The flag of the International Monetary Fund (IMF)

The International Monetary Fund (IMF) is the international organization entrusted with overseeing the global financial system by monitoring foreign exchange rates and balance of payments, as well as offering technical and financial assistance when asked. File history Legend: (cur) = this is the current file, (del) = delete this old version, (rev) = revert to this old version. ... File history Legend: (cur) = this is the current file, (del) = delete this old version, (rev) = revert to this old version. ... An international organization (also called intergovernmental organization) is an organization of international scope or character. ... The Global Financial System refers to those financial institutions and regulations that act on the international level, as opposed to those that act on a national or regional level. ... In finance, the exchange rate between two currencies specifies how much one currency is worth in terms of the other. ... The balance of payments is a measure of the payments that flow from one exports and imports of goods, services, and financial capital, as well financial transfers. ...

Organization and purpose

The IMF describes itself as: "an organization of 184 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". With the exception of North Korea, Cuba, Liechtenstein, Andorra, Monaco, Tuvalu and Nauru, all UN member states either participate directly in the IMF or are represented by other member states.

The IMF was conceived in July 1944 at an international conference held at Bretton Woods, New Hampshire, U.S.A., when delegates from 44 governments agreed on a framework for economic cooperation partly designed to avoid a repetition of the disastrous economic policies that had contributed to the Great Depression of the 1930s.

During that decade, as economic activity in the major industrial countries weakened, countries attempted to defend their economies by increasing restrictions on imports; but this just worsened the downward spiral in world trade, output, and employment. To conserve dwindling reserves of gold and foreign exchange, some countries curtailed their citizens' freedom to buy abroad, some devalued their currencies, and some introduced complicated restrictions on their citizens' freedom to hold foreign exchange. These fixes, however, also proved self-defeating, and no country was able to maintain its competitive edge for long. Such "beggar-thy-neighbor" policies devastated the international economy; world trade declined sharply, as did employment and living standards in many countries.

As World War II came to a close, the leading allied countries considered various plans to restore order to international monetary relations, and at the Bretton Woods conference the IMF emerged. The country representatives drew up the charter (or Articles of Agreement) of an international institution to oversee the international monetary system and to promote both the elimination of exchange restrictions relating to trade in goods and services, and the stability of exchange rates.

The IMF came into existence in December 1945, when the first 29 countries signed its Articles of Agreement.

The statutory purposes of the IMF today are the same as when they were formulated in 1944 (see Box 2). Since then, the world has experienced unprecedented growth in real incomes. And although the benefits of growth have not flowed equally to all—either within or among nations—most countries have seen increases in prosperity that contrast starkly with the interwar period, in particular. Part of the explanation lies in improvements in the conduct of economic policy, including policies that have encouraged the growth of international trade and helped smooth the economic cycle of boom and bust.

In the decades since World War II, apart from rising prosperity, the world economy and monetary system have undergone other major changes-changes that have increased the importance and relevance of the purposes served by the IMF, but that have also required the IMF to adapt and reform. Rapid advances in technology and communications have contributed to the increasing international integration of markets and to closer linkages among national economies. As a result, financial crises, when they erupt, now tend to spread more rapidly among countries.

In such an increasingly integrated and interdependent world, any country's prosperity depends more than ever both on the economic performance of other countries and on the existence of an open and stable global economic environment. Equally, economic and financial policies that individual countries follow affect how well or how poorly the world trade and payments system operates. Globalization thus calls for greater international cooperation, which in turn has increased the responsibilities of international institutions that organize such cooperation—including the IMF.

The IMF's purposes have also become more important simply because of the expansion of its membership. The number of IMF member countries has more than quadrupled from the 44 states involved in its establishment, reflecting in particular the attainment of political independence by many developing countries and more recently the collapse of the Soviet bloc.

The expansion of the IMF's membership, together with the changes in the world economy, have required the IMF to adapt in a variety of ways to continue serving its purposes effectively.

