfactory. Generally, it is actually provided for a period of at least six months in accordance with the provisions of the staggered purchase arrangement. Emergency assistance 1) In case of natural disasters (1962) 2) In post-conflict situations (1995) Assistance in overcoming balance of payments difficulties associated with the following: Natural disasters Consequences of civil unrest, political upheaval or international armed conflict Reasonable efforts to overcome balance of payments difficulties. Focus on developing institutional and administrative capacity to lay the groundwork for an upper credit tranche or PRGF arrangement. None, although post-conflict assistance may be divided into two or more purchases. Poverty Reduction and Assistance Financing Facility economic growth(PRGF) (1999) Longer-term assistance to overcome deep-rooted structural balance of payments difficulties - aimed at achieving sustainable growth that helps reduce poverty. Conclusion of 3-year PRGF arrangements. The programs supported by PRGF resources are based on the country's Poverty Reduction Strategy Paper, prepared with stakeholder participation, and incorporating macroeconomic, structural, and poverty reduction policies. Semi-annual (or in some cases quarterly) disbursement of funds based on meeting performance criteria and the results of reviews. Financing mechanism for coping with external shocks (2006) Short-term assistance to meet temporary balance of payments financing needs associated with an external shock. Adopting a 1-2 year program that includes macroeconomic stabilization to enable the member state to overcome the shock, and structural reform considered important to overcome the shock or mitigate the impact of future shocks. Semi-annual or quarterly disbursement of funds, subject to implementation criteria being met and, in most cases, review completion.
When providing financial assistance, the Fund requires the borrowing country to fulfill certain conditions regarding its currency system, foreign trade, and state budget balance, and the degree of their severity increases as the transition from one tranche to another. The obligations of the borrowing country are recorded in a Letter of Intent or Memorandum of Economic and Financial Policies sent to the IMF. Progress in fulfilling obligations is monitored through periodic evaluation. If the IMF considers that a country is using a loan in conflict with the goals of the Fund and is not fulfilling its obligations, it may limit its lending and refuse to provide the next tranche. Thus, this mechanism allows the IMF to exert economic and often political pressure on borrowing countries.
Russia's relationship with the IMF
In January 1992, the Russian Government officially applied to the IMF for financial assistance in the amount of $6 billion to create a stabilization fund. The first assistance agreement was signed by M. Camdessus and E. Gaidar at the beginning of July 1992. On August 5, the first tranche of $1 billion was provided, which was used to replenish foreign exchange reserves, make payments on external debt and intervene in the foreign exchange market. However, Russia did not receive subsequent tranches of the reserve loan in 1992. Funds ($6 billion) intended for the ruble stabilization fund were not allocated either. The IMF explained the refusal by the fact that the Russian government evaded the implementation of the stabilization program agreed upon with it, the volume of GDP decreased by 14.5%, the federal budget deficit, instead of the planned level of 5% of GDP, reached (according to the IMF methodology) 22.4%, and inflation averaged 20.5% per month.
In June 1993, the IMF offered Russia a second loan of $3 billion. within the framework of the newly created direction - “Assistance to system transformations” (System Transformation Facility - STF). Unlike others, the STF loan came with less stringent conditions and required that the borrowing country not impose trade restrictions. However, on September 19, 1993, the IMF suspended the transfer of money to the Russian Federation due to the fact that the Government was unable to contain inflation and reduce budget expenditures. In 1994, negotiations were held with the IMF delegation, as a result of which Russia received the second tranche of a $1.5 billion loan to support systemic reforms. Following the currency turmoil of the fall of 1994, which culminated in Black Tuesday (October 11, 1994), The government has set a course to suppress inflation as the main macroeconomicgoals, which prompted support from the IMF. This resulted in the provision of a reserve stabilization loan of $6.8 billion in April 1995. The package of agreements with the IMF consisted not only of the requirement to reduce inflation to 2% per month, but also the state budget deficit to 8% of GDP. Monitoring was to be carried out every month (previously it was carried out quarterly) by a special working group consisting of representatives of the Ministry of Finance, the Central Bank and IMF experts.
From the point of view of Russia's external economic indicators, 1997 was the most successful year. In 1998, the economic situation in Russia deteriorated sharply due to the fall in energy prices on world markets. As a result, the balance of payments on the current account turned from active to passive in the first half of 1998 with a deficit of $5.1 billion. In order to balance the state budget and prevent devaluation of the ruble, the Government developed an anti-crisis program and turned to the IMF for financial assistance. The agreement with the IMF provided for the loan to be provided in four tranches, but the first loan provided could no longer save the situation and on August 17, 1998, the country declared a default.
