Imf's anatomy

As of December 1991 he IMF was composed of 156 member countries; in addition, a number of republics of the former U.S.S.R. were in the process of joining the organization. Each member is represented by a governor on the IMF's Board of Governors, most of whom are ministers of finance, presidents of the country's central bank, or persons of similar rank. Virtually all day-to-day policy decisions are delegated to the Executive Board, which is made up of 22 representatives of the member countries.The Executive Board is presided over by the managing director, elected for a 5-year term, who is also chief of staff of the IMF.

Each member has a quota which is based on a complex formula that takes account of the country's size and its general importance in world trade and finance. The quota determines the amount of financial resources the member has to make available to the IMF. (subscription) and its access to the Fund's facilities, its entitlement to SDR allocations, as well as its voting power. Part of each member’s subscription is paid in reserve assets, and the reminder in the member's own currency.

Operations

IMF member countries may utilize the Fund's resources if they find themselves in balance of payments difficulties. Drawings normally will be in the context of policy measures — an adjustment program — intended to correct the balance of payments position and are linked to progress under that program. Technically, use of the Fund’s resources takes the form of a member using its own currency to purchase other currencies (or SDKs} held the IMF. Drawings on the Fund's resources that do

not exceed 25 percent of the member's quota normally require that the member make a reasonable effort to overcome its balance of payments problem. Purchases beyond that amount — i.e. drawings in the so-called upper credit tranches — usually are made in the context of an adjustment program. Repayments to the lMF are normally to be made within 3 to 5 years, but under the extended facility the country may have up to 10 years to repay the financing provided by the Fund.

General understanding:

1.What countries was IMF composed of on December 1991?

2.Who are the governors of IMF's Board of Governors?

3.Who presides over Executive Board?

4.How is the managing director elected?

5.What importance has “quota” for the members of IMF?

6.What operation could be carried out through IMF?

7.How have the total subscriptions changed over time?

l. Explain the role (meaning) and functions of the following. Write 2 sentences with each one:

a)member countries

b)Board of Governors

c)Executive board

d)managing director

e)quota

2. Which of the following is true:

A. IMF is composed of 22 Governors.

B. Executive board makes all decisions on the Republics of former USSR.

C. The quota determines the amount o financial.resources the member has to make available to the IMF.

D.IMF member countries may utilize the Fund's resources.

Borrowing countries have to pay the loans back within 5 years.

Questions for discussion:

Do you find the structure of IMF reasonable?

Do you know how the credits obtained from the IMF are utilized? Is IMF in control of funds utilization?

Text 3. Read and tell what is the text about.