History

Agreement for its creation came at the United Nations-sponsored Monetary and Financial Conference in Bretton Woods, New Hampshire, United States, on July 22, 1944. The principal architects of the IMF at the Bretton Woods Conference were Fabian Society member John Maynard Keynes and the Assistant Secretary of the United States Treasury, Harry Dexter White. The Articles of Agreement came into force on December 27, 1945, the organization came into existence in May 1946, as part of a post-WWII reconstruction plan, and it began financial operations on March 1, 1947. The United Nations, or UN, is an international organization established in 1945. ... The Bretton Woods system of international economic management established the rules for commercial and financial relations among the major industrial states. ... Bretton Woods, New Hampshire is an area within the town of Carroll whose principal points of interest are three leisure and recreation facilities. ... July 22 is the 203rd day (204th in leap years) of the year in the Gregorian Calendar, with 162 days remaining. ... 1944 was a leap year starting on Saturday (link will take you to calendar). ... The Fabian Society is a British socialist intellectual movement best known for its initial ground-breaking work beginning in the late 19th century and then up to World War I. The society laid many of the foundations of the Labour Party in this time-period and is still in existence... John Maynard Keynes John Maynard Keynes, 1st Baron Keynes of Tilton (pronounced kānz / kAnze), ) (June 5, 1883 – April 21, 1946) was an English economist, whose ideas had a major impact on modern economic and political theory as well as on Franklin D. Roosevelts New Deal. ... The United States Department of the Treasury is a Cabinet department, a treasury, of the United States government established by an Act of U.S. Congress in 1789 to manage the revenue of the United States government. ... Harry Dexter White (left) and John Maynard Keynes (right) at the Bretton Woods Conference Harry Dexter White (October 1892–August 16, 1948) was an American economist and senior U.S. Department of Treasury official. ... December 27 is the 361st day of the year in the Gregorian Calendar. ... 1945 was a common year starting on Monday (link will take you to calendar). ... This article is about the month of May. ... 1946 was a common year starting on Tuesday. ... World War II was a truly global conflict with many facets: immense human suffering, fierce indoctrinations, and the use of new, extremely devastating weapons like the atom bomb World War II, also known as the Second World War, was a mid-20th-century conflict that engulfed much of the globe... March 1 is the 60th day of the year in the Gregorian calendar (61st in leap years). ... 1947 was a common year starting on Wednesday (link will take you to calendar). ...

It is sometimes referred to as "a Bretton Woods institution", along with the Bank for International Settlements (BIS) and the World Bank. Together, these three institutions define the monetary policy shared by almost all countries with market economies. The Bank for International Settlements (BIS) is a financial international organization established under the Hague agreements of 1930. ... Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means...

Membership qualifications

A country may apply for membership status within the IMF. The application will be considered, first, by the IMF's Executive Board. After its consideration, the Executive Board will submit a report to the Board of Governors of the IMF with recommendations in the form of a "Membership Resolution." These recommendations cover the amount of quota in the IMF, the form of payment of the subscription, and other customary terms and conditions of membership. After the Board of Governors has adopted the "Membership Resolution," the applicant state needs to take the legal steps required under its own law to enable it to sign the IMF's Articles of Agreement and to fulfill the obligations of IMF membership. A quota is a prescribed number or share of something. ...

A member's quota in the IMF determines the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of SDRs. Special Drawing Rights is neither a currency, nor a claim on the International Monetary Fund. ...

Assistance and reforms

Part of its mission has become to provide assistance to countries that experience serious economic difficulties. Member states with balance of payments problems may request loans and/or organizational management of their national economies. In return, the countries are obliged to launch certain reforms, an example of which is the "Washington Consensus". The balance of payments is a measure of the payments that flow from one exports and imports of goods, services, and financial capital, as well financial transfers. ... Structural adjustment is a term used by the International Monetary Fund for the changes it recommends for developing countries. ... The Washington Consensus is a set of policies believed to be the formula for promoting economic growth in Latin America (although not for all countries). ...