After the default, Russia did not receive financial assistance from the IMF. In 2005, the Government repaid its debt to the IMF ahead of schedule, paying $3.3 billion.
IMF loans to Russia and their conditions
| Date | Species | Amount, billion $ | Period use | Repayment terms | Terms of agreement (Russia's obligations) |
| First tranche of the reserve loan (“stand-by”) | 5 months | Maintaining the state budget deficit within certain limits (up to 5% of GDP). Control over the growth of the money supply. Inflation rate is less than 10% per month. |
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| 1993 | First tranche of loan under the Systemic Change Financing Facility | Reducing the state budget deficit by half - to 10% of GDP. Control over the growth of the money supply, but in a significantly softened version compared to the previous loan. Monthly inflation rates – no higher – 7-9% |
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| 1994 | Second tranche under the systemic change financing mechanism | One time, in full | 10 years with deferred repayment for 4.5 years. | The parameters of macroeconomic and financial stabilization are basically the same as those that were the conditions of the previous loan. Liberalization of foreign economic activity, including the elimination of non-tariff measures to regulate exports |
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| Reserve credit (“stand-by”) | 12 months | 5 years with deferred repayment for 3 years and 3 months for each individual tranche | The parameters of macroeconomic policy are significantly detailed and tightened: a reduction of the state budget deficit by almost half (from 11% of GDP in 1994 to 6%); a reduction in the volume of net credit of monetary authorities to the “expanded government” from 8% of GDP in 1994 to 3% in 1995 - reduction in inflation to an average monthly level of 1% in the second half of 1995. Termination of financing of the budget deficit through direct loans from the Central Bank. In the field of foreign economic activity, commitments were made to eliminate foreign trade benefits, the final elimination of quantitative restrictions on exports and imports, as well as restrictions on participation in foreign trade activities, to liberalize oil exports and to abolish all export duties before January 1, 1996. Conducting monthly monitoring of Russia's fulfillment of its obligations. |
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| 1996 | Agreement within the framework of the extended lending mechanism | 10,1 | 3 years | 10 years with deferred repayment for 4.5 years for each individual tranche | Continuation and deepening of macroeconomic and financial stabilization: reduction of the state budget deficit from 5% of GDP in 1995 to 4% in 1996 and 2% in 1998 - reduction of inflation by the end of 1996 to an average monthly level of 1%, and in 1998, reaching a single-digit rate of 6.9% per annum. The IMF will monitor the implementation of fiscal and monetary programs on a quarterly basis in 1996, and first in 1997. |
| 1998 | Agreement on the loan package: 1) Addition to the loan under the 1996 Extended Credit Facility. 2) Loan under the additional reserves financing mechanism 3) Loan under the compensatory and emergency financing mechanism | It was supposed to be provided in three tranches: July 20, September 15 and December 15, 1998. One time in full | 1.5 years with repayment deferment for 10 years for each individual tranche 5 years with deferred repayment for 3 years and 3 months | Implementation of the announced anti-crisis program. Accelerated achievement of financial stability, reduction of the federal budget deficit from 5.6% of GDP in 1998 to 2.8% in 1999. Increasing budget revenues from 10.7% of GDP in 1998 to 13% in 1999, reform tax system and improving the tax collection mechanism. Structural reforms: solving problems of non-payments and promoting the development of the private sector - restructuring the banking system, including: improving legislation, clarifying the situation with weak and insolvent banks, improving bank reporting, strengthening control over the activities of banks. |
In recent years, the IMF's policies and recommendations regarding developing countries have often been criticized, the essence of which is that the implementation of recommendations and conditions are ultimately not aimed at increasing the independence and development of the national economy, but only tie it to international financial flows.
Milton Friedman, American economist, laureate Nobel Prize in economics, believes that IMF policy has become a destabilizing factor in the markets of developing countries. And not because of the conditions that he imposed on his clients, but primarily because he is trying to protect private investors from their own mistakes. Mexico's bailout during the 1995 crisis fueled crises in other emerging markets. “It would not be an exaggeration to say,” emphasizes M. Friedman, “if the IMF had not existed, then there would have been no East Asian crisis.” This shows that international structures such as the IMF are not capable of effectively solving the tasks assigned to them. Some economists have even begun to call for the cessation of the IMF in the form in which it currently exists.
Today, almost no one takes out IMF-related financial loans and therefore new IMF obligations have dropped sharply: from SDR 8.3 billion in fiscal year 2006 to SDR 237 million in 2007, and those who previously received financial assistance from the IMF are trying to repay early debts. In fiscal year 2007, nine member countries: Bulgaria, Haiti, Indonesia, Malawi, Serbia, Uruguay, Philippines, Central African Republic, Ecuador, repaid their current obligations to the IMF ahead of schedule, totaling SDR 7.1 billion.
