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What is the International Monetary Fund (IMF)?

The International Monetary Fund is an organization that uses lending to fight poverty.
The World Bank often works in collaboration with the International Monetary Fund to help prevent economic crisis.
Critics of the International Monetary Fund (IMF) assert that loans made to poor countries perpetuate their indebtedness and reliance on foreign aid.
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  • Last Modified Date: 09 November 2014
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The International Monetary Fund (IMF) is an organization that promotes and facilitates the monetary cooperation between countries and the stability of monetary exchange. It also works to promote economic growth and employment in its 184 member countries and to provide temporary aid to countries. Its overreaching goal is to avoid any local or global financial crisis, such as the Great Depression of the 1930s. The organization was established in July 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire.

The primary methods that the IMF employs to achieve its goals include “surveillance”, lending and technical assistance. The term surveillance refers to the monitoring and counseling provided to the organization's member countries. Every year, the IMF assesses the economic status of member countries, as well as the efficacy of their economic and fiscal policies. This, in addition to providing constructive advice on the formation and execution of policy, makes up the surveillance aspect of the IMF. This has led to increased transparency and openness of member countries’ economic structures.

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Lending, another tool of the IMF, helps prevent potential economic crisis and promote economic growth. In the case that member countries are struggling to make debt payments, the organization works to establish a payment structure that is easier to handle. It also uses lending to fight poverty, often in collaboration with the World Bank. Financial assistance is provided through the Poverty Reduction and Growth Facility (PRGF) and the Exogenous Shocks Facility (ESF).

The IMF provides technical assistance by helping member countries to devise and enact successful economic policy. It advises on fiscal policy, policies relating to monetary and exchange rates and the regulation of banking and financial systems.

Despite its power, the organization is accountable to its 184 member countries, and has a Board of Governors composed of one governor from each member country. The Board meets annually, while the International Monetary and Finance Committee meets biannually. The daily management of the IMF is conducted by the Executive Board, which is composed of 24 members. The organization is financed by quotas, or subscriptions, paid by member countries based on their particular economic capability.

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fify
Post 4

@ysmina-- Unfortunately, some countries do see things that way, but I don't think that's true.

Yes, IMF does want countries to make policy changes, but for the better. IMF wants governments to govern well, and they want to fight corruption in these countries that is preventing society to become better off.

When there is corruption, resources don't trickle down to the poor sections of community and foreign businesses don't want to invest in such a country. IMF's role is not the cause of these countries' poor economy. On the contrary, the IMF is trying to help them get out of the ditch they put themselves in.

ysmina
Post 3

@turquoise-- That's a good question. As far as I know, some people don't like the role of the IMF in their countries because of IMF's requirements.

The main thing that IMF does is lend money to poor countries right? IMF does that but only if the government of that country makes some economic policy changes first, such as privatization.

Some people oppose the IMF simply because they oppose privatization. Some oppose the IMF because they think that these economic policies don't necessarily promote economic growth. So some of these countries have huge loans with the IMF that they are never able to pay off because they're not getting any wealthier. That's my understanding anyway.

turquoise
Post 2

I always see headlines about the IMF in the news about people in different countries protesting the organization. Why?

Overall, it sounds like a good international organization trying to help countries prosper economically. Why are some people against the IMF?

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