• Cash-strapped Pakistan has secured a deal with the International Monetary Fund (IMF) to restore the stalled $6 billion assistance package and unlock doors for financing from other international sources.
• The International Monetary Fund (IMF) is an organization of 190 member countries.
• Each member has representation on the IMF’s executive board in proportion to its financial importance, so that the most powerful countries in the global economy have the most voting power.
• The IMF was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944.

Functions :

• Provides Financial Assistance to member countries with balance of payments problems.
• the IMF lends money to replenish international reserves, stabilize currencies and strengthen conditions for economic growth.
• It oversees the international monetary system and monitors the economic and financial policies of its 190 member countries.
• As part of this process, IMF highlights possible risks to stability and advises on needed policy adjustments.
• It provides technical assistance and training to central banks, finance ministries, tax authorities, and other economic institutions.
• This helps countries raise public revenues, modernize banking systems, develop strong legal frameworks, improve governance, and enhance the reporting of macroeconomic and financial data.
• It also helps countries to make progress towards the Sustainable Development Goals (SDGs).
• Countries were not eligible for membership in the International Bank for Reconstruction and Development (IBRD) unless they were members of the IMF.
• The Special Drawing Rights (SDR) is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.
• The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.
• The SDR basket is reviewed every five years.

Model Question

Q. With reference to the International Monetary Fund (IMF), consider the following statements :

1. The IMF was conceived at a UN conference in Bretton Woods, in 1944.
2. Unlike development banks, the IMF does not lend for specific projects.
3. The value of the SDR, created by the IMF, is based on a basket of five currencies including Chinese Renminbi.

Which of the statements given above is /are correct?

(a) 1 only

(b) 1 and 2 only

(c) 3 only

(d) 1, 2 and 3

Answer : D

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