The International Monetary Fund (IMF)
HISTORY & ORIGINS
The International Monetary Fund (IMF) origins come from a United Nations conference celebrated on July 1944 and organized in Bretton Woods, New Hampshire, United States. The 44 countries at the conference, created a framework for economic cooperation to avoid currency devaluations and crisis such as the 1930s Great Depression.
Formally established as a separate body of the United Nations since December 1945, the IMF started its operations in March 1947 with headquarters in Washington D.C. and has 189 country members and 2,700 employees from 148 countries. The IMF issues an international reserve asset know as Special Drawing Right (SDR) which countries members can use to supplement their official reserves.
The IMF primary purpose is to ensure the stability of the system of exchange rates and international payments that enable countries to transact with each other.
The IMF was first established to promote cooperation on international monetary problems, facilitate the expansion and balanced growth of the international trade, promote the exchange rate stability, assist in the establishment of a multilateral system of payments, and to lend resources to countries facing balance of payment difficulties.
SCOPE OF WORK
The IMF has surveillance, financial assistance, and capacity development as the three core areas of practice. On the matter of surveillance, the IMF advises its member countries and encourages policies according to regular economic and financial assessments. On financial assistance, The IMF provides interest-free loans to help members with payment problems overcome the economic crisis. On capacity development, the IMF provides technical support and training to assist member countries to design and implement economic policies.
The primary source of the IMF’s financial funds is the US $668 billion provided by members’ countries quotas contributions or membership fees. Based on the relative economic position of countries, the IMF establishes each member quota percentage contributions. Besides, the IMF can complement its quota resources by multilateral and bilateral borrowing agreements with countries members that have additional funds given their economic prosperity.
Member countries’, who have voting power percentages according to their quotas contribution, govern the IMF. Altogether, the 189 countries governors and their temporary substitutes, constitute the Board of Governor which approves new amendments, resources allocations, and admissions and withdrawals of members. Besides, the IMF has an Executive Board of 24 directors that represent countries or group of countries and is in charge of daily business activities such as analyzing members’ economic issues and policies. Additionally, Christine Lagarde, from France, acts a managing director of the IMF and as chairman of the Executive Board.