International Monetary Fund (IMF)
http://www.imf.org
Basic facts
The International Monetary Fund (IMF) is an international financial institution with headquarters in Washington, D. C., USA. It was established by 45 countries (including the former Czechoslovakia) at an international conference in July 1944 in Bretton Woods, USA. The IMF formally started its activity on 27 December 1945 when 29 countries signed the Agreement of the IMF. The IMF currently has 186 members.
Goals of the institution
- to promote international monetary cooperation and facilitate a balanced growth of international trade
- to promote exchange stability, to maintain exchange agreements among members, and to avoid competitive exchange depreciation
- to assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade
- to make the general resources of the IMF temporarily available to member countries, under adequate safeguard, to correct maladjustments in their balance of payments.
The IMF (unlike the World Bank) provides loans only for overcoming problems following from the maladjustment of the balance of payments which is often the consequence of various deformations in the economic system, either of structural nature or due to a wrong macro-economic policy. The IMF provides always only temporary financial help.
IMF bodies
The Board of Governors is the highest decision-making body of the IMF. It consists of one Governor and one Alternate for each member country. The Board of Governors makes all relevant decisions on IMF activities. The Board of Governors normally meets once a year (at Annual Meetings of the IMF and the World Bank Group). The Board of Governors has delegated many of its powers to the Executive Board which is its permanent executive body.
The International Monetary and Financial Committee (IMFC) meets twice a year to assess key problems of the international monetary system. Until September 1999 it worked as an Interim Committee.
The Development Committee is a joint committee of the Boards of Governors of the IMF and the World Bank. Its task is to advise and to submit reports to Governors of member states on all questions related to developing countries.
The Executive Board consists of 24 Directors. It deals with a wide range of political, operative and administrative questions, including surveillance over the monetary policy of member countries, providing financial help by the IMF to member countries and solving system problems of global economy.
The Managing Director is the Chairman of the Executive Board and also the head of the IMF staff. He is elected for a period of 5 years and can be re-elected several times. Since June 2011 the Managing Director has been Christine Lagarde (France).
SDR currency
The SDR (Special Drawing Rights) was created as an artificial currency unit in July 1969. It serves as an international reserve asset and as a unit of account. It serves only to IMF member states and some other designated institutions (e.g. the World Bank, the Bank for International Settlements). The SDR currently consists of a basket of 4 currencies (USD, EUR, JPY, GBP).
Member quotas and voting rights
The basic element of financial and organisational relations of a member country to the IMF is the member quota(expressed in SDR) which is determined on the basis of the economic position of the member country towards other IMF members. The member quota determines its maximum financial commitment to the IMF; it determines the share of a member country in the SDR allocation and the amount of money a country can receive from the IMF. The number ofmember votes depends on the size of the member quota. These votes determine the voting right of a member country at various political and operative decisions of the IMF.
The Slovak Republic and IMF
The Czechoslovak Republic (CSR) was one of the founding members of the IMF, and in 1954 its membership was interrupted. The Czechoslovak Federative Republic (CSFR) renewed its IMF membership on 20 September 1990 by signing the IMF Agreement (Act No. 500/1992). In connection to the split of Czechoslovakia into two independent republics, both countries acquired succession in the IMF since 1 January 1993.
Through a division of liabilities of the former CSFR, Slovakia received a Stand-By Loan and a Contingency a Compensatory Financing Facility (CCFF). During the first two years of independence, Slovakia's liabilities towards the IMF were extended by two new credits - the Systemic Transformation Facility (STF) and the Stand-By Loan II. At the end of October 2000, according to the resolution of the Slovak Government and a decision of the Bank Board of the Národná banka Slovenska, the Systemic Transformation Facility was repaid whereby Slovakia paid back all its liabilities towards the IMF.
The Slovak Republic achieved the convertibility of the Slovak Koruna (SKK) in the operations on the current account of the balance of accounts according to the Article VIII of the IMF Agreement on 1 October 1995.
Since 2005 Slovakia has actively participated in the IMF Financial Transaction Plan (FTP). The FTP is a mechanism through which economically strong IMF member countries lend money to member countries with a problematic balance of payments.
A Borrowing Agreement between the Slovak Republic and the IMF became effective on 12 February 2010. On the basis of this agreement the Slovak Republic shall provide a loan to the IMF up to the equivalent of EUR 440 million (Agreement). The Agreement is a part of the European Union's commitment declared in March 2009, to provide immediate support of IMF lending capacity in the amount of EUR 75 billion. In addition to the Slovak Republic, the IMF has signed bilateral borrowing agreements and bilateral note purchase agreements with other IMF members, or their central banks. The Národná banka Slovenska acts as agent and contact person for the Slovak Republic in relation to any issues concerning this Borrowing Agreement with the IMF (NBS press release).
In August 2009, the Slovak Republic received 265 Million SDR as part of the general SDR allocation, and in September 2009, it received 75.5 Million SDR as part of the special SDR allocation in the IMF (SDR Holdings and Allocations for Slovakia).
IMF annually conducts consultations with each member country according to the Article IV of the IMF Agreement. These consultations should assess the performance of the economy and submit recommendations for its further development. Since 2009, Article IV consultations with Slovakia have been split into two parts - consultations of the monetary and exchange rate policies of the euro area and economic developments in the euro area as a whole (this part is common for all euro area members) and consultations of other economic policies in Slovakia. The last mission in Slovakia related to consultations according to the Article IV took place in March 2011.
The Governor for Slovakia in the IMF is Jozef Makúch, Governor of the Národná banka Slovenska. His Alternate is the State Secretary of the Ministry of Finance of the Slovak republic.
Slovakia belongs to the Belgian constituency, together with Austria, Belgium, Belarus, the Czech Republic, Kosovo, Luxembourg, Hungary, Slovenia und Turkey. The Constituency Agreement was signed on 8 October 2003 and is valid for 10 years. The Executive Director is Willy Kiekens (Belgium).
According to the Agreement on Joint Representation signed on 25 April 2009, the Slovak Republic and the Czech Republic share a position of a Senior Advisor to the Executive Director of the IMF. Marek Jakoby has been appointed for this position from 1 July 2009 (NBS Press Release).
The member quota for Slovakia is currently SDR 427.5 million, on basis of which Slovakia has been allocated 5,014 votes in the IMF (0.20 % of total number of votes).
For more information about IMF activities related to Slovakia, see:
http://www.imf.org/external/country/SVK/index.htm
Updated: January 2012