Discuss the main function of International Monetary Fund?

Function of International Monetary Fund

Main function is to purchase and sell the member countries currencies. If any country is facing adverse balance of payment and facing the difficulty to get the currency of creditor country, it can get short-term credit from the fund to clear the debit.

The International Monetary Fund allows the debtor country to purchase foreign currency in exchange for its own currency up to 75% of its quota plus an addition 25% each year. The maximum limit of the quota is 200% in special circumstances. If the demand of any particular country currency increases and its stock with the fund falls below 75% of its quota, the International Monetary Fund can declare its scare. But International Monetary Fund also tries to increase its supply by these methods. International Monetary Fund purchases the scare currency by gold.

International Monetary Fund borrows from those countries scare currency that has surplus amount. International Monetary Fund allows the debtor countries to impose restrictions on the imports of creditor country. International Monetary Fund is very useful to avoid the competitive depreciation which took place before world War II. When the devaluation policy is  indispensable for any country then International Monetary Fund provide the loan to correct the balance of payment of that country. These are the main functions of international monetary fund.

International monitory fund or IMF is a finance monitoring organisation formed on the December 1945. Primary purpose of International Monetary Fund is to develop policies regarding money, monitoring, uniform standards for currency exchange and stable payment systems that should be mutually accepted by all the member countries of International Monetary Fund at present number of registered countries with IMF are 182, operations in 110 countries with 2600 employees.

Functions of International Monetary Fund are to develop fair and monitor currency exchange rates among all the countries. IMF also provide short-term loans to its member countries so they could bring their imbalanced payment system into balance. One more important function of IMF is to draw lending money model for borrower countries. In this way, International Monetary Fund also acts as Debtor.

International Monetary Fund also provides training and technical assistance in the areas of finance management system, tax system, banking system, development to its member countries through its monetary and exchange of affairs departments, the fiscal affairs department and the bureau of statistics.

The legal department, the bureau of computing services, and the area departments also coordinate. International Monetary Fund also helps to draw a systematic system for foreign transactions to take place. It provides advice on micro economic development.

Every member of International Monetary Fund provides a fixed quota of money to IMF. Size of amount is based on the ability of government to pay.


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