DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY, VISAKHAPATNAM, A.

INTERNATIONAL MONETARY FUNDS

Submitted To

Prof. Aruna Kammila

Submitted By

Anjani Harika,
2015-041, VIth Semester

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 ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere thanks
to all of them.

I would like to express my gratitude towards my parents & member of DSNLU for their kind co-
operation and encouragement which helped me in completion of this project.

I am highly indebted to Prof. Aruna Kammila for her guidance and constant supervision as well
as for providing necessary information regarding the project & also for her constant motivation and
support in completing the project.

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 CERTIFICATE

This is to certify that the project on the title _________________________ by

______________ is satisfactorily completed. And she has submitted the report for

the same as a part of the assessment of VIth Semester for the batch of 2015-2020 in

the year of 2017-2018 for the subject ________________ under my guidance and

support.

Signature Signature

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 CONTENTS

ABSTRACT……………………………………………………………5

SYNOPSIS…………………………………………………………….6

INTRODUCTION………………………………………………….….10

WHAT IS IMF……………………………………………………….11

HISTORY OF IMF…………………………………………….……..11

WHAT DOES IT DO? ?……………………….. …………….……….12

HOW DOES IT WORK?……………………….. …………………….13

WHAT ARE ITS OBJECTIVES AND WHO ARE THE MEMBERS?….….16

LACUNAS IN ITS WORKING…………………………………….…...17

IMF AND WORLD BANK…………………………………………….18

CRITICISMS……………………………………………………….…21

GLOBAL GOVERNANCE AND FUTURE OF IMF………………….…..22

CONCLUSION & SUGGESTIONS…………………………………......23

SOURCES……………………………………………………………..25

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 ABSTRACT

"The IMF, also known as the Fund, was conceived at a UN conference in Bretton
Woods, New Hampshire, United States, in July 1944. The 44 countries at that
conference sought to build a framework for economic cooperation to avoid a
repetition of the competitive devaluations that had contributed to the Great
Depression of the 1930s.

The IMF's responsibilities: The IMF's primary purpose is to ensure the stability of
the international monetary system—the system of exchange rates and international
payments that enables countries (and their citizens) to transact with each other. The
Fund's mandate was updated in 2012 to include all macroeconomic and financial
sector issues that bear on global stability.

The IMF has played a part in shaping the global economy since the end of World
War II. As the Second World War ends, the job of rebuilding national economies
begins. The IMF is charged with overseeing the international monetary system to
ensure exchange rate stability and encouraging members to eliminate exchange
restrictions that hinder trade. After the system of fixed exchange rates collapses in
1971, countries are free to choose their exchange arrangement. Oil shocks occur in
1973–74 and 1979, and the IMF steps in to help countries deal with the
consequences. The implications of the continued rise of capital flows for economic
policy and the stability of the international financial system are still not entirely
clear. The current credit crisis and the food and oil price shock are clear signs that
new challenges for the IMF are waiting just around the corner. The researcher will be
focusing on various other aspects as in the future scope, criticisms and various
suggestion to the existing IMF."

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 SYNOPSIS

"PROJECT TITLE- INTERNATIONAL MONETARY FUND

RESEARCHER- MS. ANJANI HARIKA

OBJECT/ AIM- The object behind this research work and the project is to understand the working
of the International Monetary Fund and to find out as to how the whole process works behind the
veil of the Funding and helping in various transactions."

"BACKGROUND - The International Monetary Fund (IMF) is an international organization

headquartered in Washington, D.C., of "189 countries working to foster global monetary
cooperation, secure financial stability, facilitate international trade, promote high employment and
sustainable economic growth, and reduce poverty around the world." Formed in 1945 at the Bretton
Woods Conference primarily by the ideas of Harry Dexter White and John Maynard Keynes,[5] it
came into formal existence in 1945 with 29 member countries and the goal of reconstructing
the international payment system. It now plays a central role in the management of balance of
payments difficulties and international financial crises.[6] Countries contribute funds to a pool
through a quota system from which countries experiencing balance of payments problems can
borrow money. As of 2016, the fund had SDR477 billion (about $668 billion)"

SCOPE- The scope of the project is the whole of the countries which are a part of the United
Nations and the International Moneary Fund. It also revolves around various other fudnign
organizations.

RESEARCH METHODOLOGY - The researcher will strictly follow doctrinal method of research by
also having internal and external approach towards the gravity of the issues.

RESEARCH QUESTION - I} Whether the IMF is at its optimized working capacity?

II} Whether IMF has to adhere to the ground norms and the International along with the National
policies of the member countries?

III} Whether IMF is Hot and Cold in currency policies?

