International Monetary Fund
IMF was supposed to oversee and monitor the economic performance of 188 member countries and warn them of any developing economic crisis. If any crisis does develop and a country approaches IMF for help, the organisation chalks out a recovery plan, which includes imposition of conditions for keeping the economies on a particular path.
The organization's objectives stated in the Articles of Agreement are:
- promote international economic cooperation,
- international trade,
- exchange-rate stability including by making financial resources available to member countries to meet balance-of-payments needs.
When did India take the IMF bailout package?
The Indian government, faced with a balance of payments crisis in 1991, took a loan and agreed to the reforms process. The liberalisation in the economy was partly a concomitant of that need.
The IMF report is part of its mandate under Article IV of its constitution. The fund holds consultations with finance ministries and central banks of each member countries annually for its spring meeting in Washington.
The decision of the IMF to intervene in any country is based on the governing board's decision. The voting rights are determined historically by the economic strength of the countries. India, because of its rapidly growing economic clout, has demanded a re-drawing of the voting rights, but that did not happen at the recent Singapore meeting. Instead, the fund gave ad hoc voting right increase to China, South Korea, Turkey and Mexico. It has promised a long-term revision in another two years.