September 8, 2008The International Monetary Fund (IMF) is an intergovernmental organization designed to regulate monetary relations between states and provide financial assistance to member countries to eliminate currency difficulties caused by imbalances in the balance of payments. The IMF was established at the International Monetary and Financial Conference (July 1-22, 1944) in Bretton Woods (USA, New Hampshire). The Foundation began its practical activities on March 1, 1947.
The USSR also took part in the Bretton Woods Conference. However, subsequently, due to the Cold War between East and West, he did not ratify the Agreement on the Formation of the IMF. For the same reason, throughout the 50-60s. Poland, Czechoslovakia and Cuba left the IMF. As a result of deep socio-economic and political reforms in the early 90s. former socialist countries, as well as states that were previously part of the USSR, joined the IMF (with the exception of the Democratic People's Republic of Korea and Cuba).
Currently, 182 countries are members of the IMF (see Fig. 4). Any country pursuing an independent foreign policy and ready to accept the rights and obligations provided for by the IMF Charter can become a member of the organization.
The official objectives of the IMF are to:
- promote balanced growth of international trade;
- maintain the stability of currency exchange rates;
- promote the creation of a multilateral system of settlements for current transactions between members of the Fund and the elimination of currency restrictions that impede the growth of international trade;
- provide member countries with credit resources that allow them to regulate the imbalance of temporary payments without the use of restrictive measures in the field of foreign trade and payments;
- serve as a forum for consultation and cooperation on international monetary issues.
Responsible for the smooth operation of the global currency and payment system, the Fund pays special attention to the state of liquidity on a global scale, i.e. the level and composition of reserves available to member states and intended to cover trade and payment needs. One of important functions The Fund is also providing additional liquidity to its members through the distribution of Special Drawing Rights (SDRs). SDR (or SDR) is an international currency unit of account, used as a conventional scale for measuring international demands and obligations, establishing currency parity and exchange rates, as an international means of payment and reserve. The value of the SDR is determined based on the average value of the five major currencies of the world (before January 1, 1981 - sixteen currencies). The specific weight of each currency is determined taking into account the country's share in international trade, but for the US dollar, its specific weight in international payments is taken into account. To date, 21.4 billion SDRs have been issued with a total value of about 29 billion US dollars, which is about 2% of all reserves.
The Fund has significant total resources to finance temporary disequilibria in the balance of payments of its members. To use them, a member must provide the Fund with a compelling justification for the need, which may be related to the balance of payments, reserve position, or changes in reserves. The IMF provides its resources on the basis of equality and non-discrimination, taking into account the social and domestic political objectives of member countries. The Fund's policies enable them to use IMF financing at an early stage when balance of payments problems arise.
At the same time, the Fund’s assistance helps to overcome imbalances in payments without the use of trade and payment restrictions. The Fund plays a catalytic role, as changes in the policies pursued by states in implementing IMF-supported programs help attract additional financial assistance from other sources. Finally, the Fund acts as a financial intermediary, ensuring the redistribution of funds from those countries where there is a surplus to countries where there is a deficit.
IMF governance structure
1. The highest governing body is the Board of Governors, in which each member country is represented by a governor and his deputy. In most cases, the Fund's managers are ministers of finance, or heads of central banks, or other persons of similar position. The Board of Governors elects a chairman from among its members. The competence of the council includes resolving the most important, fundamental issues of the IMF's activities, such as the admission and exclusion of members of the Fund, the determination and revision of quotas, the distribution of net income, and the selection of executive directors. The Governors meet in session to discuss the activities of the Fund once a year, but they may vote at any time by mail.
The IMF is structured as joint stock company, and therefore the ability of each participant to influence its activities is determined by its share in the capital. In accordance with this, the IMF operates the principle of the so-called “weighted” number of votes: each member country has 250 “basic” votes (regardless of the size of the contribution to the Fund’s capital) and an additional one vote for every 100 thousand SDR units of its share in this capital. In addition, when voting on certain issues, creditor countries receive an additional one vote for every 400 thousand US dollars of loans provided by them on voting day, due to a corresponding reduction in the number of votes of debtor countries. This arrangement leaves the final say in the management of the IMF's affairs to the countries that have invested the most in it.
