Presented By Ali Jabbar Muhammad Ahsan Mushtaq Ahmad MBAE-2010-014 MBAE-2010-062 MBAE-2010-069

Presented To Professor Shahid Mahmood

The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

1.

Conceived in July, 1944 in New Hampshire, USA Main Purpose was to avoid previous ecomomic disastrous policies of Great Depression and 2nd World War To Ensure Stability of
International monetary system System of exchange rates International payments that enables countries to transact with one other

2.

3.

Type International Economic Organization Headquarters Washington, D.C. United States Membership 187 Nations Official Languages English, French, and Spanish Managing Director Christine Lagarde Main Organ Board of Governors

The IMF's membership began to expand in the late 1950s and during the 1960s as many African countries became independent and applied for membership. But the Cold War limited the Fund's membership, with most countries in the Soviet sphere of influence not joining.

Member

Join Date Dec-45

Member

Join Date Dec-45

Member Iran, Islamic Republic of (Iran)1 Chile1 Mexico1

Join Date Dec-45

Member

Join Date Dec-46

Belgium

Iraq

Venezuela,

Bolivia1 Canada1

Dec-45 Dec-45

Luxembour g1 Netherland s1

Dec-45 Dec-45

Dec-45 Dec-45

Turkey Italy

Mar-47 Mar-47

China1
Colombia1 (Czechoslo vakia) Egypt1 Ethiopia1 France1 Greece1 Honduras1 Iceland1 India1

Dec-45
Dec-45 Dec-45 Dec-45 Dec-45 Dec-45 Dec-45 Dec-45 Dec-45 Dec-45

Norway1
Philippines
1

Dec-45
Dec-45 Dec-45 Dec-45 Dec-45 Dec-45 Dec-45 Dec-45 Dec-45 Dec-45

Peru1
Costa Rica1 (Poland)1, 6 Brazil1 Uruguay1 (Cuba)1, 7 El Salvador8 Nicaragua8 Panama8 Denmark8

Dec-45
Jan-46 Jan-46 Jan-46 Mar-46 Mar-46 Mar-46 Mar-46 Mar-46 Mar-46

Syrian Arab
Lebanon Australia Finland Austria Thailand Pakistan Sri Lanka Sweden Myanmar

Apr-47
Apr-47 Aug-47 Jan-48 Aug-48 May-49 Jul-50 Aug-50 Aug-51 Jan-52

South Africa1 United Kingdom1 United States1 (Yugoslavi a)1,4,5 Dominican Republic1 Ecuador1 Guatemala
1

Paraguay1

Member Japan Germany Jordan Haiti (Indonesia)9 Israel Afghanistan, Korea Argentina Vietnam Ireland Saudi Arabia Sudan

Join Date Aug-52 Aug-52 Aug-52 Sep-53 Apr-54 Jan-00 Jul-55 Aug-55 Sep-56 Sep-56 Aug-57 Aug-57 Sep-57

Member Ghana Malaysia Tunisia Morocco Spain Libya Portugal Nigeria New Zealand Nepal Cyprus Liberia Togo

Join Date Sep-57 Mar-58 Apr-58 Apr-58 Sep-58 Sep-58 Mar-61 Mar-61 Aug-61 Sep-61 Dec-61 Mar-62 Aug-62

Member Senegal Somalia Sierra Leone Tanzania Kuwait Jamaica Niger Burkina Faso Cameroon Central African Chad Congo Benin

Join -Date Aug-62 Aug-62 Sep-62 Sep-62 Sep-62 Feb-63 Apr-63 May-63 Jul-63 Jul-63 Jul-63 Jul-63 Jul-63

Member Gabon Mauritania Madagascar Algeria Mali Uganda Burundi Congo Guinea Rwanda Kenya Malawi Zambia

Join Date Sep-63 Sep-63 Sep-63 Sep-63 Sep-63 Sep-63 Sep-63 Sep-63 Sep-63 Sep-63 Feb-64 Jul-65 Sep-65

Member Singapore Guyana Indonesia9 Gambia, The Botswana Lesotho Malta

Join Date Aug-66 Sep-66 Feb-67 Sep-67 Jul-68 Jul-68 Sep-68

Member Barbados Fiji Oman Samoa (Western Samoa) Bangladesh Bahrain Qatar United Arab Emirates Romania