Criticism

The role of the three Bretton Woods institutions has been controversial to many since the late Cold War period. Critics claim that IMF policy makers deliberately supported capitalist military dictatorships friendly to American and European corporations. Critics also claim that the IMF is generally apathetic or hostile to their views of democracy, human rights, and labor rights. These criticisms generated a controversy that helped spark the anti-globalization movement. Others claim the IMF has little power to democratize sovereign states, nor is that its stated objective: to advise and promote financial stability. Arguments in favor of the IMF say that economic stability is a precursor to democracy. For the generic term for a high-tension rivalry between countries, see cold war (war). ... Augusto Pinochet (sitting) was an army general who led a military coup in Chile in 1973. ... A corporation is a legal entity (distinct from a natural person) that often has similar rights in law to those of a Civil law systems may refer to corporations as moral persons; they may also go by the name AS (anonymous society) or something similar, depending on language (see below). ... Apathy is complete lack of emotion or motivation. ... Human rights are rights which some hold to be inalienable and belonging to all humans. ... Labor rights are laws created in order to always have fairness and keep peace between employees and employers. ... Anti-WEF grafiti in Lausanne. ...

Two criticisms from economists have been that financial aid is always bound to so-called "Conditionalities", including Structural Adjustment Programs. Conditionalities, it is claimed, retard social stability and hence inhibit the stated goals of the IMF. A conditionality in international development is a condition attached to a loan or to debt relief, typically by the International Monetary Fund or World Bank. ... Structural adjustment is a term used by the International Monetary Fund for the changes it recommends for developing countries. ...

Typically the IMF and its supporters advocate a Keynesian approach. As such, adherents of supply-side economics generally find themselves in open disagreement with the IMF. The IMF frequently advocates currency devaluation, criticized by proponents of supply-side economics as inflationary. Secondly they link higher taxes under "austerity programmes" with economic contraction. Keynesian economics (pronounced kaynzian) or Keynesianism, is an economic theory based on the ideas of John Maynard Keynes, as put forward in his book The General Theory of Employment, Interest and Money, published in 1936 in response to the Great Depression of the 1930s. ... Supply-side economics is a school of macroeconomic thought which emphasizes the importance of tax cuts and business incentives in encouraging economic growth, in the belief that businesses and individuals will use their tax savings to create new businesses and expand old businesses, which in turn will increase productivity, employment... Devaluation is a reduction in the value of a currency. ... Inflation rates of five core members of the G8 from 1950 to 1994. ...

Currency devaluation is recommended by the IMF to the governments of poor nations with struggling economies. Supply-side economists claim these Keynesian IMF policies are destructive to economic prosperity, although many other economists disagree.

Complaints are also directed toward International Monetary Fund gold reserve being undervalued. At its inception in 1945, the IMF pegged gold at 35 dollars per troy ounce of gold. In 1973 the Nixon administration lifted the fixed asset value of gold in favour of a world market price. Hence the fixed exchange rates of currencies tied to gold were switched to a floating rate, also based on market price and exchange. This largely came about because Petrodollars outside the United States were more than could be backed by the gold at Fort Knox under the fixed exchange rate system. The fixed rate system only served to limit the amount of assistance the organization could use to help debt-ridden countries. International Monetary Fund gold reserve refers to 3,217 tonnes of gold held by IMF. It is currently priced at a range of $40 and $50 an ounce, a price that was fixed in the 1970s before Nixion government stopped pegging the US dollar to the gold and instead allowed... A floating exchange rate is a type of exchange rate regime wherein a currencys value is allowed to fluctuate according to the foreign exchange market. ... A petrodollar is a dollar earned by a country through the sale of oil. ... There is also a Fort Knox in the state of Maine, across the Penobscot River from Bucksport. ...