Decisions in the IMF Board of Governors are mainly made by a simple majority (at least half) of votes, and on the most important issues (for example, amendments to the Charter, establishment and revision of the size of the shares of member countries in capital, a number of issues of the functioning of the SDR mechanism, policy in the field of exchange rates, etc.) by a “special (qualified) majority”, which currently provides for two categories: 70% and 85% of the total votes of member countries.
The current IMF Charter provides that the Board of Governors may decide to establish a new permanent governing body, the Council at the ministerial level of member countries, to oversee the regulation and adaptation of the global monetary system. But it has not yet been created, and its role is played by the 22-member Interim Committee of the Board of Governors on the World Monetary System, established in 1974. However, unlike the proposed Council, the Interim Committee does not have the power to make policy decisions.
2. The Board of Governors delegates many of its powers to the Executive Board, i.e. The Directorate, which is responsible for the conduct of the affairs of the Foundation and operates from its headquarters in Washington.
3. The IMF Executive Board appoints a managing director, who heads the administrative apparatus of the Fund and is in charge of day-to-day affairs. Traditionally, the managing director must be European or (at least) non-American. Since 2000, the Managing Director of the IMF is Horst Keller (Germany).
4. The IMF Committee on Balance of Payments Statistics, which includes representatives of industrialized and developing countries. It develops recommendations for the wider use of statistics in the compilation of balances of payments, coordinates the implementation of a basic statistical survey of portfolio investments and carries out studies on the recording of flows associated with derivative funds.
Capital. The IMF's capital is made up of subscription contributions from member countries. Each country has a quota expressed in SDR. A member country's quota is the most important element of its financial and organizational relationship with the Fund. First, the quota determines the number of votes in the Fund. Secondly, the size of the quota is based on the extent of access of an IMF member to the financial resources of the organization in accordance with established limits. Third, the quota determines the IMF member's share in the allocation of SDRs. The Charter does not provide methods for determining quotas for IMF members. At the same time, from the very beginning, quota sizes were associated, although not on a rigid basis, with such economic factors, such as national income and the volume of foreign trade and payments. The Ninth General Review of Quotas used a set of five formulas agreed upon during the Eighth General Review to produce “estimated quotas,” which provide a broad measure of the relative position of IMF members in the global economy. These formulas use economic data on a state's gross domestic product (GDP), current transactions, fluctuations in current receipts, and government reserves.
The United States, being the country with the highest economic performance, made the largest contribution to the IMF, amounting to about 18% of the total amount of quotas (about 35 billion US dollars); Palau, which joined the IMF in December 1997, has the smallest quota and has contributed about US$3.8 million.
Until 1978, 25% of the quota was paid in gold, currently - in reserve assets (SDRs or freely usable currencies); 75% of the subscription amount is in national currency, usually provided to the Fund in the form of promissory notes.
The IMF Charter provides that in addition to its own capital, which is the main source of financing its activities, the Fund also has the ability to use borrowed funds in any currency and from any source, i.e. borrow them both from official bodies and on the private capital market. To date, the IMF has received loans from the treasuries and central banks of member countries, as well as from Switzerland, which was not a member until May 1992, and from the Bank for International Settlements (BIS). As for the private money market, he has not yet resorted to its services.
IMF lending activities. The IMF's financial transactions are carried out only with official bodies of member countries - treasuries, central banks, and currency stabilization funds. The Fund's funds can be made available to its members through a range of approaches and mechanisms, differing mainly in the types of problems of financing the balance of payments deficit, as well as the level of conditions put forward by the IMF. Moreover, these conditions are a composite criterion that includes three separate elements: the state of the balance of payments, the balance of international reserves and the dynamics of the reserve position of countries. These three elements that determine the need for balance of payments financing are considered independent and each of them can form the basis for submitting a request for financing to the Fund.
A country in need of foreign currency purchases freely usable currency, or SDRs, in exchange for an equivalent amount of its domestic currency, which is deposited into an IMF account at the country's central bank.
The IMF charges borrowing countries a one-time fee of 0.5% of the transaction amount and a fee, or interest rate, for the loans it provides, which is based on market rates.
After the expiration of the established period, the member country is obliged to carry out the reverse operation - to buy back its national currency from the Fund, returning to it the borrowed funds. Typically, this operation, which in practice means the repayment of a previously received loan, must be carried out within a period of 3 1/4 to 5 years from the date of purchase of the currency. In addition, the borrowing country must repurchase its excess currency for the Fund ahead of schedule as its balance of payments improves and foreign exchange reserves increase. Loans are also considered repaid if the national currency of the debtor country held by the IMF is purchased by another member state.