HYPOTHESIS The researcher would get into the understanding of the project by having a
presumption that the IMF is stabilized and regulated and help as a crisis manager during the odd
times of the economy. The proof or disproof of it will be found out in the later part of the project.

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LITERATURE REVIEW

I} International Monetary Fund and International Bank for Reconstruction and

Development- Bretton Woods, N. H

"The representatives of the forty-four nations faced differences of opinion frankly and reached an
agreement which is rooted in genuine understanding. None of the nations represented here has had
altogether its own way. The author says we have had to yield to one another not in respect to
principles or essentials but in respect to methods and procedural details,-. The fact that we have
done it, and that We have done it in a spirit of good-will and mutual trust, is, what he believes, one
of the hopeful heartening portents of our time. This book is a sign blazoned upon the horizon,
written large upon the threshold of the future—a sign for men in battle, for men at work in mines,
and mills,' and in the fields, and a sign for women whose hearts have been burdened and anxious
lest the cancer of war assail yet another generation—a sign that the peoples of the earth are learning
how to join hands and work in unity. There is a curious notion that the protection of national
interest and the development of international cooperation are conflicting philosophies—that
somehow or other men of different nations cannot work together without sacrificing the interests of
their particular nation."

II] CAPITAL FLOWS: IMF GUIDELINES CRITICIZED

"This Bretton Woods Project article highlights the IMF’s continued struggle with the idea of capital
controls as acceptable policy instruments. Whether or not the struggle is more ideological than
prudential is of little interest to countries that are experiencing large inflows of capital from
investors seeking higher returns than they can get in “developed countries.” Their warranted fear is
that the capital will be retrieved by investors as interest rates once again rise in Europe and the US.
Countries that used controls during the financial crisis have better weathered the storm than those
that did not - a statistic that suggests the IMF should reconsider more vocally. The current surge of
capital flows to emerging markets continues to challenge the IMF’s historical position regarding
capital account regulation and exchange rate policies, with the Fund’s policy framework being
criticised by academics and emerging markets"

III] AGREEMENT ON A GLOBAL FIREWALL, BUT LITTLE BEYOND THAT. - ANNIE LOWERY

" At the most recent summit of finance ministers, central bankers and international financial
institutions (World Bank and IMF) in Washington D.C., the view that countries are divided about
what to do to revert the crisis was consolidated. Despite pledges to rack up the IMF’s lending
capacity, the contributors are all but in agreement about what should be done with it. Whilst
European finance ministers stubbornly praise austerity yet lobby for greater pools of money, the

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IMF and the World Bank have made clear that “fiscal consolidation” alone will be deleterious.
Additionally, several emerging economies argue that fairer representation at the IMF is long
overdue, particularly considering the relative sizes of their economies and their generous
contributions to the bailout fund."

IV] THE REFORM OF IMF: THE PROVISIONAL APPRAISAL AND PERSPECTIVE OF INTERNATIONAL
DEBATES - BY RAINER WALK.

"This book primarily talks about the regionalization issue and how is it to have a regionalized body
that would work for the regional institution for flow of capital in the country balancing the influx of
the capital. "

CHAPTERS

1] INTRODUCTION

2] WHAT IS IMF?

3] HOW DOES IT WORK?

4] WHAT ARE ITS OBJECTIVE AND WHO ARE ITS MEMBERS?

5] WHAT ARE THE LACUNAS IN ITS WORKING?

6] CRITICISM TO SYSTEM

7] GLOBAL GOVERNANCE AND FUTURE OF IMF

8] SUGGESTIONS

9] SUMMARY

10] CONCLUSION

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BIBLIOGRAPHY

 FOR A STRONG AND DEMOCRATIC UNITED NATIONS : A SOUTH PERSPECTIVE.

 GLOBAL FINANCIAL REFORM : HOW? WHY? WHEN?
 STRUCTRAL ADJUSTMENT OF THE IMF : OPTIONS FOR REFORMING THE IMF'S
GOVERNANCE STRUCTURE

It is for the kind information of the readers, that the project might have a turn and may add few
more topics to the already existing ones with the advancement of the project.

