The IMF at a Glance
The International Monetary Fund was created in 1945 to help promote the health of the world economy through international monetary cooperation. Headquartered in Washington DC, it is governed by and accountable to the governments of the 185 countries that make up its global membership. |
What is the International Monetary Fund?
The International Monetary Fund—also known as the “IMF” or the “Fund”—was conceived at a United Nations conference convened in Bretton Woods, New Hampshire, U.S. in July 1944. The 45 governments represented at that conference sought to build a framework for economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s.
Fast Facts on the IMF
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Article I of the Articles of Agreement sets out the IMF's main responsibilities:
- promoting international monetary cooperation;
- facilitating the expansion and balanced growth of international trade;
- promoting exchange stability;
- assisting in the establishment of a multilateral system of payments; and
- making its resources available (with adequate safeguards) to members experiencing balance of payments difficulties.
IMF activities
The IMF is generally, responsible for promoting the stability of the international monetary and financial system—the system of international payments and exchange rates among national currencies that enables trade and financial transactions to take place between countries. The Fund's job is to promote economic stability, help prevent crises, and help resolve them when they do occur, thereby promoting growth and alleviating poverty. Its three main activites—surveillance, technical assistance, and lending—are intended to meet these goals.
The IMF works to promote global growth and economic stability—and thereby prevent economic crisis—by encouraging countries to adopt sound economic policies.
Surveillance comprises multilateral surveillance, under which the IMF provides periodic assessments of global and regional developments and prospects, published twice each year in the World Economic Outlook; and bilateral surveillance which is the regular dialogue and policy advice that the IMF offers to each of its members. Usually once a year, the Fund conducts in-depth appraisals of each member country’s economic situation and policies, and advises on desirable policy adjustments. A new Surveillance Decision, adopted in 2007, clarified best practices in this area, calling in particular for greater focus on assessing whether policies are conducive to external and domestic stability. The overwhelming majority of countries opt for transparency, publishing extensive information on bilateral surveillance.
Technical assistance and training are offered—mostly free of charge—to help member countries strengthen their capacity to design and implement effective policies. Technical assistance is offered in several areas, including fiscal policy, monetary and exchange rate policies, banking and financial system supervision and regulation, and statistics.
In the event that member countries do experience crises, the IMF resources may be tapped to help finance balance of payments needs.
Financial assistance is available to give member countries the breathing room they need to correct balance of payments problems. A policy program supported by IMF financing is designed by the national authorities in close cooperation with the IMF, and continued financial support is conditional on effective implementation of this program.
In low-income countries, the IMF provides financial support through its concessional lending facilities—the Poverty Reduction and Growth Facility (PRGF) and the Exogenous Shocks Facility (ESF)—and through debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). In most low-income countries, this support is underpinned by Poverty Reduction Strategy Papers (PRSP). These papers are prepared by country authorities—in consultation with civil society and external development partners—to describe a comprehensive economic, structural and social policy framework that is being implemented to promote growth and reduce poverty.
Through all these activities, the IMF contributes to international efforts to reduce poverty around the globe, in collaboration with the World bank and other organizations.
IMF governance and organization
The IMF is accountable to the governments of its member countries. At the apex of its organizational structure is its Board of Governors, which consists of one Governor from each of the IMF's 185 member countries. All Governors meet once each year at the IMF-World Bank Annual Meetings. Twenty-four of the Governors sit on the International Monetary and Finance Committee (IMFC) and meet twice each year. The day-to-day work of the IMF is conducted at its Washington DC headquarters by its 24-member Executive Board; this work is guided by the IMFC and supported by the IMF's professional staff. The Managing Director is Head of IMF staff and Chairman of the Executive Board, and is assisted by three Deputy Managing Directors.
The IMF's resources are provided by its member countries, primarily through payment of quotas, which broadly reflect each country's economic size. The total amount of quotas is the most important factor determining the IMF's lending capacity. The annual expenses of running the Fund have been met mainly by the difference between interest receipts (on outstanding loans) and interest payments (on quotas used to finance the loans "reserve positions"), but the membership recently agreed to adopt a new income model with a range of revenue sources more suited to the diverse activities of the Fund.
More detailed information can be found on the IMF's website: http://www.imf.org/.