Member countries' access to IMF credit resources is limited by certain nuances. According to the original Charter, they were as follows: firstly, the amount of currency received by a member country in the twelve months preceding its new application to the Fund, including the amount requested, should not exceed 25% of the country's quota; secondly, the total amount of a given country’s currency in the IMF’s assets could not exceed 200% of its quota (including 75% of the quota contributed to the Fund by subscription). The revised Charter in 1978 removed the first limitation. This allowed member countries to utilize their ability to obtain currency from the IMF for more than short term than the five years it took before. As for the second condition, in exceptional circumstances its operation may be suspended.
Technical assistance. The International Monetary Fund also provides technical assistance to member countries. It is carried out through sending missions to central banks, ministries of finance and statistical bodies of countries that have requested such assistance, sending experts to these bodies for 2-3 years, and conducting an examination of draft legislative documents. Technical assistance is expressed in the IMF's assistance to member countries in the field of monetary, exchange rate policy and banking supervision, statistics, development of financial and economic legislation and personnel training.
The International Monetary Fund is a financial institution that, despite its status as a special UN agency, has gained notoriety. What is the IMF, what are its functions according to the founding documents and in reality, how fair are the critics who call the financial assistance of the fund disastrous for the economies of the countries being financed?
Creation of the IMF, goals of the fund
The concept of a monetary fund, whose mission would be to support financial stability throughout the world, called the “IMF Charter”, was developed in July 1944 during the Bretton Woods Conference under the auspices of the United Nations, which resolved issues of international financial and monetary interaction after the apparent end of World War II war.
The date of creation of the IMF (English IMF, or International Monetary Fund) was December 27, 1945 - on this day, representatives of the first 29 IMF countries officially signed the final version of the relevant agreement. The organization's de facto activities began only on March 1, 1947, when France took out the first IMF loan. Today the IMF unites 188 countries, and the fund's headquarters is located in Washington.
According to Article 1 of the IMF Charter, the International Monetary Fund has the following goals:
promoting cooperation of all countries in the monetary and financial sphere, joint resolution of financial problems;
promoting the achievement and maintenance of high levels of real income and employment of the world's population, strengthening and developing the industrial and productive potential of all member states without exception through the expansion and growth of international trade;
maintaining the stability of the currencies of the member states, preventing the devaluation of national currencies;
assistance in the formation and functioning of a multilateral settlement system for financial transactions between member countries, in the abolition of currency restrictions that stand in the way of the growth of world trade;
by providing financial assistance to Member States, to enable them to eliminate imbalances in their balance of payments without introducing measures that could harm their national welfare;
reduce the duration of imbalances in the balance of payments of member countries, while simultaneously reducing the scale of these violations.
It is noteworthy that the so-called financial assistance of the fund is provided exclusively in the form of loans, but they are not provided for the implementation of specific projects. The interest on them is small (0.5% per annum), but often lending does not contribute to the development of the real sector of the economy and the production of competitive products. The following shows the provision of funds from the fund to various countries since 1972 for 40 years, i.e. from the expiration date:
In the first post-war years, the main borrower of the fund was Europe to restore the economy damaged during the war. Since the early 1980s, the focus has shifted towards Latin America and Asia, and since the 1990s, Russia and the CIS countries have also played a significant role in loans. Ukraine is still in constant contact with the fund. Finally, since the 2000s, loans have been flowing again to Europe - mainly Eastern Europe.
It is noteworthy that the time before the year was the most favorable in the world and the least favorable for the fund - very few loans were required, and accordingly, the IMF’s influence on the world economy and politics greatly decreased. However, already in 2011, lending quickly restored its volumes, which continued to grow further, including in connection with the Cyprus and Greek crises.
The IMF’s policy is clearly visible from the graph - to help all (and not just poor) countries, focusing on current problems. At the same time, by the way, the complete or almost complete absence of loans to African countries is interesting. Any country within the IMF is either a borrower of the fund, receiving and paying off the loan, or its creditor in accordance with its quota. It can be seen that, in addition to the decline before the last global crisis, the average historical amount of loans has grown over time - compared to the end of the 80s, Europe in 2012 borrowed about 5-6 times more.
In what currency are loans calculated? The fact is that the IMF has its own non-cash means of payment, called “special drawing rights” (Special Drawing Rights, SDR). The scale at the top is in billions of SDR. Formally, it is neither a debt obligation nor a currency.