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 INTRODUCTION

"Just as the United Nations (U.N.) was created in direct response to the human atrocities and
international conflict of World War II, the International Monetary Fund (IMF) was created to
help repair the decimation that was experienced by the developed nations that became involved
in the war. While both organizations have seemingly similar objectives (i. e. , post-war
reconstruction and creation of an environment for lasting peace), the Articles of Agreement of
the IMF, however, contains no explicit mention of human rights. After the reparation of the
former Axis powers was accomplished, the IMF was left somewhat without purpose.
Subsequently, the institution became involved in the financial matters of the developing nations
as a regulator of fiscal policy, as well as delving into other domestic matters. Thus, one might
say, the IMF became a sort of development agency. The IMF is a U.N. specialized agency. As a
result, Sigurn Skogly has argued that the IMF would be obligated to act in accordance with the
U.N. Charter. More specifically, it might be suggested that the IMF should adhere to human
rights standards of protection and promotion of such rights in keeping with the purpose of the
international organization. Looking to the literature, we find a number of pieces that discuss a
human rights-based approach to development. Assuming that the IMF serves a developmental
function, one might expect to find a portion of the literature treating the institution’s role and
participation in such a rights-based ideal. In fact, a number of authors deal with the subject, but
only a few are built around an in-depth discussion of the IMF’s human rights obligations, and
others merely gloss over the topic in short. "

"As might be expected, the institution itself most often claims that human rights concerns are
outside its scope. Some analyses focus on the IMF’s reaction to human rights prescriptions;
others go to lengths to outline the IMF’s legal personality and legal obligations to uphold the
ideals of the U.N. Charter. The IMF itself largely ignores the topic, while a number of NGOs
repeatedly mention the human rights obligations and effects of the organization. Academics
largely take a critical role in the discussion of the IMF and human rights-based approaches,
suggesting that the organization is falling short of the mark."

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 WHAT IS IMF?

"The International Monetary Fund (IMF) was another component agency formed out of the Bretton
Woods Conference in 1944. The purpose of the IMF was to provide stability to the global
monetary system. Similar to the World Bank, the mission of the IMF has evolved over time, and is
now primarily focused on the alleviation of poverty and the support of the UN Millennium
Development goals agreed to in 2000."

"According to Article 1 of its Articles of Agreement, the IMF was established to:
• promote international monetary cooperation
• facilitate the expansion and balanced growth of international trade
• promote exchange stability
• assist in the establishment of a multilateral system of payments
• make its resources available (under adequate safeguards) to members experiencing balance of
payments difficulties."

"Ultimately, the goal is to promote economic stability and limit the impact and frequency of crises,
to help resolve crises when the occur, and to promote economic growth and alleviate poverty."

"The International Monetary Fund (IMF) is an international organization that provides financial
assistance and advice to member countries. This article will discuss the main functions of the
organization, which has become an enduring institution integral to the creation of financial
markets worldwide."

"The International Monetary Fund is an organization of 189 member countries. It stabilizes the
global economy in three ways. First, it monitors global conditions and identifies risks. Second, it
advises its members on how to improve their economies. Third, it provides technical assistance
and short-term loans to prevent financial crises. The IMF's goal is to prevent these disasters by
guiding its members. These countries are willing to give up some of their sovereign authority to
achieve that aim."

HISTORY OF IMF

"The IMF was created at the 1944 Bretton Woods conference. It sought to rebuild Europe after
World War II. The Conference also set up a modified gold standard to help countries maintain the
value of their currencies. The planners wanted to avoid the trade barriers and high-
interest rates that helped cause the Great Depression."

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 W HAT D OES I T D O?

"The work of the IMF is of three main types. Surveillance involves the monitoring of economic
and financial developments, and the provision of policy advice, aimed especially at crisis-
prevention. The IMF also lends to countries with balance of payments difficulties, to provide
temporary financing and to support policies aimed at correcting the underlying problems; loans to
low-income countries are also aimed especially at poverty reduction. Third, the IMF provides
countries with technical assistance and training in its areas of expertise. Supporting all three of
these activities is IMF work in economic research and statistics."
"In recent years, as part of its efforts to strengthen the international financial system, and to
enhance its effectiveness at preventing and resolving crises, the IMF has applied both its
surveillance and technical assistance work to the development of standards and codes of good
practice in its areas of responsibility, and to the strengthening of financial sectors."
"The IMF also plays an important role in the fight against money-laundering and terrorism."

"The IMF was born at the end of World War II, out of the Bretton Woods Conference in 1945. It
was created out of a need to prevent economic crises like the Great Depression. With its sister
organization, the World Bank, the IMF is the largest public lender of funds in the world. It is a
specialized agency of the United Nations and is run by its 186 member countries. Membership is
open to any country that conducts foreign policy and accepts the organization's statutes."

"The IMF is responsible for the creation and maintenance of the international monetary system, the
system by which international payments among countries take place. It thus strives to provide a
systematic mechanism for foreign exchange transactions in order to foster investment and promote
balanced global economic trade."