That said, the IMF sometimes advocates "austerity programmes," increasing taxes even when the economy is weak, in order to generate government revenue and balance budget deficits, which is the opposite of Keynesian policy. These policies were critisised by Joseph E. Stiglitz, former chief economist at the World Bank, in his book Globalization_and_Its_Discontents. He argued that by converting to a more Monertarist aproach, the fund was no longer had a valid purpose as it was designed to provide funds for countries to carry out Keynsianesque reflations. A tax is a compulsory charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ... A budget deficit occurs when an entity (often a government) spends more money than it takes in. ... Globalization and Its Discontents is a book written by the 2001 Nobel laureate Joseph E. Stiglitz. ...

Most altermondialists, like ATTAC, believe that IMF interventions aggravate the poverty and the debts of Third World and developing countries. According to the analysis by Yves Engler, the IMF is considered to be responsible for worsening or creating famine in Malawi (2002), Ethiopia (2003) and Niger (2005). [1] It has been suggested that this article or section be merged with Anti-globalization. ... Association for the Taxation of Financial Transactions for the Aid of Citizens (ATTAC - Association pour la Taxation des Transactions pour lAide aux Citoyens) is an activist organization for the establishment of a tax on exchange transactions. ... A boy from an East Cipinang trash dump slum in Jakarta, Indonesia shows his find. ... Debt is that which is owed. ... For the Jamaican reggae band, see Third World (band). ... A developing country is a country with low average income compared to the world average. ... Yves Engler is a Canadian writer and political activist. ... A famine is a phenomenon in which a large percentage of the population of a region or country are undernourished that death by starvation becomes increasingly common. ... 2002(MMII) is a common year starting on Tuesday of the Gregorian calendar. ... 2003(MMIII) is a common year starting on Wednesday of the Gregorian calendar. ... 2005(MMV) is a common year starting on Saturday of the Gregorian calendar. ...

Opposition to the IMF can be very fragmented. For instance advocates of supply-side economics would in general regard the policies advocated by ATTAC to be little different in form to the ideas peddled by the IMF. In other words, they would see ATTAC tax-and-spend policies and the IMFs austerity policies as being fundamentally similar.

Argentina, which had been considered by the IMF to be a model country in its compliance to policy proposals by the Bretton Woods institutions, experienced a catastrophic economic crisis in 2001, generally believed to have been caused by IMF-induced budget restrictions — which undercut the government's ability to sustain national infrastructure even in crucial areas such as health, education, and security — and privatization of strategically vital national resources. The crisis added to widespread hatred of this institution in Argentina and other South American countries, with many blaming the IMF for the region's economic problems [2]. The current — as of 2005 — trend towards moderate left-wing governments in the region and a growing concern with the development of a regional economic policy largely independent of big business pressures can be seen as a result, at least partially of this crisis. 2001: A Space Odyssey. ... Privatization (sometimes privatisation, denationalization, or, especially in India, disinvestment) is the process of transferring property, from public ownership to private ownership and/or transferring the management of a service or activity from the government to the private sector. ...

Another example of where IMF Structural Adjustment Programmes aggravated the problem was in Kenya. Before IMF got involved in the country, the Kenya central bank oversaw all currency movement in and out of the country. IMF mandated that Kenya central bank had to allow easier currency movement. However, the adjustment resulted in very little foreign investment, but allowed Kamlesh Manusuklal Damji Pattni, with the help of corrupt government officials, to syphon out billions of Kenya shillings in what came to be known as the Goldenberg scandal, leaving the country in a state worse than that which it was in before the IMF reforms were implemented. Kamlesh Mansukhlal Damji Pattni (born 1962) is a controversial Kenyan businessman. ... Kenya encourages exports (as do most countries) by granting tax-free status to businesses involved in the export of goods and sometimes subsidize the exports. ...

That the IMF intervenes only in countries that are already in dire financial straits has certainly hurt its reputation. The financial collapses it intervenes to help are the product of decades of mismanagement, but mismanagement that is often invisible to the outside world. These collapses tend to lead to years of economic difficulty, and since this period is often coextensive with IMF involvement in the economy it has in many cases quickly become associated with the malaise. Politicians have also long used the IMF as an easy target for blame when they themselves have erred, using nationalism and the poor public relations of the IMF to gain easy political points.