Since 2016, the SDR rate has been pegged to a basket of 5 currencies and is similar to . Nevertheless, there are differences - perhaps the main thing is the presence of the Chinese yuan in the amount of almost 11% due to a decrease in the share of the euro. At the time of this article, the SDR rate is 1.45 US dollars. You can view it, for example, here: http://bankir.ru/kurs/sdr-k-dollar-ssha/.
| Period | USD | EUR | CNY | JPY | GBP |
|---|---|---|---|---|---|
| 2016–2020 | (41.73%) | (30.93%) | (10.92%) | (8.33%) | (8.09%) |
Functions of the IMF
Scroll modern functions The International Monetary Fund largely coincides with Article 1 of the IMF Charter:
expansion of international trade;
assistance to countries in the form of lending;
promoting interstate interaction in monetary policy;
assistance in the preparation (training, internship) of economic personnel;
stabilization of exchange rates;
advising debtor countries;
development and implementation of standards for global financial statistics;
collection, processing and publication of these statistics.
It is interesting that prominent economists subject to reasoned criticism not only the methods of the IMF’s work with debtor countries (that is, those with outstanding debts to the organization), but also the quality of statistics published by the fund, as well as analytical reports.
Structure of the International Monetary Fund
Fund management and decisions on issuing loans are carried out by:
The Board of Governors is the name of the highest governing body of the International Monetary Fund. It includes two authorized persons from each member state - the manager and his deputy;
The Executive Board consists of 24 directors who represent certain member states or groups of countries. The head of the executive body - the managing director - is invariably the plenipotentiary representative of Europe, and his first deputy is a US citizen. Eight directors are delegated by states with the largest quotas in the IMF, the remaining 16 are elected by other participating countries, divided into the appropriate number of groups;
The International Monetary and Financial Committee is formally an advisory body consisting of twenty-four governors, including a representative of the Russian Federation. Performs, in particular, the function of developing strategic decisions relating to the global monetary and financial system;
The IMF Development Committee is another advisory body with similar functions.
IMF capitalization and sources of funds
As of March 1, 2016, the size of the IMF’s authorized capital was about 467.2 billion SDR. Capital is formed by contributions to the monetary fund of member countries, paying as a rule 25% of the quota in SDR (or one of the world currencies) and the remaining 75% in their own national currency. Quotas are constantly revised—there have already been 15 revisions since the foundation began its activities. In 2015, another change occurred with the delegation of about 6% from developed countries to developing countries.
Important: almost all real decisions are made by a majority of 85% of the votes. At the same time, approximately 17 percent quota (for 2016 contribution of about 42 billion SDR) belongs to the United States of America, giving it an exclusive veto right. Japan, which is in second place, has a quota almost three times lower - about 6%. Russia's share is 2.7% (contribution of about 6.5 billion SDR). So it is extremely difficult to call critics of the organization who claim “the IMF is the USA” wrong or biased.
In fact, the United States and the European Union, which often supports it, have a sufficient quota in the IMF to make the vast majority of decisions. The efforts of China, Russia and India to increase quotas in the fund in accordance with the increased weight of these countries in the world economy are met with opposition from the United States and its allies, who do not want to lose political influence on other IMF countries through the “conditionality” of loans - the presentation of mandatory political obligations to debtor states. -economic requirements.
However, one should not think that the financial problems of countries can be solved only with the help of IMF money. For example, the recent loan to Greece of more than 300 billion euros was financed by the IMF by less than 10% and amounted to only about 20 billion euros in euro terms. Much a large amount- €130 billion - allocated by the European Financial Stability Fund created in June 2010.
In addition to the quotas paid by the participating countries, the sources of financial resources of the Monetary Fund are:
gold holdings, according to official data amounting to about 90.5 million ounces and valued at 3.2 billion SDR. The organization accepts gold from participating countries mainly as payment for interest on loans, after which it has the right to use it to finance new loan tranches;
loans from “financially secure” member states;
funds from donor trust funds and lines of credit that open the fund to G7 and G20 countries.
Russia joined the IMF in June 1992, immediately resorting to obtaining a loan. According to eyewitnesses, during one of his first visits to the Kremlin, Clinton was amazed by the luxury of the halls and said to a colleague: “And these people are asking us for money?” Over 6 years (from August 1992 to early August 1998), Russia borrowed a total of more than $32 billion from the fund - however, the loans did not help us achieve either a projected reduction in inflation or prevent the August default of 1998. Russia repaid the loan from 2000 to 2005 years, taking advantage of rising oil prices, and since 2005 has become a creditor of the fund. The table below shows the distribution of loans in the 90s and the lender's requirements for Russia:
Financial assistance or credit needle?
Many experts argue that the recommendations of the creditor fund to the IMF borrowing countries de facto fundamentally contradict the principles and goals declared by the Charter. Instead of developing their productive potential, borrowing countries are hooked on the credit needle, and real incomes of the population do not increase - they fall.