"To achieve these goals, the IMF focuses and advises on the macroeconomic policies of a country,
which affect its exchange rate and its government's budget, money and credit management. The
IMF will also appraise a country's financial sector and its regulatory policies, as well as structural
policies within the macroeconomy that relate to the labor market and employment. In addition, as a
fund, it may offer financial assistance to nations in need of correcting balance of
payments discrepancies. The IMF is thus entrusted with nurturing the economic growth and
maintaining high levels of employment within the countries."

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 H OW D OES I T D O?

"The IMF gets its money from quota subscriptions paid by member states. The size of each quota is
determined by how much each government can pay according to the size of its economy. The quota
in turn determines the weight each country has within the IMF - and hence its voting rights - as
well as how much financing it can receive from the IMF."

"Twenty-five percent of each country's quota is paid in the form of special drawing rights (SDRs),
which are a claim on the freely usable currencies of IMF members. Before SDRs, the Bretton
Woods system had been based on a fixed exchange rate, and it was feared that there would not be
enough reserves to finance global economic growth. Therefore, in 1968, the IMF created the SDRs,
which are a kind of international reserve asset. They were created to supplement the international
reserves of the time, which were gold and the U.S. dollar. The SDR is not a currency; it is a unit of
account by which member states can exchange with one another in order to settle international
accounts. The SDR can also be used in exchange for other freely-traded currencies of IMF
members. A country may do this when it has a deficit and needs more foreign currency to pay its
international obligations."

"The SDR's value lies in the fact that member states commit to honor their obligations to use and
accept SDRs. Each member country is assigned a certain amount of SDRs based on how much the
country contributes to the Fund (which is based on the size of the country's economy). However,
the need for SDRs lessened when major economies dropped the fixed exchange rate and opted for
floating rates instead. The IMF does all of its accounting in SDRs, and commercial banks accept
SDR denominated accounts. The value of the SDR is adjusted daily against a basket of currencies,
which currently includes the U.S. dollar, the Japanese yen, the euro, and the British pound."

"The larger the country, the larger its contribution; thus the U.S. contributes about 18% of total
quotas while the Seychelles Islands contribute a modest 0.004%. If called upon by the IMF, a
country can pay the rest of its quota in its local currency. The IMF may also borrow funds, if
necessary, under two separate agreements with member countries. In total, it has SDR 212 billion
(USD 290 billion) in quotas and SDR 34 billion (USD 46 billion) available to borrow."

"Similar to the World Bank, the IMF works with member states to meet its mission. More than the
World Bank, the IMF holds significant influence over the policies of the member states, as outlined
in Article IV of the IMF Articles of Agreement. Article IV provides for significant involvement by
the IMF into the activities and policies of member states. Often referred to as “consultations”,
these sessions are designed to ensure that member state policies are aligned globally."

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"The IMF engages in a number of ways with member states. Some examples are:"

Surveillance

"Not what you might think, surveillance is the regular ongoing interaction between the IMF staff
and member states. The IMF conducts in-depth analysis of member state’s economy and economic
trends, and works with the member state to craft policies and approaches to ensure sustainable and
prosperous economic growth. Elements of this analysis are in monetary policy areas – including
exchange rate, money supply, interest rates and other monetary levers."

"The IMF produces a wealth of analytical reports. It provides the World Economic Outlook,
the Global Financial Stability Report, and the Fiscal Monitor each year. It also delves into regional
and country-specific assessments."

"It uses this information to determine which countries need to improve their policies. Hence, the
IMF can identify which countries threaten global stability. The member countries have agreed to
listen to the IMF's recommendations because they want to improve their economies and remove
these threats. "

Technical Assistance

"Given the strong technical resources of the IMF, the organization provides significant technical
assistance to member states in need. This assistance can range from consultation on fiscal and
monetary policy to banking system structure, regulation and statistical analysis. The IMF can serve
as a virtual “central bank” for those states that do not have adequate resources, or that need
additional assistance."

Financial Assistance

"Of late, the IMF has assumed some of the roles that traditionally would be considered banking –
blurring the roles between the IMF and the World Bank. Relying on the Article I mandate to
address balance of payments issues, the IMF provides short and medium term loans to address
balance of payments deficits, or to address more structural issues for some of the poorest
members. The IMF loans, unlike World Bank loans, are not project oriented. They are general
funds. However, they come with the provision that the IMF can set significant conditions on the
loans – incurring criticism of infringing on sovereignty. Generally these loans are from 3-10 years
in term, versus the 30+ year loans that can be obtained through the World Bank."

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"Since the Mexican peso crisis of 1994–95 and the Asian crisis of 1997–98, the IMF has taken a
more active role to help countries prevent financial crises. It develops standards that its members
should follow."

