IMF

Purpose of IMF
The IMF was created to PROTECT a country in severe financial trouble, unable to
pay its international bills because that country is a problem to the stability of the
international (worldwide) financial system.
The type of countries that seek IMFs help
A country must be able to make its international payments and maintain a safe level
of reserve. When a country cannot make its international payments and maintain a
level of reserve then it turns to the IMF.
IMF does not
IMF LOANS do NOT help countries tackle balance of payments problems, stabilize
internal economies, and restore sustainable (self on-going) growth. IMF does not
finance projects.
Changes to IMF
In last 20 years, the amount of countries that need loans has increased. There are
too many countries that need loans. So limits have been placed on loans and changes
have madespeeded up the lending process to make it easier for low-income
countries.
Lending
IMF Lending (when countries borrow)
1. Help a country avoid disruptive economic adjustment, something that would
be extremely costly for those countries and others.
2. IMF help search or connect with other lenders.
3. Lend to prevent crisis within a country and globally.
Conditions for borrowers
In order to receive a loan from the IMF, a country may be near STATE ECONOMIC
CRISIS, with international reserved used up, economic imports or exports failing,
households going bankrupt.
Once the loan is requested
The IMF (lender) discusses (talks) with the country (borrower) the economic
policies that may be expected to address the money problems.
NO surprise to the country.
LOAN DISTRIBUTION
Loans are given in installments (portions, sections) when each CONDITIONAL GOAL
HAS BEEN MADE BY THE COUNTRY.
*when a country is eligible for a IMF loan that means they are on track to improve
their economy.

There are different types of loans that address the varying conditions of countries.
This is a good thing because no one country is alike.
Extended Credit Facility- provides financial assistance (loans-money advice) with
LONG TERM internal problems.
Rapid Credit Facility provides FAST assistance (loans-money advice) with
LIMITED CONDITIONALITY to countries facing URGENT (EXTREME) NEED
Standby Credit Facility- provides financial assistance (loans-money advice) to
countries with SHORT TERM PROBLEMS.
_________________________________________________________________________________________________

Two initiatives that address debt forgiveness:

HIPC HEAVILY INDEBTED POOR COUNTRIES creditors(lenders) provide debt
relief with view of restoring sustainability.
Multilateral debt relief initiative- IMF, World Bank, and African Development fund
cancel 100 percent of their debt claims on certain countries to help them advance
towards the millennium development goals.

QUOTAS
Each country is charged a quota based on their position in the world economy.
The members quota determines the MAXIMUM FINANCIAL COMMITMENT
(obligation), VOTING POWER, ACCESS ( or right ) TO THE IMF FINANCING.
100 % is the total amount of quota
______________________________________________________________
50% consist of GDP
30% openness
15% economic variability (changing economy)
5% international reserves
Fun Fact
USA largest member of IMF with a quota of 42.1 billion
Tuvalu is the smallest member with a quota of 1.8 million
Whats your countrys quota?
A country must the total amount of quota in order to be a member.
VOTES
Each IMF member have basic votes plus one additional vote for each $100,000 of
quota.
The more money you pay in quota, the more additional votes you have.
BORROWING
In a year a country can borrow 200% of its quota and over the time 600% of the
quota.
The more you pay, the more you can borrow.
CHANGES
Changes in quotas have to be approved by 85% majority.
SUPTOPICS:
Conditionality
When Developed Countries Tell Developing Countries What To Do
Debt Relief & Loan Forgiveness
When Developing Countries Have Trouble Paying Back Their Loans
IMF Voting Reform
When Developed Countries Have All The Voting Power

Notes about ___________

Does my country agree with this countrys policies?

Why or why not?

Would we like to write a draft
resolution with this country?
Other notes

RESOLUTIONS
Should focus on only ONE sub-topic
Students may NOT bring pre-written resolutions to the conference!
o However, they can come with ideas for action
Only the best two resolutions will be debated
Teach students to think creatively AND realistically