The brief content of the lecture

1. IMF is a specialized agency of the United Nations established in 1945 to promote international monetary cooperation and expand international trade, stabilize exchange rates, and help countries experiencing short-term balance of payments difficulties to maintain their exchange rates. The Fund assists members by supplying the amount of foreign currency it wishes to purchase in exchange for the equivalent amount of its own currency. The member repays this amount by buying back its own currency in a currency acceptable to the Fund, usually within three to five years. The Fund is financed by subscriptions from its members, the amount determined by an estimate of their means. Voting power is related to the amount of the subscription – the higher the contribution the higher the voting right.

Fund fulfils regulation and financial functions. 184 states are members of the IMF. State-members of the IMF oblige follow to Code of Economic Behavior, cooperate with Fund and between each other for provision agreements on exchange operations, stability of Monetary rates, prevention of unpleasant factors of national and international development. Fund controls over exchange rates policy, forms common pool of foreign currency, using for prevention of balance deficit of the IMF state-members. Short or middle term credits promotes to states liquidate balance deficit, without using trade or payment limitation. Policy of Fund regulation provides of credit facilities and eased their excess to the financial market.

The standard unit of account used by the International Monetary Fund. In 1970 members of the IMF were allocated SDRs in proportion to the quotas of currency that they had subscribed to the fund on its formation. There have since been further allocations. SDRs can be used to settle international trade balances and to repay debts to the IMF itself. On the instructions of the IMF a member country must supply its own currency to another member, in exchange for SDRs, unless it already holds more than three times its original allocation. The value of SDRs was originally expressed in terms of gold, but since 1974 it has been valued in terms of its members’ currencies. SDRs provide a credit facility for IMF members in addition to their existing credit facilities (hence the name); unlike these existing facilities they do not have to be repaid, thus forming a permanent addition to members reserves currency.

II. Structure and activity:

Council of Managers is a high body of the IMF. Council meets annual. Vote of state depends of the subscription in Fund financial resources and reflect rating of state in the world economy (trade, currency reserve).

Executive Councilfulfils current job in the Head-Quarter in Washington. E.C. consists of 24 managers. Biggest quota and biggest vote belong to 5 states: USA, Great Britain, Germany, France, Japan. They assign managers. Three managers represent China, Russia and Saudi Arabia.

Policy of the Executive Council defines by recommendations of two ministries committees:

i. Contemporary Committee of the managers’ Council on International Monetary System problems;

ii. Joining ministry committee of World Bank and International Monetary Fund (Committee on Development).

IMF has permanent representations in Paris, Geneva and New-York.

Activity of the IMF:

1. Policy of exchange rates

2. Consultations

3. Quotas and means

4. Financial services

5. Compensation finance

6. Structural reconstruction

7. Technical assistance

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