"For example, members agree to provide adequate foreign exchange reserves in good times. That
helps them increase spending to boost their economies during recessions. The IMF reports on
members countries' observance of these standards. It also issues member country reports that
investors use to make well-informed decisions. That improves the functioning of financial markets.
The IMF also encourages sustained growth and high living standards, which is the best way to
reduce members' vulnerability to crises."

**GIST**

"The IMF was conceived primarily as a supervisory institution to promote international monetary
cooperation and facilitate the growth of international trade. This is to be achieved through
maintaining monetary exchange stability and assisting member countries who are experiencing
balance of payments problems."

"Upon membership of the IMF, member countries deposit a sum of money known as a ‘quota
subscription’. This sum will determine how much money the country can draw from the Fund in
times of crisis. Quotas also determine the voting rights of each member country, which means, like
the World Bank, decision-making power in the IMF rests with the countries with the highest
contribution."

"The IMF lends money to member countries faced with balance of payments problems, ie when a
country fails to earn sufficient foreign currency—through exports or provision of services—to pay
for its imports. In return for financial assistance from the IMF, borrower countries must implement
a set of economic reforms aimed at overcoming their balance of payments problems. Loans are
disbursed in installments and payment is tied to the countries’ compliance with the structural
adjustment policies."

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 WHAT ARE ITS OBJECTIVES AND THE S TRUCTURE

"The International Monetary Fund (IMF) is based in Washington, D.C. and currently consists of
189 member countries, each of which 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's website describes its mission as "to foster global monetary cooperation, secure
financial stability, facilitate international trade, promote high employment and sustainable
economic growth, and reduce poverty around the world." "

"The governance structure of the IMF is similar to the World Bank. There is a Board of Governors
with representatives from all member countries, and a 24 person executive committee. Each state
is assessed a quota based on the size of their economy, and a portion of the amount is maintained in
the form of SDR’s or Special Drawing Rights where they maintain 25% of their quota in a reserve
currency. The amount of the quota determines the voting rights, with the USA having the largest
share."
"The IMF chief has been Managing Director Christine Lagarde since June 28, 2011. She is
Chairman of the 24-member Executive Board. It appointed her to a second renewable five-year
term in February 2016, effective July 5, 2016. The Managing Director is the chief of the IMF’s
2,700 employees from 147 countries. She supervises four Deputy Managing Directors. "

"The IMF Governance Structure begins with the IMF Governing Board which sets direction and
policies. Its members are the finance ministers or central bank leaders of the member countries.
They meet each year in conjunction with the World Bank. The International Monetary and
Financial Committee meets twice a year. These committees review the international monetary
system and make recommendations. "

"The role of the IMF has increased since the onset of the 2008 global financial crisis. In fact, an
IMF surveillance report warned about the economic crisis but was ignored. As a result, the IMF has
been called upon more and more to provide global economic surveillance. It's in the best position
to do so because it requires members to subject their economic policies to IMF scrutiny. Member
countries are also committed to pursuing policies that are conducive to reasonable price stability,
and they agree to avoid manipulating exchange rates for unfair competitive advantage."

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 LACUNAS

"Bold statements made by the UN special rapporteur on the right to food argue that international
law is binding on organisations such as the World Bank, IMF and WTO. In his September interim
report to the UN General Assembly, Jean Ziegler analyses negative impacts of the policies of the
World Bank and IMF on the human rights of vulnerable populations in the South. Given that the
power of nation-states is often “eclipsed by other actors”, the traditional boundaries of human
rights to regulate the power of other international actors such as the BWIs should be extended, and
systematically elaborated."

"The current crisis in Niger, which he attributes in part to the market-based paradigm imposed by
the World Bank and IMF, including cost-recovery policies in health centres, and the privatisation
of public services. Also referring to large projects that have resulted in human rights violations
stemming from forced displacement and involuntary resettlement. For instance, the Kedung Ombo
dam in Indonesia led to 12,000 people losing their land and livelihoods; while the Bank’s internal
Inspection Panel recommendations for compensation and rehabilitation of those affected by a coal-
mine in Jharkhand, India, were largely ignored."

"The analysis is also extended to the far-reaching impacts of structural adjustment and PRSPs,
which “far from improving food security for the most vulnerable, have often resulted in a
deterioration of food security among the poorest”. He uses case studies in Zambia and India to
illustrate how such WB/IMF-imposed measures to drastically cut public spending, liberalise trade,
and ‘flexibilise’ land, labour and financial markets has violated economic, social and cultural
rights."

"He premises that “the programmes of economic reform imposed by IMF and World Bank in
indebted countries have a profound and direct influence on the situation of the right to food and
food security”."

