International Monetary Fund (IMF)

 The international monetary fund is an organization, established in 1944 after the end of the second world war. It was created to overcome the economic crises around the globe due to the second world war and to prevent any crisis such as the great depression that occurred in 1929 and lasted till the late 1930s considered one of the greatest global market crashes in the 20th century. It is the worldwide biggest lending organization which is run collectively with its member countries. Whereas, it offers open membership to the countries which accept the IMFs statutes.

Overview

IMF works through the surveillance system by monitoring its member country policies as well as national, regional, and global economic and financial developments to maintain stability and prevent the crisis in the international monetary system. It also provides alternate policies that can help in stabilizing a country's economies, preventing financial crises such as the great depressions of the 1930s to repeat and ensuring better economic conditions, Currently, IMF has 190 members out of which 24-member state heads executive director representing member countries. Whereas the board of governors is the highest decision-making body of IMF, consisting of one governor and one alternate governor for all member states which is usually appointed by member state and is usually the minister of finance. All power of IMF is vested in the board of governess. A specific quota and voting shares are given to the member states that are assigned based on their relative position in the world economy. The parameters that describe a member countries quota are economic variability (15%), GDP (50%), international reserves (5%), and openness to the global economy (30%). Each member is obliged to provide financial resources based on its quota. Each member’s state has to pay its subscription-based on its quota in full upon joining the fund. up to 25 % is paid in SDR and 75% percent can be paid in its currency. SDR are special drawing rights that were created by IMF in 1969 whose value is determined from a weighted basket of major currencies, including the U.S. dollar, the euro, Japanese yen, Chinese yuan, and British pound. SDR basket comprises of the currencies of "members or monetary unions whose exports had the largest value over five years, and have been determined by the IMF to be free. the current value of 1SDR IS equal to $1.41733. usable. Each country gets financial support in the form of loans according to its quota. A member can borrow up to 145% to 435% of their quota based on terms and interest rates. Currently, 10 countries united states, the UK, France, Germany, Japan, Italy, Russia, India, China, and brazil share the largest voting quota of IMF.

Members Voting percentage of Millions of SDR

1. US 16.6 82,994.2
2. UK 4.07 20,155.1
3. France 4.03 20,155.1
4. Germany 5.37 26,634.4
5. Japan 6.21 30,820.5
6. Italy 3.02 15,070.0
7. Russia 2.59 12,903.7
8. India 2.63 13,114.4
9. China 6.08 30,482.9
10. brazil 2.22 11,042.0
11. Pakistan 0.43 2,031.0

Pakistan and IMF

Pakistan signed its first agreement with IMF in 1958 by securing special drawing rights of 25 million under standby agreement in the government of General Ayyub Khan. Since then Pakistan has secured 22 loans in its 61 years and current debt of US$5.765 billion to the International Monetary Fund. Whereas Pakistan has reserved a subscription of 2,031.0 million of SDR which makes about 0.46 additional voting rights of Pakistan in IMF. From 1958 to 2019 47% of loans were secured by the people party Pakistan government, 35% were secure by Pakistan Muslim league-Nawaz, and 18% by the dictators.