How much does imf have

Seventh, the IMF is governed by many different countries with different interests and must work by consensus. Its director does not have the power of, say, an Alan Greenspan to move the entire body, although recently the U.

However, the U. The Fund did not try to make a determination whether the country is merely illiquid rather than insolvent nor, for reasons I have already outlined, would it have made sense to try. The question the Asian-cum-Russia-cum potential Latin American crisis has put on the table, therefore, is whether the IMF should continue in this role, have its operations refined, changed, constrained or eliminated.

The IMF And Flexible Exchange Rates One alleged argument for dismantling the Fund is built around the claim that it was created to support the Bretton Woods system of fixed and only occasionally adjusted exchange rates.

Now that fixed rates are largely dead, it is said: it is time to sunset the IMF. This argument is misplaced on several levels. As a threshold matter, even in the wake of the Asian crisis, not all countries have abandoned fixed rates, or their close cousins, currency bands or managed floating regimes. But more fundamentally, the main purpose for which the Fund was created—to discourage countries from adopting economic policies in the heat of a balance of payments crisis that harm other economies in the process—is independent of the exchange rate regime that may be in place.

In the former case, a jump in prices of a key import has a direct inflationary impact which is compounded by the drop in the exchange rate, which also makes other imports more expensive.

The sharp currency depreciation that can follow a drop in world prices of important commodity exports can have a similar impact on exporting countries. If the affected countries also have sizeable foreign currency debts, then the sudden currency depreciation can generate a wave of bankruptcies that can further damage the economy, which may already be weakened by any attempts to fight the depreciation-induced inflation through restrictive macroeconomic policies.

By themselves, these familiar events may not justify IMF assistance. If countries cannot borrow foreign currency to stop the run on their own reserves, then they may adopt any number of measures that restrict trade and capital in an effort to halt the inflationary impacts of their falling currencies. If only one or two countries take such counterproductive measures, the damage to the world may not be significant.

This is what happened in the s. And it was what the IMF was created to prevent. More sophisticated critics of the IMF may nonetheless respond that while the purposes of the Fund theoretically may be appropriate in a world of flexible exchange rates, the availability of Fund financing creates a kind of moral hazard—not the typical one I will discuss shortly—that discourages countries from adopting floating rates. These critics will or should point out that a major reason for the Asian crisis was that the countries in the region pegged their currencies to the dollar, encouraging local borrowers to engage in a massive arbitrage play: borrowing dollars at low interest rates with the aim of using the funds to earn much higher rates of return in local currency.

Critics may point out that had the IMF not been in existence, and thus unavailable to provide liquidity in the event of a run on the currency, it is possible that the Asian countries never would have adopted the currency pegs that encouraged this arbitrage game. It is impossible to know, of course, whether this would have been the case. Although I personally believe that flexible rates should be the norm for most countries, fixed or managed rates may be useful in ending a hyper-inflation by constraining the ability of centrals banks to pursue an overly expansionary monetary policy.

Once inflation has been brought under control, then the case for pegging weakens. That should be a main lesson of the recent financial turmoil that the Fund should be preaching to its members rather than any of the members calling for the downsizing or elimination of the Fund. As I am about to briefly summarize, some of these attacks are partly valid. This distorts the pricing of loans and encourages too much borrowing and lending at artificially suppressed interest rates.

IMF officials have acknowledged this problem, have urged attention be devoted to solving it, but at the same time, either have implicitly or explicitly suggested that this is a price that may have to be paid in order to prevent contagion. This view is far too pessimistic. In the United States, we heard similar objections to curtailing the ability of regulators to protect uninsured depositors during the s and yet a law was enacted in FDICIA that does precisely that. In the international arena, the objective should be to establish a similar system, or at the very least, to adopt measures that have the effect of providing more market discipline.

