IGNOU : M.COM : IBO 1 : UNIT 13 : Q - 3. Explain the objectives and functions of IMF.

 

Ans. Objectives

The first Article of the Fund's charter laid down six objectives for the organization. These are:

i) to promote international cooperation by providing the machinery for consultation and collaboration by members on international monetary issues.

ii) to facilitate the balanced growth of international trade and through this, contribute to high levels of employment and real income and the development of productive capacity.

iii) to promote exchange stability and orderly exchange arrangements and facilitate the avoidance of competitive currency depreciation.

iv) to foster a multilateral system of payments and transfers for current transactions and seek the elimination of exchange restrictions which hamper the growth of world trade.

v) to make financial resources available to members, on a temporary basis and with adequate safeguard to permit them to correct payment in balances without resorting to measures destruction of national or international prosperity and;

vi) to seek reduction of both the duration and magnitude of payments imbalances.

Functions

IMFs functions can be broadly classified into three main categories. These are :

i) to formulate and administer a code of conduct regarding exchange rate policies and restrictions on payments for current account transactions.

ii) to provide members with financial resources to enable them to observe the code of conduct while they were correcting or avoiding payment imbalances.

iii) to provide a forum in which the IMF could consult with one another and collaborate on international monetary matters.