international monetary fund upsc

Definition and Role: The International Monetary Fund (IMF) is an international organisation that oversees those financial institutions and regulations that act at the international level. It also acts as an international organisation player in cooperative security.
Institutional Status in the UN System: The IMF is classified as one of the specialised agencies (non-subsidiary) of the United Nations system.
Membership and Voting Power:
- The IMF has 190 member countries (as on 19 February 2024), but members do not enjoy an equal say.
- The G-7 members hold 41.29% of the votes:
  - United States: 16.52%
  - Japan: 6.15%
  - Germany: 5.32%
  - France: 4.03%
  - United Kingdom: 4.03%
  - Italy: 3.02%
  - Canada: 2.22%
- Other major members and their voting shares include:
  - China: 6.09%
  - India: 2.64%
  - Russia: 2.59%
  - Brazil: 2.22%
  - Saudi Arabia: 2.02%
Role in Economic Globalisation: The IMF is highlighted as one of the key international institutions that plays a significant role in determining economic policies across the world.
Balance of Payments Accounting Standards: The IMF introduced new accounting standards in the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6), which divides the balance of payments into three accounts: current account, financial account, and capital account.
Historical Role and Lending Conditionalities:
- India (1991 Crisis): During the crippling 1991 balance of payments and external debt crisis, India approached the IMF and the World Bank (IBRD) and received a $7 billion loan. In exchange, the IMF and World Bank imposed conditionalities requiring India to open up and liberalise its economy, remove restrictions on the private sector, reduce the government’s role, and dismantle trade barriers, leading to India’s New Economic Policy.
- Pakistan: Economic reforms were likewise dictated to Pakistan by the World Bank and IMF, contrasting with China, which initiated structural reforms on its own without such international compulsion.