Join Date 29-Dec-70 28-May-71 23-Dec-71 28-Dec-71 17-Aug-72 7-Sep-72 8-Sep-72

Member GuineaBissau Seychelles So Tom and Prncipe Maldives Suriname Solomon Islands

Join Date 24-Mar-77 30-Jun-77 30-Sep-77 13-Jan-78 27-Apr-78 22-Sep-78

Member Vanuatu Antigua and Barbuda Belize Hungary St. Kitts and Nevis

Join Date 28-Sep-81 25-Feb-82 16-Mar-82 6-May-82 15-Aug-84

Mozambiqu 24-Sep-84 e Tonga 13-Sep-85

Cape Verde 20-Nov-78

Mauritius
Swaziland Yemen Equatorial Guinea Cambodia

Sep-68
Sep-69 Sep-69 22-Dec69 31-Dec69

22-Sep-72
15-Dec-72

Dominica
Djibouti St. Lucia

12-Dec-78
29-Dec-78 15-Nov-79

Kiribati
Poland1,6 Angola Yemen, (Czechoslo vakia)1,2,3 Bulgaria

3-Jun-86
12-Jun-86 19-Sep-89 May-90 Sep-90 25-Sep-90

Bahamas, The 21-Aug-73 Grenada Papua New Guinea Comoros 27-Aug-75 9-Oct-75 21-Sep-76

St. Vincent and the 28-Dec-79 Grenadines Zimbabwe Bhutan 29-Sep-80 28-Sep-81

(May (Yemen Arab 22, 10 Republic) 1970)

Member Namibia Mongolia Albania Lithuania Georgia Kyrgyz Republic (Kyrgyzstan) Latvia Marshall Islands Estonia

Join -Date 25-Sep-90 14-Feb-91 15-Oct-91 29-Apr-92 5-May-92 8-May-92 19-May-92 21-May-92 26-May-92

Member Armenia Switzerland Russian Federation Belarus Kazakhstan Moldova Ukraine Azerbaijan Uzbekistan

Join -Date 28-May-92 29-May-92 1-Jun-92 10-Jul-92 15-Jul-92 12-Aug-92 3-Sep-92 18-Sep-92 21-Sep-92

Member Turkmenistan San Marino Croatia5 Slovenia5 Serbia5 Czech Republic3 Slovak Republic3 Tajikistan Micronesia,

Join Date 22-Sep-92 23-Sep-92 14-Dec-92 14-Dec-92 14-Dec-92 1-Jan-93 1-Jan-93 27-Apr-93 24-Jun-93

Member Eritrea

Join Date 6-Jul-94 10-Oct-95 16-Dec-97 23-Jul-02 18-Jan-07 29-Jun-09 24-Jun-10 24-Jun-10

Brunei Darussalam
Palau (East Timor) Montenegro5 Kosovo Tuvalu Tuvalu

The IMF's mandate and governance have evolved along with changes in the global economy, allowing the organization to retain a central role within the international financial architecture. The diagram below provides a stylized view of the IMF's current governance structure.

DC

Board of Governors The Board Of Governors is the highest decisionmaking body of the IMF. It consists of one governor and one alternate governor for each member country.

Ministerial Committees (1) International Monetary and Financial Committee (IMFC) (2) Development Committee

International Monetary and Financial Committee Responsible for advising, and reporting to, the Board of Governors Monitors developments in global liquidity and the transfer of resources to developing countries

Development Committee
The Development Committee is a joint committee, tasked with advising the Boards of Governors of the IMF and the World Bank on issues related to economic development in emerging and developing countries.

The Executive Board

Consists of 24 members

The Board discusses everything from the IMF staff's annual health checks of member countries' economies to economic policy issues relevant to the global economy.

Surveillance Technical Assistance

Lending

Surveillance

A commitment to pursue policies that are conducive

To orderly economic growth Reasonable price stability To avoid manipulating exchange rates for unfair competitive advantage

Technical Assistance
Central banking
Monetary and exchange rate policy Tax policy

Objective

To improve the design and implementation of members' economic policies. To reestablish government institutions in countries following severe civil unrest or war.

Lending

For Member Countries With Severe Financial Troubles Such As:

Unable to pay its international bills Poses potential problems for the stability of the international financial system, which the IMF was created to protect.