"The report challenges the Bank and Fund’s denial of their human rights responsibilities, including
the claim that they are restricted by their articles of agreement. The Bank and Fund’s claim that
they are organisations not states overlooks the widely recognised view that human rights find their
source not only in treaties, but also in customary law. The obligation to realise the right to adequate
food has become part of customary international law, given the almost universal ratification of
treaties that contain it. Furthermore most member states of these institutions have ratified at least
one human rights treaty in which the right to food is contained."

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WITH POWER MUST COME RESPONSIBILITY

"In order to fully comply with their obligations under the right to food, international organisations
must “respect, protect and support the fulfilment of the right to food by their member states”. The
Bank and Fund should at least recognise their minimum obligation to refrain from promoting
policies or projects that negatively impact the right to food, particularly where no social safety nets
are implemented. Lastly, they should also recognise positive obligations by ensuring that those they
sponsor do not violate the right to food in the implementation of common projects, and should
support governments in the fulfilment of the right to food."

IMF AND WORLD BANK

"The International Monetary Fund and the World Bank were both created at an international
conference convened in Bretton Woods, New Hampshire, United States in July 1944. The goal of
the conference was to establish a framework for economic cooperation and development that would
lead to a more stable and prosperous global economy. While this goal remains central to both
institutions, their work is constantly evolving in response to new economic developments and
challenges."

"The IMF’s mandate. The IMF promotes international monetary cooperation and provides policy
advice and capacity development support to help countries build and maintain strong economies.
The IMF also makes loans and helps countries design policy programs to solve balance of
payments problems when sufficient financing on affordable terms cannot be obtained to meet net
international payments. IMF loans are short and medium term and funded mainly by the pool of
quota contributions that its members provide. IMF staff are primarily economists with wide
experience in macroeconomic and financial policies."

"The World Bank’s mandate. The World Bank promotes long-term economic development and
poverty reduction by providing technical and financial support to help countries reform certain
sectors or implement specific projects—such as building schools and health centers, providing
water and electricity, fighting disease, and protecting the environment. World Bank assistance is
generally long term and is funded both by member country contributions and through bond
issuance. World Bank staff are often specialists on particular issues, sectors, or techniques."

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"The IMF and World Bank collaborate regularly and at many levels to assist member countries and
work together on several initiatives. In 1989, the terms for their cooperation were set out in
a concordat to ensure effective collaboration in areas of shared responsibility."

"High-level coordination. During the Annual Meetings of the Boards of Governors of the
IMF and the World Bank, Governors consult and present their countries’ views on current issues in
international economics and finance. The Boards of Governors decide how to address international
economic and financial issues and set priorities for the organizations."

"A group of IMF and World Bank Governors also meet as part of the Development Committee,
whose meetings coincide with the Spring and Annual Meetings of the IMF and the World Bank.
This committee was established in 1974 to advise the two institutions on critical development
issues and on the financial resources required to promote economic development in low-income
countries."

"Management consultation. The Managing Director of the IMF and the President of the World
Bank meet regularly to consult on major issues. They also issue joint statements and occasionally
write joint articles, and have visited several regions and countries together."

"Staff collaboration. IMF and Bank staffs collaborate closely on country assistance and policy
issues that are relevant for both institutions. The two institutions often conduct country missions in
parallel and staff participate in each other’s missions. IMF assessments of a country’s general
economic situation and policies provide input to the Bank’s assessments of potential development
projects or reforms. Similarly, Bank advice on structural and sectoral reforms is considered by the
IMF in its policy advice. The staffs of the two institutions also cooperate on
the conditionality involved in their respective lending programs."

"The 2007 external review of Bank-Fund collaboration led to a Joint Management Action Plan on
World Bank-IMF Collaboration (JMAP) to further enhance the way the two institutions work
together. Under the plan, Fund and Bank country teams discuss their country-level work programs,
which identify macroeconomic and sectoral issues, the division of labor, and the work needed in
the coming year. A review of Bank-Fund Collaboration underscored the importance of these joint
country team consultations in enhancing collaboration."

"Reducing debt burdens. The IMF and World Bank have also worked together to reduce the
external debt burdens of the most heavily indebted poor countries under the Heavily Indebted Poor
Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI)."

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"They continue to help low-income countries achieve their development goals without creating
future debt problems. IMF and Bank staff jointly prepare country debt sustainability analyses under
the Debt Sustainability Framework (DSF)developed by the two institutions."

"Reducing poverty. In 1999, the IMF and the World Bank launched the Poverty
Reduction Strategy Paper (PRSP) approach as a key component in the process leading to debt relief
under the HIPC Initiative and an important anchor in concessional lending by the Fund and the
Bank. While PRSPs continue to underpin the HIPC Initiative, the World Bank and the IMF adopted
in July 2014 and July 2015, respectively, new approaches to country engagement that no longer
requires PRSPs. The IMF streamlined its requirement for poverty reduction documentation for
programs supported under the Extended Credit Facility (ECF)or the Policy Support Instrument
(PSI)."

