INTERNATIONAL MONETARY FUND (IFM)

The International Monetary Fund (IMF) is an international organization that oversees the global financial system by observing exchange rates and balance of payments, as well as offering financial and technical assistance when requested. Its headquarters are located in Washington, D.C.

The primary mission of the IMF is to provide financial assistance to countries that experience serious financial difficulties. Member states with balance of payments problems may request loans and/or organizational management of their national economies. In return, the countries are usually required to launch certain reforms.

The International Monetary Fund (IMF) concentrates on providing advice and temporary funds for countries with economic difficulties.

The economic medicine prescribed by the IMF is painful. For example, it often insists on strict anti-inflationary measures, such as increasing the prices on basic goods and services. Besides supervising the international monetary system and providing financial support to member countries, since the early 1990s the IMF has been concentrating its efforts in two areas. First, it has mounted a massive campaign to assist the countries of Eastern Europe in difficult transition from centrally planned to market economies. It is providing not only money but, what is more important, expertise in establishing those financial and economic structures (central banks, tax systems, currency convertibility, tariff regimes, etc.) indispensable for functioning of a free-enterprise system. Second, it is continuing to assist its poorer members in creating environment for economic growth.

Each member has a quota which is based on a complex formula that takes account of the country’s size and its 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 as well as its voting power. Part of each member’s subscription is paid in reserve assets, and the remainder in the member’s own currency.

An unwritten rule establishes that the IMF's managing director must be European and that the president of the World Bank must be from the United States. Executive Directors, who confirm the managing director are voted in by Finance Ministers from countries they represent.

The IMF is for the most part controlled by the major Western Powers, with voting rights on the Executive board based on a quota derived from a monetary stake in the institution. Rarely does the board vote and pass issues contradicting the will of the US or Europeans.

21. Give English equivalents to the following:

Резервные кредиты, страны-должники, благоприятный курс, в свою очередь, уменьшать субсидии, кредиты развития, одолеваемая долгами, текущая (краткосрочная) задолженность, слаборазвитые страны, в крайнем случае.

22. Read the words and guess their meanings:

global financial system, exchange rates, balance of payments, offering financial and technical assistance, to experience serious financial difficulties, increasing the prices, transition from centrally planned to market economies, currency convertibility, economic growth, the Executive board, monetary stake in, floating debt, debt-ridden, development loans, underdeveloped countries, in turn, favourable rate, debtor countries, to reduce subsidies, standby loans, in the last resort.

23. Which of the following is true?

1. The IMF came into existence in December 1945, when the first 29 countries signed its Articles of Agreement.

2. IMF is composed of 22 Governors.

3. The quota determines the amount of financial resources the member has to make available to the IMF.

4. IMF member countries may utilize the Fund’s resources.

5. Borrowing countries have to pay the loans back within 3-5 years.

6. Much of the IMF’s work is centered on annual consultations with each member country to ensure that its national policies take into account their consequences for the world economy and avoid unfair exchange policies.

7. The IMF's influence in the global economy steadily increased as it accumulated more members.

8. The IMF is for the most part controlled by the major Western Powers, with voting rights on the Executive board based on a quota derived from a monetary stake in the institution.

24. Translate into English:

1. МВФ был создан 27 декабря 1945 года.

2. МВФ предоставляет кратко- и среднесрочные кредиты при дефиците платёжного баланса государства.

3. Предоставление кредитов обычно сопровождается набором условий и рекомендаций, направленных на улучшение ситуации.

4. Основные функции МВФ:

• содействие международному сотрудничеству в денежной политике

• расширение мировой торговли

• кредитование

• стабилизация денежных обменных курсов

5. Высший руководящий орган МВФ — Совет управляющих (Board of Governors), в котором каждая страна-член представлена управляющим и его заместителем. Обычно это министры финансов или руководители центральных банков.

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