IMF
- INTERNATIONAL
News:
IMF, World Bank hold
first meetings in Africa in 50 years
What's
in the news?
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The IMF and World Bank began talks in
Morocco in their first annual meetings on African soil in 50 years, under
pressure to reform to better aid poor nations blighted by debt and climate
change.
Key
takeaways:
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The International Monetary Fund and World
Bank traditionally hold their annual gathering of finance ministers and central
bank governors outside their Washington headquarters every three years.
IMF:
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The IMF, also known as the Fund, was
conceived at a UN conference in Bretton
Woods, New Hampshire, United States, in July 1944.
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Headquartered in Washington, D.C.
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Consisting of 190 countries.
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The IMF is 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 while periodically depending on the World Bank for its
resources.
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It now plays a central role in the management of balance of payments
difficulties and international financial crises.
IMF
Members:
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Any other state, whether or not a member
of the UN, may become a member of the IMF in accordance with IMF Articles of
Agreement and terms prescribed by the Board of Governors.
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Membership
in the IMF is a prerequisite to membership in the IBRD.
Pay
a Quota subscription:
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On joining the IMF, each member country
contributes a certain sum of money, called a quota subscription, which is based
on the country’s wealth and economic performance (Quota Formula).
○
It is a weighted average of GDP (weight of
50 percent)
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Openness (30 percent)
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Economic variability (15 percent)
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International reserves (5 percent).
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The GDP of a member country is measured
through a blend of GDP - based on market exchange rates (weight of 60 percent)
and on PPP exchange rates (40 percent).
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Member's
voting power is related directly to their quotas (the
amount of money they contribute to the institution).
SDR:
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Special
Drawing Rights (SDRs) is the IMF’s unit of account and not a currency.
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The currency value of the SDR is
determined by summing the values in U.S. dollars, based on market exchange
rates, of a SDR basket of currencies
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SDR
basket of currencies includes the U.S. dollar, Euro, Japanese yen, pound
sterling and the Chinese renminbi (included in 2016).
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The SDR currency
value is calculated daily (except on IMF holidays or whenever the IMF is closed
for business) and the valuation basket is reviewed and adjusted every five
years.
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Quotas
are denominated (expressed) in SDRs.
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SDRs represent a claim to currency held by
IMF member countries for which they may be exchanged.
Reports:
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Global Financial Stability Report
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World Economic Outlook - It is usually
published twice a year in the months of April and October.
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Fiscal Monitor (FM).