Kristalina Georgieva re-appointed IMF MD for another 5 years term

According to the International Monetary Fund (IMF), Kristalina Georgieva has been re-appointed as the Managing Director (MD) of the IMF for a new 5 year term. Kristalina Georgieva's new term will start on 1 October 2024. 

How is the IMF MD Appointed 

The IMF managing director is appointed by the executive board, which can select a managing director based on voting or consensus. In 2004, the IMF adopted a policy of appointing a Managing Director through consensus. This year, Kristalina Georgieva was the only candidate nominated for the post.

The candidate for the MD post can be nominated by an IMF Fund Governor or by an Executive Director.

Board of Governors of the IMF

The Board of Governors is the highest decision-making body of the IMF.The Board of Governors consists of one governor and one alternate governor. The governor is normally the country's finance minister. The alternate governor is usually the governor of the country's central bank. Thus, Nirmala Sitharam is the governor, and the RBI governor is the alternate governor of India on the Board of Governors. The Board of Governors normally meets once a year in September /October.

The Executive Board performs the day-to-day function of the IMF. 

Functions of the Executive Board of the IMF

The Executive Board is responsible for conducting the IMF's day-to-day business. The Executive Board has 24 Directors who are elected by member countries or groups of countries.

The Managing Director is the chairman of the Executive Board and the chief of the IMF’s operating staff. 

There are four deputy managing directors who help the managing director in the day-to-day operations of the IMF.

About  Kristalina Georgieva

Kristalina Georgieva is from Bulgaria and was appointed as the MD of the IMF in 2019 for a five-year term. She has also been Chief Executive Officer of the World Bank. She also served as the Interim President of the World Bank Group. She also worked as Commissioner for International Cooperation, Humanitarian Aid and Crisis Response of the European Commission.

International Monetary Fund 

• The International Monetary Fund is a global multilateral development (MDB) bank established as a specialised agency of the United Nations on 27 December 1945. It formally started operating on 1 March 1947.
• The Bretton Woods Conference, also known as the United Nations Monetary and Financial Conference, was held from 1 July to 22 July 1944 in Bretton Woods, New Hampshire, United States. 
• 44 countries, including India, participated in the conference and agreed to set up a new International monetary system after the Second World War. The conference decided to establish the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which later became part of the World Bank group. 
• India is a founder member of the IMF.

Function of IMF

The IMF performs various functions. There has been a change in the function of the IMF as time has progressed. Some of the functions are :

Monitoring Exchange Rate 

• The Bretton Woods conference set up a system of exchange rates based on a gold standard. The exchange rate is the rate at which a country’s currency is exchanged into US Dollars.
• In this standard, the United States dollar was made the reserve currency, and the US dollar was fixed to a weight of gold.
• The IMF was charged with monitoring exchange rates to promote international financial stability and lend reserve currency to nations with balance-of-payments deficits. 
• The IMF abandoned it in 1973. Thus, monitoring the global exchange rate is not currently a function of the IMF.

Financial Assistance to Member countries 

• The IMF provides loans to its member countries facing economic crises or balance of payment crises. Balance of payment crisis refers to a situation where the country doesn't have enough foreign exchange to repay its external debts and fund its normal imports. 
• The IMF is the only multilateral development bank in the world that provides help to such countries.
• It not only provides loans to such member countries but also prescribes certain economic policies to restore economic stability and growth and prevent such crises from occurring again. 
• The IMF also provides loans to member countries where there is a possibility of such financial crises occurring in the near future.

Monitoring member countries' economy 

The IMF regularly monitors its member countries' economic and financial policies and advises them on adopting sound policies. 

Capacity Development of Member Countries 

IMF provides technical assistance and training to help member countries’ governments implement sound economic policies. It trains the economists and policymakers of the member countries for this purpose.

Quota and Voting Rights In IMF

• There are 190 member countries of the IMF. Whenever a member joins the IMF, the member countries are allotted a quota which reflects the country’s position in the world economy.
• The quota is denominated in the Special Drawing Rights (SDR), which is the IMF's accounting unit. The member countries subscribe to the quota by purchasing the allotted SDR. In return, the country is allotted a voting right that is roughly in proportion to its quota. 
• The United States of America has the highest quota,17.43%. Thus, the United States, which has the highest quota in the IMF, has the highest voting rights, 16.77%.
• The United States has a virtual veto power in the IMF, as the major decision requires approval by at least 85 % of the members vote.
• India has the eighth largest quota-2.75% in the IMF. India has a voting share of 2.63% in the IMF.

Headquarters of the IMF: Washington D.C, United States of America.

Accounting Unit of IMF: Special Drawing Rights (SDR)

First MD of IMF:  Ivar Rooth of Sweden 1951-1956

Member countries: 190