Ones again ZOMBI brings information about IMF function for his sweet visitors. Read and enjoy. IMF main function is to purchase and sell the member countries currencies.
If any country is facing adverse balance of payment and facing the difficulty to get the currency of creditor country, it can get short term credit from the fund to clear the debit.
The IMF allows the debtor country to purchase foreign currency in exchange for its own currency up to 75% of its quota plus an addition 25% each year. The maximum limit of the quota is 200% in special circumstances.
If the demand of any particular country currency increases and its stock with the fund falls below 75% of its quota, the IMF can declare it scare. But IMF also tries to increase its supply by these methods.
IMF purchases the Scare currency by gold.
IMF borrows from those countries scare currency that has surplus amount.
IIMF allows the debtor countries to impose restrictions on the imports of creditor country.
IMF is very useful to avoid the competitive depreciation which took place before World war-II.
When the devaluation policy is indispensable for any country then IMF provides loan to correct the balance of payment of that country. These are the main functions of International Monetary Fund.
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