International Monetary Fund (IMF)

• The International Monetary Fund (IMF) is a global financial institution.
• It was established in 1944 at the Bretton Woods Conference.
• Its primary goals are to promote international monetary cooperation, ensure financial stability, and assist countries facing balance of payments (BoP) crises.
• It is an important pillar of global economic governance, especially for developing and emerging economies.

Key Facts 

Objectives of IMF (As per Article I of its Articles of Agreement)

• Promote international monetary cooperation
• Facilitate the balanced growth of international trade
• Ensure exchange rate stability
• Assist in the development of a multilateral payment system
• Provide temporary financial support to countries with BoP difficulties
• Contribute to poverty reduction and employment generation globally

Organizational Structure

Quota System

• Each member's quota is based on their economic size and determines:
  • Voting power
  • Access to IMF resources
  • SDR allocations
• India is among the top 10 quota holders.
• Quotas are reviewed every 5 years to reflect changes in the global economy.

Special Drawing Rights (SDRs)

• Created in 1969 as an international reserve asset.
• SDR value is based on a basket of five currencies:
  • US Dollar (USD)
  • Euro (EUR)
  • Chinese Yuan (CNY)
  • Japanese Yen (JPY)
  • British Pound (GBP)
• SDRs are not a currency, but a claim on the freely usable currencies of IMF members.

Key Lending Instruments

India and the IMF

• Founding member (1945)
• Has received IMF support during critical periods (e.g., 1991 BoP crisis)
• Today, India:
  • Holds significant voting power
  • Plays a key role in G20, BRICS, and global economic reform discussions
  • Advocates for greater representation of emerging economies

Criticisms of the IMF

• Strict conditionalities - lead to austerity, hurting poor populations.
• Western dominance - top positions typically held by Europeans.
• One-size-fits-all policies - don’t suit diverse economies.
• Limited voice for developing countries in decision-making.