Critics of the fund explain that the conditions for receiving IMF loans are often:
deprivation of the borrower state's right to freely issue national currency;
total privatization, including in areas of natural monopolies (housing and communal services, railway transport);
rejection of protectionist measures to protect our own producers and support for medium and small businesses;
freedom of movement of capital, allowing for their outflow abroad;
cutting spending on social programs, eliminating benefits for vulnerable groups of the population, reducing salaries in the public sector and pensions.
However, the listed measures often only aggravate the crisis in the economy; impoverishment of the population leads to a decrease in consumption, leading to a decline in production, bankruptcy of enterprises and a deterioration in the state budget. As a result, the government has to take out new loans to pay off the previous ones.
Countries most affected by IMF dependence:
Rwanda, where the refusal of state support for farms and the devaluation of the national currency led to a fall in the income of the population, pushing it into the abyss civil war Hutus and Tutsis with 1.5 million victims;
Yugoslavia, which collapsed due to problems with the economic alignment of the regions;
Argentina, which declared twice;
Mexico is the birthplace of domesticated corn, which has turned from an exporter of this agricultural crop into an importer.
According to forecasts, this list may be supplemented by Ukraine, which is being forced by the creditor fund to increase gas prices. Its rise in price not only hits the pockets of citizens, but also completely negates the competitiveness of Ukrainian commodity producers, already undermined by the unfavorable Association Agreement with the EU. Ukraine, together with Romania and Hungary, is the largest current debtor to the International Monetary Fund.
But since history does not have a subjunctive mood, it is impossible to assess what the consequences will be in different countries would have resulted from a lack of funding from the IMF. So the position of the fund’s defenders is something like this: maybe things didn’t work out well in some places, but without the loan it would have been even worse. And critics of the fund are attacking not the very idea of providing a loan, but the conditions accompanying the loan - which in fact have an ambiguous effect on the economy and do not interfere with corruption, but in many ways look like an increase in the political influence of the main lender. And although the inefficiency of the current lending system is clear to almost everyone, real changes in such a cumbersome and politically important structure cannot happen “with the snap of a finger.” What is more useful or harmful from the IMF at the moment - everyone decides for himself.
Strauss-Kahn continues to fight for political survival, with his supporters claiming the harassment allegations are a conspiracy. At the same time, the struggle for the post of leader has already begun within the International Monetary Fund (IMF). Countries with developing economies are demanding that this prestigious place go to them, but the Europeans are not giving up their claims either.
The International Monetary Fund is a $325 billion organization headquartered in Washington. Until very recently, the IMF had only one main issue - saving the euro. The fund's share of the aid packages for Greece, Ireland and Portugal amounts to 78.5 billion euros. Calmly and effectively, the fund acted as an intermediary between Europe's debtors and donors.
Following the arrest of IMF chief Dominique Strauss-Kahn on Saturday evening New York time, the fund itself has become a plaything for various interests. The once powerful head of the IMF continues to fight for his political survival. His supporters are spreading rumors and evidence that the attempted rape charge is a Secret Service-style conspiracy. DSK - as he is sometimes called for short - did not allegedly attempt to rape a maid at the New York Sofitel Hotel, as he was allegedly having lunch with his daughter at that time.
What is established is that nothing is established. The whole world believes that there should be no rush to condemn him. Federal Chancellor Angela Merkel also said yesterday that we need to wait for the results of the investigation.
She said so, but did it differently. A few minutes later, Merkel, speaking on behalf of Europe, announced her claims to the position of head of the IMF: although in principle this is correct, and in the “medium term,” according to Merkel, countries with developing economies can lay claim to leading positions in international organizations. “However, I believe that in modern conditions, when we have a lot of discussions about the European space, there are good reasons for Europe to have good candidates at its disposal,” she emphasized.
Because there is no cost to ignoring one's own interests, Merkel offered hope to emerging economies: “The existing conditions at the IMF must reflect the balance of power in the world,” Merkel said at the G20 summit in Seoul. Shortly before this, the world's 20 major economies decided to increase the share of votes of emerging economies. The words of the head of the Eurogroup, Jean-Claude Juncker, sounded even more definite. Strauss-Kahn is “the last European” to head the IMF “for the foreseeable future,” he said back in 2007.
Countries with developing economies responded joyfully to this Western opinion. It is high time to move away from a model dominated only by industrial states, said Brazilian Finance Minister Guido Mantega.
Now comes sobering up. And after sobering up, a struggle for power begins. Berlin yesterday announced it was conducting soundings “with our European friends” on the issue of a candidate to head the IMF.
