Consider the following statements and identify the right ones.i. IMF c...
IMF (International Monetary Fund) and its Origins
The International Monetary Fund (IMF) is an international financial institution that was established in 1944, with the primary goal of promoting global monetary cooperation and financial stability. It plays a crucial role in fostering economic growth, reducing poverty, and ensuring the stability of the international monetary system.
i. IMF came into existence as an outcome of the Bretton Woods agreement
The Bretton Woods agreement refers to the international conference held in Bretton Woods, New Hampshire, United States, in July 1944. The conference aimed to devise a new global economic framework after the devastation caused by World War II. One of the key outcomes of the conference was the establishment of two international institutions: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (now part of the World Bank).
The IMF was created to address the challenges faced by countries in maintaining stable exchange rates and managing their international payments. It was envisaged as an organization that would provide financial assistance to member countries facing balance of payments problems and help them stabilize their economies. The IMF's main objectives were to promote international monetary cooperation, facilitate the expansion and balanced growth of international trade, and contribute to the stability and growth of the global economy.
ii. France was the first country to borrow from IMF
After its establishment, the IMF began providing financial assistance to its member countries to help them overcome balance of payments difficulties. France was indeed one of the first countries to borrow from the IMF. In 1947, France faced severe economic challenges due to the aftermath of World War II, and it sought financial assistance from the IMF. The IMF approved a loan for France, which helped stabilize its economy and rebuild its infrastructure.
The IMF's lending activities have since expanded to provide financial assistance to numerous countries facing economic crises or significant external imbalances. It provides loans to member countries with conditions aimed at promoting economic reforms and ensuring the sustainability of the borrowing country's economy.
Overall, both statements i and ii are correct. The IMF was indeed established as an outcome of the Bretton Woods agreement, and France was one of the first countries to borrow from the IMF. These facts highlight the significance of the IMF's role in the global financial system and its efforts to promote economic stability and growth among its member countries.