"Setting the stage for the 2030 development agenda. Between 2004 and 2015 the IMF and the
Bank jointly published the annual Global Monitoring Report (GMR),which assessed progress
towards meeting the Millennium Development Goals (MDGs). In 2015, with the replacement of
the MDGs with the Sustainable Development Goals (SDGs) under the 2030 Global Development
Agenda, the IMF and the Bank have actively engaged in the global effort to support the
Development Agenda. Each institution has committed to new initiatives, within their respective
remits, to support member countries in reaching their SDGs. They are also working together to
better assist the joint membership, including through enhanced support of stronger tax systems in
developing countries, and support of the G-20 Compact with Africa—in collaboration with
the African Development Bank—to promote private investment in Africa."

"Assessing financial stability. The IMF and the World Bank are also working together to make
financial sectors in member countries resilient and well regulated. The Financial Sector Assessment
Program (FSAP) was introduced in 1999 to identify the strengths and vulnerabilities of a country's
financial system and recommend appropriate policy responses."

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 CRITICISM

"The IMF would be obligated to act in accordance with the U.N. Charter. More specifically, it might
be suggested that the IMF should adhere to human rights standards of protection and promotion of
such rights in keeping with the purpose of the international organization. "

"Looking to the literature, we find a number of pieces that discuss a human rights-based approach to
development. Assuming that the IMF serves a developmental function, one might expect to find a
portion of the literature treating the institution’s role and participation in such a rights-based ideal. "

"In fact, a number of authors deal with the subject, but only a few are built around an in-depth
discussion of the IMF’s human rights obligations, and others merely gloss over the topic in short. As
might be expected, the institution itself most often claims that human rights concerns are outside its
scope. Some analyses focus on the IMF’s reaction to human rights prescriptions; others go to
lengths to outline the IMF’s legal personality and legal obligations to uphold the ideals of the U.N.
Charter. The IMF itself largely ignores the topic, while a number of NGOs repeatedly mention the
human rights obligations and effects of the organization. Academics largely take a critical role in the
discussion of the IMF and human rights-based approaches, suggesting that the organization is
falling short of the mark."
"Philip Alston. 1995. The United Nations and Human Rights. Oxford: Clarendon Press."

" This volume reports that the IMF has been criticized by the U.N. General Assembly for having
continued its lending relationship with South Africa in the atmosphere of sanctions. It also
reports that IMF conditions are adversly affecting the poor and are violating ILO standards and
human rights."

"Gilles de Wildt; Mike Rowson; Marjan Stoffers and Meri Koivusalo. 2001. “Which comes first-
- health or wealth?”Lancet. 357(9262): 1123. "

"Abstract: Focuses on the alleged lack of protection of basic human rights, particularly the right
to health, by international organizations such as the World Bank, the International Monetary
Fund (IMF), and the World Trade Organization (WTO). Effect of policies instituted by these
organizations on health care in less-developed nations; Criticism voiced by branches of the
United Nations; Mention of a meeting which will challenge the notion that international
financial institutions are above international human rights. "

21
"L. and Hargrove J. L. Henkin. 1994. Human Rights: An Agenda for the Next Century.
Washington, D. C.: The American Society of International Law. "

“Development and Human Rights” by Danilo Turk relates that the IMFs SAPs affect human
rights. It is suggested that states need to regulate human rights and the IMF must assure that
there is no negative impact of its programs. The author also suggests that there needs to be a
strengthening of cooperation among U.N. human rights organs to assure that development
programs avoid human rights violations.

"Ann Pettifor. 2001. “Global Economic Justice: human rights for debtor nations”. Journal of
Human Development. 2(1): 47-51. "

"Abstract: Focuses on the call of Jubilee 2000 campaign to cancel the unpayable debts of the
poorest countries. Goals of Jubilee 2000; Status of human rights in indebted countries; Role of
World Bank and International Monetary Fund in reckless lending and borrowing; Role of
Jubilee 2000 in altering the balance of power between rich and poor nations."

FUTURE PLANS

"Setting the stage for the 2030 development agenda. Between 2004 and 2015 the IMF and the
Bank jointly published the annual Global Monitoring Report (GMR),which assessed progress
towards meeting the Millennium Development Goals (MDGs). In 2015, with the replacement of
the MDGs with the Sustainable Development Goals (SDGs) under the 2030 Global
Development Agenda, the IMF and the Bank have actively engaged in the global effort to
support the Development Agenda. Each institution has committed to new initiatives, within their
respective remits, to support member countries in reaching their SDGs. They are also working
together to better assist the joint membership, including through enhanced support of stronger
tax systems in developing countries, and support of the G-20 Compact with Africa—in
collaboration with the African Development Bank—to promote private investment in Africa."