I will briefly discuss two steps that would move policy in this direction. First, the Shadow Financial Regulatory Committee, of which I am a member, proposed last May and has just reiterated in September that future IMF emergency lending or at the very least the interest rate on those loans should be made conditional on borrowing countries having a mechanism that, with one caveat I am about to mention, imposes some kind of a haircut on foreign currency creditors of banks when such rescues are announced.

The caveat is that the haircut not apply if the creditors keep their money in the banks—if they roll over their deposits or interbank loans at no higher rate of interest and keep their money in until the IMF loan is paid back.

Furthermore, governments would be prohibited from guaranteeing any more than the principal amount of the interbank credits minus the haircuts.

Such a system would promote stability because it penalizes lenders only if they withdraw their funds. I have heard it said that such a conditional haircut regime nonetheless would be destabilizing because it could encourage lenders who fear that an IMF rescue package is imminent to mount anticipatory runs on banks.

I do not see this is as a drawback, but as a plus, provided the IMF has adequate funds to respond to crises when it is called upon to do so. As it is now, precisely because of the policy conditions the IMF imposes on its loans—the subjects I will turn to next—governments tend to put off going to the IMF until their currency reserves are nearly exhausted.

If a conditional haircut system causes governments to adopt policy reforms sooner, then this is a clear advantage of the idea. Another criticism of haircuts is that once they are imposed they allegedly would redline a country out of the international credit markets.

Furthermore, given that Russia does not have anything close to a functioning market economy—nor is there a prospect that it will have one any time soon—it is hardly surprising that the financial community is saying that Russia has dealt itself out of world credit markets. A much better example for haircut critics to look at is the experience in Latin America following the issuance of Brady Bonds, which effectively guaranteed only the written-down portion of the original sovereign debt.

Past interventions by the IMF have included providing funds for countries caught up in the Asian financial crisis, and loans to help South American countries such as Argentina and Brazil stave off debt default crises. In October , the IMF activated an emergency funding scheme for countries facing economic distress resulting from the global financial crisis. The biggest borrowers then were Hungary, Romania and Ukraine. The recent eurozone crisis also triggered extensive IMF intervention, including hefty bailouts for countries such as Greece, Portugal and Ireland in tandem with the European Union.

It is currently contributing to the second international bailout of Greece, and discussing further loans to Hungary. The IMF can also grant emergency loans following natural disasters; these have included the Asian tsunami. Developing countries have voiced dissatisfaction with what they say is their lack of influence in the IMF and World Bank.

This includes the so-called Bric countries - Brazil, Russia, India and China - whose economic power has grown significantly. They have called for changes to the quota system in which votes in the IMF are weighted in line with member nations' financial contributions.

The long-standing arrangement under which the IMF is usually led by a European, while the World Bank is led by an American, has also been called into question. Ms Lagarde quickly appointed Zhu Min - a former deputy governor of the People's Bank of China - to the newly created post of deputy managing director when she took over.

Image source, Getty Images. It would not be starry-eyed philanthropy but a constructive bid to reboot the global economy. Rich economies would be the main beneficiaries from the boost to global trade and allied tax revenues. Such a transfer of official funds would trigger local and international commercial investment in the hardest-hit countries, opening the prospects for economic transformation.

Most of these ideas have been zinging through the in-boxes of the G20 economic advisors, while their bosses, now chaired by Italy, nod sagely about the need for action, but procrastinate.

Weeks later, the G20 failed to agree on how that would work. Now the people of Africa, Asia and Latin America, the vast majority of whom lack vaccines, face another wave of the pandemic and sundry variants of the virus. Nor should it, until we can agree on a way to save millions of lives and boost the economic prospects of hundreds of millions more.

One project of dazzling clarity and flawless logic is ready to launch in the meantime. As Georgieva points out, that is an investment-to-return ratio of to one. Even fortified by Bolivian marching powder, financial traders dare not dream of such profits.

These include total resources after NAB has been expanded and a quota increase has been ratified. IMF member countries agreed in September to sell The IMF cannot sell more than the As of Feb. Most executive directors represent a group of countries.