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The Total Recall

In the recent report by the International Monetary Fund (IMF) reinstates that India will beat China in terms of the growth and is all set to march well ahead of China by the next year i.e. 2016. IMF plays a very important role in the financial and economical aspects in all the countries of the world.

IMF came into the being in 1945 in order to improve the world economy which was in doldrums after the 2nd world war and with just 29 countries showing keen interest in the first meeting which was held on 27.12.1945, whereas most of the countries refrained from showing any interest as against the presence of representatives of keen  44 countries in the previous meeting which was held in the 1944, and now the IMF has 195 countries as its members with headquarters in Washington DC, with a workforce of 2600 people from 147 countries and 26 directors representing a country or representing a group of countries with a quota of $362 billion. The major borrowers are Greece and Ukraine.

At these times when the Greece is suffocating and struggling with its financial crises, the IMF is playing a very important role. Sometimes the harsh role exhibited by the IMF becomes the reason of criticism everywhere but mostly IMF is appreciated as an efficient responsible body, the statistic report which proves as a boon to the markets of the concerned country by bringing in the drastic change about the overview of that country from global point of view.

IMF is also connected with the international financial affairs in one way or the other. So much so that the report of the IMF for India sometimes goes against or sometimes goes in favor of India. A relief of some sorts this report by IMF that India’s growth rate will beat China is a breather. It is imperative to understand that what the functions of IMF are and how is IMF different from the other international association bodies.

1)The source of the Fund:-  To run the IMF the fellow member countries have made quota according to 2)their individual capacities, and this capacity of the member countries are re-determined at least after every five years. A country may also deposit well up to 75% of its finances or wealth. The IMF also earns from the interest from the loan which it gives to the various countries.

3)The Exchange Rate System:- It is the responsibility of IMF to keep the international financial stability and harmony by trying to keep the exchange rate system and the international payments stable which happens to be the backbone of the businesses between any nation.

4)Economical Aid/Subsidies:- IMF helps the financially weak countries by extending them the monetary help in terms of aid or subsidies, technical help, planning, expenditure management and the training about the related aspects to the concerned country. Special Drawing Rights (SDR) is neither a currency nor any claim but this amount is special quota kept aside which the IMF keeps it aside for those fellow countries to help them counter any financial crisis, and the concerned country need not pay any interest until it does not bails itself out of the quota category. IMF gives loans through two arrangements, one is new arrangement to borrow (NAB) and the other is general arrangements to borrow (GAB), presently the IMF has the loan capacity of $500 billion. IMF makes special arrangements during the time of economical crisis of the member countries.

5) Emphatic Gold: - The gold plays a very significant role in planning of the IMF; in 1978 the IMF had determined the limit of transactions done through gold, but now this is only accepted in special circumstances only, the gold deposits with IMF is 2814 metric tones.

5) Surveillance: - The IMF monitors the financial strategy, policies and planning of various countries so that the world economy remains does not goes overboard. 

IMF and the World Bank: - The IMF only gives loan against the reforms for various policies while the World Bank gives the loan to its fellow countries for the various development programmes like construction of the dams. The World Bank gives loans only to the developing nations and the emerging markets whereas the resources of the IMF is for poor, developing as well as the developed nations also.