What is the interest rate sent by the IMF?
The International Monetary Fund (IMF) provides conditional loans to member countries for various needs such as balance of payments, foreign trade deficit, budget support and climate crisis. This loan is provided through the company’s own financing mechanism, Special Drawing Rights or SDR. But where does the IMF get so much money? This report contains the interest loss on the loan given by them.
What is SDR?
Special Drawing Rights or SDRs are the IMF’s own financing mechanism. The IMF’s assets and liabilities are denominated in SDR units. But it is not a currency itself, just an idea. SDRs are denominated in US Dollars, Euros, Chinese Renminbi, Japanese Yen and Pounds.Calculates the proportional average of these five currencies. But all the central banks of the world support its value. This virtual asset can be exchanged with any currency. As a result, central banks can count the IMF’s SDR in any currency against their reserves. Through this, a country’s foreign exchange reserves increase. SDR values are updated regularly. Last Friday, the value of 1 SDR was 1.33 USD.
Where does the IMF get its money from?
Basically the IMF collects funds or money from three sources. One. Membership subscription or quota. Two. Borrowing. Three. Bilateral loan agreement. How much money a country will contribute among the members of the IMF is specified in the form of quota. The amount of contribution a country pays is determined by the country’s economic size in the global economy. This subscription is the main source of income of the organization. However, any member country can contribute more than the fixed quota if it wants.
About 47,627,200,000 SDRs have been deposited in the IMF fund from members’ contributions. Of this, 106 crore 66 lakh SDRs are specified for Bangladesh, which is 22 percent of the total SDRs.
Apart from this, the IMF takes loans from the member countries if needed. It is also a source of income for the organization. Apart from this, the IMF provides loan assistance to member countries. The money that comes from interest is also a major source of income for the organization
How much money does the IMF have?
In 1944, 44 countries formed the IMF. Currently, 190 countries of the world are members of the IMF. Total assets of the IMF, including membership fees and other income, currently amount to about 97,700 crore (977 billion) SDR. Of this, 71 thousand 3 billion (713 billion) SDRs are at the lending level. If expressed in US currency, it is about 1 trillion or 100 million US dollars.
There are many types of loan programs
Broadly, the IMF lends from three types of funds. One. General Asset Account (GRA). Two. Poverty Reduction and Growth Trust (PRGT). Three. Newly formed Resilience and Sustainability Trust (RST) Fund.Among these are loans from the GRA Fund at market-based interest rates on hard terms. It can take any member state. Loans with flexible terms are provided from the PRGT Fund. This is mainly for low income countries. Currently no interest is payable on such loans. And low- and middle-income countries are given loans from the RST fund to tackle long-term challenges like climate change and the coronavirus. IMF has 13 types of loan programs under these three funds.The IMF’s Board of Directors sets different interest rates for different lending programs.
When did Bangladesh first borrow?
Bangladesh has taken a total of 11 loans from the IMF so far. It was taken for the first time in 1974. Then the loan was taken five times during 1980-90. One of the IMF’s conditions for the loan in 1990 was the introduction of value added tax (VAT). In 2003, Bangladesh took loans under the condition of reducing the losses of state-owned enterprises.After almost a decade in 2012, Bangladesh signed a 1 billion dollar loan agreement in seven installments. One of its conditions was to enact a new VAT law. The last two installments were withheld by the IMF due to the delay in making this law. Last January 30 this year, the agency approved a loan of 4.7 billion dollars for Bangladesh.