Conditions of Loans
Reducing government borrowing

Higher taxes and lower spending

Higher interest rates to stabilize the currency. Allow failing firms to go bankrupt. Exchange Rate Reforms

IMF Loans and Binds

An important source to manage the financial problems such as

Balance of payment deficits Stabilization of currency Rebuilding international reserves Managing liquidity problems

A total of 11 agreements
9 By Civilian Government

2 By Military Government

Date of
Facility Arrangement

Date of

Amount

Amount

Amount

Expiration

Agreed

Drawn

Outstanding

Standby Arrangement Extended Credit Facility Standby Arrangement Extended Credit Facility

Nov 24, 2008 Dec 06, 2001 Nov 29, 2000 Oct 20, 1997

Dec 30, 2010 Dec 05, 2004 Sep 30, 2001 Oct 19, 2000

7,235,900 1,033,700 465,000 682,380

4,936,035 861,420 465,000 265,370

4,936,035 499,618 0 0

Extended Fund Facility

Standby Arrangement Extended Credit Facility Extended Fund Facility Standby Arrangement Structural Adjustment Facility Commitment Standby Arrangement

Oct 20, 1997

Dec 13, 1995 Feb 22, 1994 Feb 22, 1994 Sep 16, 1993 Dec 28, 1988 Dec 28, 1988

Oct 19, 2000

Sep 30, 1997 Dec 13, 1995 Dec 13, 1995 Feb 22, 1994 Dec 27, 1991 Nov 30, 1990 Total

454,920
562,590 606,600 379,100 265,400 382,410 273,150 12,341,150

113,740
294,690 172,200 123,200 88,000 382,410 194,480 7,896,545

0
0 0 0 0 0 0 5,435,653

IS IMF GOOD OR BAD Good Cop Bad Cop

Double Barrel Question There is no Free Lunch. IMF is just a push. A country has to rely on its own resources and efforts A path to glory OR a never ending viscous cycle of economic slavery

World Bank is a vital source of financial and technical assistance for countries who seek financial help/assistance.

Mission

To fight poverty with passion Elimination of poverty Help developing countries

A combination of 2 unique development institutions

(IBRD) International Bank for Reconstruction and Development (IDA) International Development Association

IBRD Aims to reduce poverty middle-income Countries Creditworthy poorer countries IDA focuses on the world's poorest countries

Their work is complemented by that of the (IFC) International Finance Corporation (MIGA) Multilateral Investment Guarantee Agency (ICSID) International Centre for the Settlement of Investment Disputes

World Bank provides Low-interest loans, Interest-free credits Grants to developing countries To invests in 1. Education 2. Health 3. Public Administration 4. Infrastructure 5. Financial and Private Sector Development 6. Agriculture 7. Environmental and Natural Resource management.

Type International Economic Organization Headquarters Washington, D.C. United States Membership 187 Nations Official Languages English, French, and Spanish Managing Director Robert B. Zoellick Main Organ Board of Governors Offices More than 100 Employees 10000

Main purpose:

Elimination of poverty Help developing countries To facilitate international trade

World Bank in a glance:

187 shareholders Board of Governors Governors are Ministers of finance or Ministers of Development. Annual Meetings of the Boards of Governors of the WBG (and IMF). 25 Executive Directors

The five largest shareholders 1. France 2. Germany 3. Japan 4. United Kingdom 5. United States

The President of the World Bank, Robert B. Zoellick

Chairs meetings of the Boards of Directors Responsible for overall management President is selected by the Board of Executive Directors

A five-year, renewable term

World Bank Building (Washington D.C)

Executive Directors consider and decide on the following:

IBRD loans IDA credits and grants IFC investments Policies and strategic issues

Executive Directors are also responsible for presenting to the Boards of Governors

An Audit of Accounts An Administrative Budget An Annual Report on the Bank's operations and policies

Each Executive Director also serves on one or more of five standing committees:

Audit Committee (AC) Budget Committee (BC) Committee on Development Effectiveness (CODE) Committee on Governance and Executive Directors' Administrative Matters (COGAM) Human Resources Committee (HRC)

IBRD and IDA provide

Low or no interest loans (credits)

Grants to countries

WBG do not operate for profit.

WBG pay for their own operating costs

They do not furnish funds for overhead.

World Bank & Pakistan Projects, Programs & Results

Helping the Federal and Provincial Governments Growth Investment Employment Generation. Social works like 1. Education 2. Health 3. Clean Drinking Water 4. Sanitation.