Overall the IMF success record is limited. While it was created to help stabilize the global economy, since 1980 over 100 countries have experienced a banking collapse that reduced GDP by four percent or more -- far more than at any previous time in history. The considerable delay in IMF response to a crisis, and the fact that it tends to only respond to rather than prevent them, has led many economists to argue for reform.

Whatever the feelings people in the Western world have for the IMF, research by the Pew Research Center shows that more than 60 percent of Asians and 70 percent of Africans feel that the IMF and the World Bank have a positive effect on their country [3]. Such research has made proponents of IMF claim the IMF-critique misleading, as it would be difficult to speak of suffering if the sufferers don't feel hurt. Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means...

The documentary Life and Debt deals with the IMF's policies' influence on Jamaica and its economy, from a critical point of view. . Life and Debt is a 2001 documentary film directed by Stephanie Black. ...

Past managing directors

An unwritten rule establishes that the IMF's managing director must be European and the president of the World Bank from United States. Executive Directors, who confirm the managing director are voted in by Finance Ministers from countries they represent.

The IMF is for the most part controlled by the major Western Powers, with voting rights on the Executive board based on a quota derived from a monetary stake in the institution. Rarely does the board vote and pass issues contradicting the will of the US or Europeans. There have been some exceptions in the past. Dr. Mohamed Finaish from Libya, the Executive Director representing the majority of the Arab World and Pakistan, was a tireless defender of the developing nations' rights at the IMF. He stood steadfast in his beliefs and principles for fourteen years until his defeat in the 1992 elections to an Egyptian IMF Staff Member.

This article is about the month of May. ... 1946 was a common year starting on Tuesday. ... May 6 is the 126th day of the year in the Gregorian Calendar (127th in leap years). ... 1951 was a common year starting on Monday; see its calendar. ... Camille Gutt (1884 - 1971) served as the first Managing Director of the International Monetary Fund (IMF) from May 6, 1946 to May 5, 1951. ... Note: as an adjective (stressed on the second syllable instead of the first), august means honorable. ... 1951 was a common year starting on Monday; see its calendar. ... October is the tenth month of the year in the Gregorian Calendar and one of seven Gregorian months with the length of 31 days. ... 1956 was a leap year starting on Sunday of the Gregorian calendar. ... Ivar Rooth was Managing Director of the International Monetary Fund (IMF) from August 3, 1951 to October 3, 1956. ... December is the twelfth and last month of the year in the Gregorian Calendar and one of seven Gregorian months with the length of 31 days. ... 1956 was a leap year starting on Sunday of the Gregorian calendar. ... May 5 is the 125th day of the year in the Gregorian Calendar (126th in leap years). ... 1963 was a common year starting on Tuesday (link will take you to calendar). ... Per Jacobsson (February 5, 1894 - May 5, 1963) was Managing Director of the International Monetary Fund (IMF) from November 21, 1956 until his death in 1963. ... September 1 is the 244th day of the year (245th in leap years). ... 1963 was a common year starting on Tuesday (link will take you to calendar). ... September 1 is the 244th day of the year (245th in leap years). ... 1973 was a common year starting on Monday. ... Pierre-Paul Schweitzer (? - January 2, 1994) was Managing Director of the International Monetary Fund (IMF) from September 1, 1963 to August 31, 1973. ... September 1 is the 244th day of the year (245th in leap years). ... 1973 was a common year starting on Monday. ... June 17 is the 168th day of the year in the Gregorian calendar (169th in leap years), with 197 days remaining. ... 1978 was a common year starting on Sunday (the link is to a full 1978 calendar). ... H. Johannes Witteveen was Managing Director of the International Monetary Fund (IMF) from September 1, 1973 to June 16, 1978. ... June 17 is the 168th day of the year in the Gregorian calendar (169th in leap years), with 197 days remaining. ... 1978 was a common year starting on Sunday (the link is to a full 1978 calendar). ... January 16 is the 16th day of the year in the Gregorian Calendar. ... 1987 is a common year starting on Thursday of the Gregorian calendar. ... Jacques de Larosière de Champfeu, Chairman of the Strategic Committee of the French Treasury and Advisor to BNP Paribas, became President of the London-based European Bank for Reconstruction and Development in September 1993 in the wake of the scandals that led to the departure of the EBRDs... January 16 is the 16th day of the year in the Gregorian Calendar. ... 1987 is a common year starting on Thursday of the Gregorian calendar. ... February 14 is the 45th day of the year in the Gregorian Calendar. ... This article is about the year 2000. ... Michel Camdessus (born May 1, 1933) was Managing Director of the International Monetary Fund (IMF) from January 16, 1997 to February 14, 2000. ... May 1 is the 121st day of the year in the Gregorian calendar (122nd in leap years). ... This article is about the year 2000. ... March 4 is the 63rd day of the year in the Gregorian Calendar (64th in leap years). ... 2004(MMIV) is a leap year starting on Thursday of the Gregorian calendar. ... Horst Köhler (   listen?, born 22 February 1943) is the President of Germany. ... March 4 is the 63rd day of the year in the Gregorian Calendar (64th in leap years). ... 2004(MMIV) is a leap year starting on Thursday of the Gregorian calendar. ... May 4 is the 124th day of the year in the Gregorian calendar (125th in leap years). ... 2004(MMIV) is a leap year starting on Thursday of the Gregorian calendar. ... Anne O. Krueger has been the First Deputy Managing Director of the International Monetary Fund since September 1, 2001. ... May 4 is the 124th day of the year in the Gregorian calendar (125th in leap years). ... 2004(MMIV) is a leap year starting on Thursday of the Gregorian calendar. ... Rodrigo Rato (born March 18, 1949) was Spains Economy Minister and Vice President serving with the Peoples Party (PP) between 1996 and 2004. ...

