IMF proposes to deploy its full 1 trillion US Dollar lending capacity to support countries

IMF proposes to deploy its full 1 trillion US Dollar lending capacity to support countries

Part of: GS Prelims and GS-II –Global Groupings; Role of International Organization

In News:

• International Monetary Fund (IMF) has proposed to deploy its full 1 trillion US Dollar lending capacity to support countries battling COVID-19 outbreak.
• The IMF Board has already approved debt relief for 25 of its poorest members. 

Important value additions:

The International Monetary Fund (IMF) 

• It is an organization of 189 countries which has the objectives to: 
  • foster global monetary cooperation
  • secure financial stability
  • facilitate international trade
  • promote high employment and sustainable economic growth
  • reduce poverty around the world.
• It was created in 1945. 
• It is governed by and accountable to the 189 member countries. 
• Its primary purpose is to ensure the stability of the international monetary system, that is, the system of exchange rates and international payments that enables countries to transact with each other.
• The IMF provides broad support to low-income countries (LICs) through surveillance, capacity-building activities and concessional financial support. 
• Decisions are made by a majority of votes cast. 
• The Board of Governors consists of one(1) governor and one alternate governor for each member country. 
• IMF funds come from two major sources: quotas and loans. 
• Quotas are pooled funds of member nations. Nations with larger economic importance have larger quotas. 
• Wealthier countries that provide more money to the IMF have more influence. 
• Member’s quota also determines its relative voting power.