Approx US$1.1 billion worth of investment in In Punjab in Education Sector : Teacher recruitment Net primary school enrollment in Punjab increased from 45 percent in 2001 to 62 percent in 2008. Female primary enrollment went up from 43 percent to 60 percent.

Investment In Sindh In Education Sector : Merit-based recruitment of 13,000 teachers

300 new private coeducational primary schools in underserved rural communities These schools have over 26,000 students School participation rate has increased from 30 percent to 80 percent

In July and August 2010, Pakistan experienced the worst floods in its history. Floods affected 78 districts 10 percent of Pakistans population
Bank grants: Consisting of $300 million in import financing $20 million for highways rehabilitation $125 million to finance cash transfers to around 1.4 million flood affected families.

October 8, 2005 earthquake 2.8 million homeless, and 570,000 houses damaged The Bank provided $400 million for Earthquake Reconstruction $220 million was for housing reconstruction. 350,000 houses have been completed

The Benazir Income Support Program (BISP)

Monthly payment of Rs. 1,000 to qualifying households. In 2011 it is expected to cover about 7 million households

Pakistan Poverty Alleviation Fund (PPAF)

Formation of 80,000 community organizations Provided 1.9 million micro-credit loans 16,000 community infrastructure schemes Training support for 232,000 people in enterprise development skills.

Financing reconstruction of 201 primary schools

35 other buildings including government offices police stations, and vocational training institutes 24 rural roads.

In Education Sector
In Power Sector (Challenge of Electricity and Power) On Roads (Linkage between Poverty and Infrastructure) In Banking and Privatization Sector both Public and Private sector participation

An Informal group of creditor countries with no permanent members which functions on the principle of unanimity on the terms to be provided to debtor countries and of equal Burdon sharing among its creditor countries. Its meetings are always held in Paris

 Established in 1956 after the devastation of World War

II A group of 19 of some of the worlds biggest Creditor Countries Provides Financial Services Such As
Debt Restructuring Debt Relief Debt Cancellation After War Restructuring Funding

Chaired by the Director General of the Treasury and Economic Policy Department, Mr Ramon FERNANDEZ
Members meets every six weeks at the French Ministry of the Economy, Finance, and Industry in Paris.

French Version Secrtariat du Club de Paris Direction gnrale du Trsor et de la Politique conomique 139, rue de Bercy Tldoc 551 75572 Paris Cdex 12 France

English Version Secretariat of the Paris Club Branch of the Treasury and Economic Policy 139, rue de Bercy Tldoc 551 75572 Paris Cedex 12 France

1956 (May 16): First Paris Club Agreement (Argentina) 1966: First Paris Club Agreement with an Asian country (Indonesia) 1976: First Paris Club Agreement with an African country (Zaire) 1981: First Paris Club Agreement with a European country (Poland) 1982: The Mexican crisis triggers the debt crisis of the 1980s. 1987: First Paris Club Agreement under the Venice terms (Mauritania) 1988: First Paris Club Agreement implementing the Toronto terms (Mali) 1990: First Paris Club Agreement implementing the Houston terms (Morocco). First debt swap clause in a debt treatment agreement 1991: Exceptional exit treatments granted to Poland and Egypt. First Paris Club Agreement implementing the London terms (Nicaragua) 1992: First Paris Club Agreement with Russia (deferral) 1995: First Paris Club Agreement implementing the Naples terms (Cambodia)

1997: Russia joins the Paris Club. First early repayment operation (Argentina) 1998: First Paris Club Agreement implementing the Lyon terms under the HIPC initiative (Uganda) 1999: Enhanced HIPC Initiative. First Paris Club Agreement implementing the Cologne terms under the HIPC initiative (Mozambique) 2000: Uganda is the first HIPC-eligible country to reach the Enhanced HIPC Initiative Completion Point 2001: Exceptional debt treatments granted to the Former Republic of Yugoslavia 2003: Paris Club creditors approve the Evian Approach 2004: First debt treatment under the Evian Approach (Kenya). Phased exit treatment granted to Iraq 2005: Exceptional treatment granted to countries hit by the tsunami (Indonesia and Sri Lanka). Exit treatment granted to Nigeria 2006: 50th anniversary of the Paris Club 2007: First buyback operations at market value below par (Gabon, Jordan)

HIPC

During the 1990s,the club started differentiating between HIPC & NON-HIPC countries Larger debt reductions for HIPC countries Less debt reductions for non HIPC countries

In 2004, Writing Off Iraq Debts Eliminated 18 billion $ worth of Nigerian Debt after a payment of 12 billion $

There are two categories of memberships and then there are observers.