See also

• Bretton Woods Institutions
• Economics
• Bank for International Settlements
• Organisation for Economic Co-operation and Development
• Special Drawing Rights
• World Bank

The Bretton Woods Institutions (BWIs) consist of the World Bank (originally International Bank for Reconstruction and Development, IBRD) and the International Monetary Fund (IMF), founded in July 1944 at a meeting of delegates of 44 countries in Bretton Woods, New Hampshire (USA). ... U.S. Economic Calendar Economics at the Open Directory Project Economics textbooks on Wikibooks The Economists Economics A-Z Institutions and organizations Bureau of Labor Statistics - from the American Labor Department Center for Economic and Policy Research (USA) National Bureau of Economic Research (USA) - Economics material from the organization... The Bank for International Settlements (BIS) is a financial international organization established under the Hague agreements of 1930. ... The Organisation for Economic Co-operation and Development (OECD) is an international organisation of those developed countries that accept the principles of representative democracy and a free market economy. ... Special Drawing Rights is neither a currency, nor a claim on the International Monetary Fund. ... Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means...

External links

• International Monetary Fund website
• Kenneth Rogoff - The sisters at 60
• How the IMF Props Up the Dollar System [4]
• IMF’s Origins as a Blueprint for Its Future, Anna J. Schwartz, National Bureau of Economic Research

References

• Jan Joost Teunissen and Age Akkerman (eds.) (2005) Helping the Poor? The IMF and Low-Income Countries, FONDAD. ISBN-10: 90-74208-25-8
• Axel Dreher (2002) The Development and Implementation of IMF and World Bank Conditionality, HWWA. ISSN 16164814
• Dreher, Axel (2004), A Public Choice Perspective of IMF and World Bank Lending and Conditionality, Public Choice 119, 3-4: 445-464.
• Dreher, Axel (2004), The Influence of IMF Programs on the Re-election of Debtor Governments, Economics & Politics 16, 1: 53-75
• Dreher, Axel (2003), The Influence of Elections on IMF Programme Interruptions, The Journal of Development Studies 39,6: 101-120.
• The Best Democracy Money Can Buy by Greg Palast (2002)
• The IMF and The World Bank: How do they differ?[5] by David D. Driscoll