International Monetary Fund
The International Monetary Fund was established, along with the World Bank, at a conference in Bretton Woods, New Hampshire, USA, in July 1944, the closing stages of World War II. The participants represented 44 countries including the countries which were soon to win the war against fascism. They were concerned about the rebuilding of Europe and of the global economic system after a devastating war and enhance economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s.
Currently with 188 members it gathers funds through a quota system which stood up to USD1.0 trillion from which countries with payment imbalances can borrow funds temporarily. The IMF’s Executive Board which comprises of 24 members control the fund and considers options to enhance multilateral, financial, and bilateral surveillance and efficient allocation of monetary resources across member countries. The Managing Director is the head of the IMF staff and Chairman of the Executive Board, and is assisted by four Deputy Managing Directors. Currently Christine Madeleine Odette Lagarde heads the IMF as managing director.
To maintain stability and prevent crises in the international monetary system, the IMF reviews country policies, as well as national, regional, and global economic and financial developments through a formal system known as surveillance. Under the surveillance framework, the IMF provides advice to its 188 member countries, encouraging policies that foster economic stability, reduce vulnerability to economic and financial crises, and raise living standards. It provides regular assessment of global prospects in its World Economic Outlook, financial markets in its Global Financial Stability Report, and public finance developments in its Fiscal Monitor, and publishes a series of regional economic outlooks.
IMF financing provides 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 conditioned on effective implementation of this program. In an early response to the recent global economic crisis, the IMF strengthened its lending capacity and approved a major overhaul of the mechanisms for providing financial support in April 2009, with further reforms adopted in August 2010 and December 2011.
In the most recent reforms, IMF lending instruments were improved further to provide flexible crisis prevention tools to a broad range of members with sound fundamentals, policies, and institutional policy frameworks. In low-income countries, the IMF doubled loan access limits and is boosting its lending to the world’s poorer countries, with interest rates set at zero through end-2012.
But IMF succumbs to some criticism as well. Main criticisms of the IMF which support the analysis are that it is a pillar of global apartheid. And developed countries were seen to have a more dominant role and control over less developed countries primarily due to the Western bias towards a capitalist form of the world economy with professional staff being Western trained and believing in the efficacy of market-oriented policies.