IMF General Information

IMF
Borrowing and surveillance activities


Introduction.

The International Monetary Fund (IMF) is an international

Came into formal existence in 1945 with 29 member countries

As of 2010, the fund had about US$755.7 billion at then

The IMF works to improve the economies of its member

organization headquartered in Washington, D.C..

and the goal of reconstructing the international payment

exchange rates.

countries.

system.


When can a country borrow from the IMF?

If a country is unable to make payments to other countries without taking “measures destructive of
national or international wealth”, it may borrow money from the IMF.

Requires the borrower to follow a program aimed at meeting certain quantifiable economic goals.

The duration, payment terms, and lending conditions vary on a case-by-case basis.

The IMF also lends money to countries dealing with sudden losses of financial confidence, such as
after natural disasters or wars.


The process of IMF lending.

Loan Application - The country needs to submit a request
The country has to be in Trouble!

to the IMF stating their current situation, the
consequences etc.

Fund Release - Once IMF's board approves the nation's
IMF decides - On receiving the country's request, IMF's

request, steps are taken to release the fund in

help is made available under a lending arrangement.

installments and phases thus making sure the rightful
implementation of the recovery program.


Top 10 debtor countries owe 86% of total IMF loans

A total of 79 countries owed a staggering $84.57 billion as on May 31, 2015.

The 10 biggest borrowing countries, including Portugal, Greece, Ukraine, Ireland and Pakistan, owed $72.4 billion, or nearly 86% of the total amount

lent.

The biggest outstanding loans from the IMF were issued to European nations, notably Greece and Portugal.


Korea.
Through the beginning of the crisis in Thailand and Indonesia in 1996, Korea appeared relatively unaffected.

Concerns about the increasing of debts of financial institutions had increased significantly after several large corporate bankruptcies. By December
1997, the won had depreciated by over 20 percent against the U.S. dollar.

As a response to Korea’s financial crisis, the IMF approved on December 4, 1997 a three-year stand-by arrangement totaling $21 billion, equivalent to
approximately 1,940 percent of the country’s quota.

Economic growth estimations were further reconsidered downward, yet by July, Korea had made substantial progress in overcoming its external crisis.


Surveillance activity.

• The IMF's regular monitoring of economies and associated provision of policy advice is intended to identify weaknesses
that are causing or could lead to financial or economic instability. This process is known as surveillance.


Why is IMF surveillance important?

• Surveillance is essential to identify risks that policies may need to address to sustain growth.


The IMF’ surviellance work.
Surveillance in its present form was established by Article IV of the IMF’s Articles of Agreement, as

revised in the late 1970s following the collapse of the Bretton Woods system of fixed exchange rates.

There are two
main aspects:

Bilateral surveillance, or the assessment of and advice on the policies of each member country. IMF economists continually monitor members’ economies. They visit member
countries—usually annually—to exchange views with the government and the central bank and consider whether there are risks to domestic and global stability that need
adjustments in economic or financial policies.

Multilateral surveillance, or oversight of the world economy. The IMF also monitors global and regional economic trends, and analyzes unexpected consequences from
members’ policies onto the global economy.


• These actions help ensure that the IMF is in a better position to address spillovers from members’ policies on global
stability; monitor members’ external sectors in a more comprehensive manner; more effectively engage members in a
constructive dialogue; better safeguard the effective operation of the international monetary system; and support global
economic and financial stability.


Thank you!