Permanent members Associated members Observers

A total of 19 creditor member countries All of them are currently worlds biggest economies These creditor countries have constantly applied the terms defined in the Paris Club Agreed Minutes to their bilateral claims and have settled any bilateral disputes or arrears with Paris Club countries, if any.

Australia Austria Belgium Canada Denmark Finland France Germany Ireland Italy

Japan Netherlands Norway Russia Spain Sweden Switzerland United Kingdom United States

Associated members can also actively participate in negotiation sessions, subject to the agreement of permanent members and of the debtor country. The following 13 countries have participated as creditors in some Paris Club agreements

Abu Dhabi Argentina Brazil Israel Kuwait Mexico Morocco

New Zealand Portugal South Africa South Korea Trinidad and Tobago Turkey

Only attend negotiation meetings

Do not participate Do not sign formal agreements Just Observe the Proceedings

1.

Representatives of international institutions: -IMF -World Bank - European Commission ADB Representatives of permanent members of the Paris Club which have no claims concerned by the debt treatment but nevertheless want to attend the negotiation meeting Representatives of non Paris Club countries which have claims on the debtor country concerned but are not in a position to sign the Paris Club agreement as associated members

2.

3.

A one-day meeting Topics of discussion may include External debt situation of debtor countries Methodological issues regarding the debt of developing countries. Negotiation meetings

1.

2.

3.
4.

Delegates from the debtor country. (4-6 members) Creditor country representatives. International Monitory Fund (IMF), International Organizations, which are invited as observers.

Negotiation Meetings Prerequisites

A country wanting to reschedule its debt with Paris club must carry out the following terms

1.

Demonstrate that it is not able to meet its financial obligations Prepare a detailed request Implements a structural adjustment program supported by IMF

2.

3.

Initially on case-to-case bases But with the advent of the debt crisis in 1980, standard terms were introduced

Toronto Terms

Introduced in 1988 Granted 33% debt relief Rescheduling of 25 years maturity, including a 14 years grace period.

London Terms
(Also known as Enhanced Toronto Terms)

Formulated in 1991 to replace the Toronto Terms Provided 50% debt reduction Debt rescheduling for 30 years, 12-year grace period, Interest rates at least as low as the original interest rates.

Naples Terms

Applied in December 1994, Increased the percentage of debt relief to 67%

Lyons Terms

Applied in 1996 Provided 80% present value reduction. Available only to HIPC

Cologne Terms

Adopted in June, 1999 Allowing for up to 90% forgiveness of debt and more in individual.

Total amount of agreements Total amount of debtor countries Total amount of debt Total amount of countries in Toronto Terms" Total amount of countries in London Terms" Total amount of countries in "Naples Terms" Total amount of countries in "Cologne Terms"

422 88 553 Billion $ 59 21 36 33

Medium And Long Terms Debts Of Developing Countries

An assessment by potential lenders of the country's capacity to repay its external debt. Being creditworthy is a key to success for developing countries Governments of debtor countries have a significant impact

Factors that influence creditworthiness are

Economic factors, such as the capacity of the country to generate balance-ofpayment receipts, and the volatility of these receipts. Financial factors, such as the debt repayment profile. Political factors

Creditworthiness usually takes a long time to build,

Failure to full fill debt obligations can rapidly damage credit worthiness.

A dynamic fashion to manage debts Buying back of debt ahead of schedule

Reduce ones debt service Morocco 2003-2007

3.8Billion $ in 2005

The Paris Club was put into place to help poor, under developed & developing countries to get back on their feet and become a vibrant self sustained country on the world trade and banking markets and so far it has been doing its job on neutral ground and is playing a very vital role for the economic as well as social growth and sustainability of these countries

http://www.imf.org/external/index.htm http://en.wikipedia.org/wiki/International_Monetary _Fund http://timesofindia.indiatimes.com/topic/Internation al-Monetary-Fund http://www.worldbank.org/ http://en.wikipedia.org/wiki/World_Bank http://en.wikipedia.org/wiki/Paris_Club http://www.slate.com/articles/news_and_politics/ex plainer/2003/05/what_is_the_paris_club.html