The struggle of countries with developing economies for greater influence in the IMF began even before Strauss-Kahn's arrest. In April this year, Brazil's finance minister complained that Americans regularly run the World Bank while Europeans run the IMF. Such a system, in his opinion, is already outdated. These posts should be allocated based on ability, and the process itself should be transparent, the Brazilian demanded.
In other words, those countries that provide global growth, - that is, China, India, as well as Brazil - should in the future have a chance to occupy leadership positions. The share of leading developing countries in global gross domestic product over the last 20 years alone (by 2010) has increased from 10.4% to 24.2%, while the share of the seven largest industrial countries, on the contrary, has decreased from 64.9% to 50 .7%.
Therefore, back in the fall, countries with developing economies received additional votes in the IMF. Finance ministers from the 20 largest industrial and emerging economies (G20) have decided to distribute almost 6% of the voting rights previously held by industrial powers to countries such as China, India, Brazil and Russia. As a result of the reform, these four countries received more rights and more responsibility in the executive directorate of the International Monetary Fund. This reform came into force in March.
Now they demand changes on a personal level. That is why, immediately after the events with Dominique Strauss-Kahn in New York, the name of the Turkish politician Kemal Dervis began to be mentioned more and more often. This architect of the economic reforms that began ten years ago in Turkey and has been high-ranking official The World Bank comes from an emerging economy and is considered a brilliant economist. Since he is from Turkey, he could presumably be involved in building bridges between Asia, Europe and the United States.
His work at the Washington-based World Bank allowed him to acquire excellent connections. And in Europe he no longer has the image of a person who primarily protects the interests of Turkey. Kemal Dervis is now seen more as an international economist who happens to have a Turkish passport.
Dervis's name was already mentioned at the annual meeting of the Asian Development Bank, which took place almost a week ago in the Vietnamese city of Hanoi. Perhaps it's time for an Asian to head the IMF. Nobel laureate Joseph Stigliz also considers him an excellent candidate, as he said Monday in a private discussion.
The Chinese leadership is taking a rather restrained position in connection with Strauss-Kahn's impending departure, but in fact this scandal suits Beijing quite well - the European is leaving his post in disgrace, and this creates the conditions for reconsidering existing structures. The informal agreement among industrial nations that a European should always be at the helm of the International Monetary Fund is causing resentment among this rising economic power. From the Chinese point of view, this kind of arrangement is outdated and reminiscent of colonial times.
Americans and Europeans can share leadership positions between themselves because they together have enough votes to block other proposals. Even after the reform, China, being the second largest economy in the world, has 3.82% of the votes and is significantly behind the United States, which has almost 17%. These figures also reflect the share of capital invested. China would, of course, be willing to pay more for more influence, but existing rules, he can't do it.
That is why the Chinese, at meetings like the G20, constantly advocate for the introduction of a system that would more accurately reflect the economic realities existing in the world. They consider themselves fighters for the rights of other countries with developing economies, and, in addition, the Chinese secretly hope to secure a leading international role for themselves.
Other emerging economies, including India and Russia, have been much less ambitious about IMF reform. “They want to solve the problems they currently have, but they do not intend to rewrite the global rules of the game,” said Jean Pisani-Ferry, an economist at the University of Paris-Dauphine. China also assumes that it is not yet in a position to press its demands - after all, its own national currency is not yet freely convertible.
This is also why the idea is being discussed in French government circles to preserve the existing structures and instead of Strauss-Kahn, send to Washington the Minister of Finance, who has a good international reputation, Christine Lagarde. On paper she
looks like a good candidate: her work as a lawyer has brought her into contact with all the major figures in the financial world, and during the financial crisis she developed a reputation for herself as a charming but exceptionally tough negotiator. In addition, the post of head of the IMF could open up additional prospects for her - primarily taking into account the possible defeat of her boss Nicolas Sarkozy in the presidential elections in 2012. For now, judging by the official statements made, she plans to compete for the mandate of an ordinary member of parliament.
Her problem: “The DSK affair has undermined confidence in France and their candidates for high international positions,” according to Paris. DSK is an international abbreviation for Dominique Strauss-Kahn. In addition, Lagarde herself became a participant in a high-profile case, which, however, cannot be compared with the problems of Strauss-Kahn. She is accused of using her influence to achieve a favorable ruling for the famous French entrepreneur in a dispute between the state and Bernard Tapie over the sale of a stake in Adidas. This case has not received much international publicity, but it could become an obstacle if Lagarde runs for the post of head of the IMF.
When it comes to such responsible positions as the head of the IMF, the candidate will be scrutinized - and now for real - twice as carefully.
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