22
 CONCLUSION

"Over the last two decades, the framework for international financial regulation has emerged as
a primary example of how contemporary international law works in the absence of familiar
trappings of law. As the literature on the topic emphasizes, traditional definitions of
international law assume formal obligations and international institutions created by state-level
agreements. According to this literature, one thing is certain: there is no traditional, state-level,
treaty-based component of international financial regulation."

"This conventional account misapprehends the scope of international monetary law and the role
of the International Monetary Fund, a treaty-based international institution. It miscasts the Fund
as only a monitor of its members’ compliance with agreements forged elsewhere. In fact,
although the Fund is largely known for its conditional lending function, it is a regulatory
institution charged with enforcing formal obligations of its nearly universal membership,
including the members’ obligations with regard to their financial policies. The Fund’s primary
regulatory role is to conduct bilateral surveillance of its members’ performance of these
obligations and multilateral surveillance to ‘oversee the international monetary system in order
to ensure its effective operation’ (Art IV Section 3a of the IMF Articles of Agreement). –
Surveillance is thus a mode of enforcement, albeit one that relies primarily on persuasion and
not on coercive sanctions. And, since the 1990’s, members’ financial policies have become an
increasingly important component of the Fund’s bilateral and multilateral surveillance."

"A recent article of mine describes three important post-Crisis developments in the Fund’s
financial surveillance: the evolution of the Financial Sector Assessment program, a project the
Fund conducts with the World Bank, and its incorporation into Fund surveillance of members
with systemically important financial systems; the Fund’s new view on managing capital flows
and its expanded efforts to help manage flows on a global level; and the Fund’s efforts to
promote financial regulatory reforms in the Eurozone."

"By misapprehending its regulatory function, scholars and commentators have underestimated
the Fund’s potential impact on its members’ domestic and international financial policies and
what that impact may tell us about global governance. Assuming that the Fund has some
meaningful impact on its members’ financial policies, this requires a remapping of the Fund’s
place within the framework of international financial regulation, and it seriously complicates the
account of financial regulation as exclusively the province of regulatory networks and informal
coordination and cooperation. "

23
"An accurate account must at least accommodate a formal international institution performing
the distinctly traditional regulatory roles of enforcement and supervision. In the taxonomy of
network theory, international financial regulation is a vertical governance network with the
Fund, a genuinely supranational institution, performing an enforcement function."

"Furthermore, if Fund surveillance has more than trivial impact on international financial
regulation, this raises an interesting possibility: that states’ formal commitments and the Fund’s
formal responsibilities under its Articles contribute to the design and operation of both domestic
and international financial regulation. These formal, treaty-based obligations and responsibilities
likely do make such a contribution. Perhaps most significantly, they appear to influence the
Fund’s staff and its officials in their performance of ongoing supervisory and regulatory
activities. Internal governance at the Fund puts meaningful weight on the formal authority for
the Fund’s mandate and its activities, and such attention to formal authority likely gives Fund
staff and officials some measure of confidence in their conduct of surveillance with members. It
is also possible that states’ formal obligations pursuant to the Fund’s Articles affect their
engagement with Fund staff and officials in the course of surveillance."

"The conventional account of international financial regulation as a paradigmatic example of the

regulatory work done by soft law and informal arrangements in global governance may be
largely accurate. However, this account ignores the role of the Fund in helping design and
regulate the financial regulatory framework and the formal legal basis for that role. In ignoring
this component of international financial regulation, scholars may be missing an important
example of the utility of formal international legal arrangements."

24
 "SOURCES OF INFORMATION:-"
 "BIBLIOGRPHY"
 "International Monetary Fund and International Bank for Reconstruction
and Development- Bretton Woods, N. H"
 "CAPITAL FLOWS: IMF GUIDELINES CRITICIZED"
 "THE REFORM OF IMF: THE PROVISIONAL APPRAISAL AND PERSPECTIVE OF
INTERNATIONAL DEBATES - BY RAINER WALK."

 "AGREEMENT ON A GLOBAL FIREWALL, BUT LITTLE BEYOND THAT. - ANNIE

LOWERY"

 WEBSITES
 "ncrc.co.in"
 "heinonline.com"
 "manupatra.com"
 "indiakanoon.com"
 "shodhganga.com"
 "hanumanth.com"

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