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International Monetary Fund (IMF)

The IMF is a cooperative intergovernmental monetary and financial organization that was established in July, 1944 in Breton-Woods, New Hampshire, USA. The Fund started to work in Washington in May, 1946 comprising 39 countries at that time.

Herst Keller (Germany) is an Executive Director of the IMF since April, 2000.

At the present time 183 countries have membership in the IMF.

The IMF emerged as a proper response to the unsolved financial problems, which spurred the Great Depression in the 30s: sudden and unpredictable fluctuations in exchange rates of national currencies and unwillingness of governments to authorize convertibility of national currencies.

Article-agreements of the IMF are a main document of the fund, where all provisions and obligations of member-countries are mentioned.

One of the main tasks of the IMF is stabilization of world monetary system. Therefore, the main goals of the IMF are:

promoting the balanced expansion of world trade
stabilization of exchange rates
assistance in the creation of current calculations between IMF members and assistance in the elimination of currency limitations that distorts development of world trade
credit lending to member countries in order to adjust their balances of payments without distorting world trade and world payment flows
setting up Forum for consultations and cooperation in the sphere of international monetary issues.
The fund monitors international monetary system in order to provide its proper functioning and monitors exchange rates system of its members. Every member country has to provide the IMF with necessary information.

The Fund is responsible for a balanced functioning of the international monetary system and it pays special attention to global liquidity - the level composition of reserves available to member countries in order to satisfy their trade and payment abilities.

One of the main responsibilities of the Fund is to be a source of extra liquidity by distributing Special Drawing Rights (SDR) among its members.

IMF is not a bank and does not engage in intermediary activities between borrowers and lenders. Nonetheless, the IMF possesses considerable resources evaluated presently as being more than 90 billion SDR worth (around 125 billion USD). In case of special circumstances the IMF borrows from governmental organisations.

The membership payment of quota subscription is determined in accordance with economic development of a country.

Subscription payments. Countries pay 25% of their quota subscriptions in SDR or in other major currencies, such as USD; the rest is payable in national currencies of a member.

The IMF resources sufficiency is checked every 5 years.

Every member has its quota in SDR, which is equal to its subscription. The quota is the most important element in its financial and organisational relations with the Fund. Firstly, it determines the number of votes in the fund (besides 250 initial votes for every member) - one vote for every 100 000 SDR of the quota when executive directors are being elected; and for other operational and strategic decisions of the Executive Council. Secondly, the quota provides a member with a maximum access to the financial assets of the Fund. Thirdly, the quota determines the share of member in the SDR distribution.

According to the Clauses of the IMF Charter, the Managers Council should reconsider the volume of quotas within five years, and offer any amendments, which it considers necessary.

Both developing and developed countries could receive IMF credits, i.e. any country is thought to be a member of the Fund. In case of foreign currency shortage, a member-state has an opportunity to use temporarily IMF resources for a problem solution, irrespective of a national economy status or GDP per capita size.

Usually, the credits received from the IMF should be paid back within 3-5 years and in any way later than 10 years. The interest rates are a little bit lower than those of market, but are not so low as in case of the credits given by the International Association of Development (IAD) or the World bank.

The basic IMF aid criterion is the status of countrys balance of payment.

The IMF lends credits for subsidizing reforms in transitional period. To be sure that the given finances are used effectively, the IMF carefully supervises a course of countrys economic development during this period, through rendering technical assistance and subsequent advisory services if required.

The IMF also provides technical assistance in activity organization of central banks, establishment and modernization of taxation systems, and promotes to gather and publish the economic statistical data.

Member-countries do not make obligatory annual payments to the IMF. However, after recalculations at the end of each financial year (April 30) it is necessary to repay the gap that emerges because of fluctuation in currency exchange rate and SDR.

Cooperation of Uzbekistan with the IMF
In September 1992 Uzbekistan became a member of the IMF. The Republic entered the group together with Switzerland, Poland, Turkmenistan, Kyrgyz Republic and Tajikistan.

The representative office is opened in Uzbekistan in September 1992. The work of the IMF experts in Uzbekistan is being supervised by the Eastern sector and the second IMF European Department.

An IMF Manager from Uzbekistan is the President of the Board of Governors of the Central Bank of Uzbekistan - F.Mullajanov; First Deputy Minister of Finance T.Guskova is a Deputy Manger.

Total amount of loans given to Uzbekistan are 165.2 million SDR (about 225.2 m USD); out of which 99.75 million SDR (135.9 million USD) was given within the framework of system reforms (SR) and "stand-by" credit at an amount of 65,45 million SDR (89,2 million USD).

Credit returning has been undertaken since 1999. So far, according to the set terms, 123,6 m SDR (168,5 m USD) has been paid back and for April 1, 2003 indebtedness made up 41,6 m SDR (56,7 m USD).

On September 25, 2001 the last payment on "stand-by" credit was accomplished; as a result, the Republic has fulfilled all obligations on this credit.

Several IMF missions have visited Uzbekistan to provide technical assistance and to conduct consultations to the Government and Central Bank.

The Government of the Republic of the Uzbekistan and IMF have signed Memorandum on economic and financial issues describing concrete measures for reforming Uzbek economy, currency market liberalisation and providing national currency convertibility.

The Funds Board of Executive Directors greeted the Government's determination and commitment to implement a program of macroeconomic and structural reforms and positively assessed the measures that Uzbekistan has taken to meet conditions set by the Memorandum.

From July 12 to July 26, 2002 the IMF mission visited Uzbekistan which analyzed and assessed the course of implementing the Memorandum. The Government and Central Bank, jointly with the IMF have issued the Declaration about considerable progress that has been achieved during the implementation of the Memorandum.

The given application is published in the mass media of Uzbekistan.

From September 11 till September 20, 2002 the next IMF mission paid a visit to Uzbekistan, which aimed at the study of realization results of the Monitoring Program.

From February 11 till March 1, 2003 another IMF mission visited Uzbekistan within the framework of advice under the clause IV.

The last IMF mission led by the director of the Second European Department J.Odling-Smi visited Uzbekistan in May 1-3, 2003.

As a result of the performed work the Mission marked that monetary-credit and fiscal policies as a whole corresponded to the coordinated control parameters and progress was achieved by liberalization of cash operations, expansion of cash foreign currency access to the market and reforms realization in the field of state purchases.

 

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