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The International Monetary Fund (IMF) is a major financial agency of the
United Nations The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and security, develop friendly relations among nations, achieve international cooperation, and be a centre for harmoni ...
, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world." Formed in 1944, started on 27 December 1945, at the Bretton Woods Conference primarily by the ideas of Harry Dexter White and
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international monetary system. It now plays a central role in the management of balance of payments difficulties and international financial crises. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money. , the fund had XDR 477 billion (about US$667 billion). The IMF is regarded as the global lender of last resort. Through the fund and other activities such as the gathering of statistics and analysis, surveillance of its members' economies, and the demand for particular policies, the IMF works to influence the economies of its member countries. The organization's objectives stated in the Articles of Agreement are: to promote international monetary co-operation,
international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significa ...
, high employment, exchange-rate stability, sustainable economic growth, and making resources available to member countries in financial difficulty. IMF funds come from two major sources: quotas and
loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that ...
s. Quotas, which are pooled funds of member nations, generate most IMF funds. The size of a member's quota depends on its economic and financial importance in the world. Nations with greater economic significance have larger quotas. The quotas are increased periodically as a means of boosting the IMF's resources in the form of
special drawing rights Special drawing rights (SDRs, code ) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency ''per se''. They represent a claim ...
. The current managing director (MD) and Chairwoman of the IMF is
Bulgaria Bulgaria (; bg, България, Bǎlgariya), officially the Republic of Bulgaria,, ) is a country in Southeast Europe. It is situated on the eastern flank of the Balkans, and is bordered by Romania to the north, Serbia and North Macedo ...
n
economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...
Kristalina Georgieva Kristalina Ivanova Georgieva-Kinova ( bg, Кристалина Иванова Георгиева-Кинова; ; born 13 August 1953) is a Bulgarian economist serving as managing director of the International Monetary Fund since 2019. She was ...
, who has held the post since October 1, 2019. Indian-American economist
Gita Gopinath Gita Gopinath (born 8 December 1971) is an Indian-American economist who has served as the first deputy managing director of the International Monetary Fund (IMF), since 21 January 2022. She had previously served as chief economist of the IMF b ...
, who previously served as Chief Economist, was appointed as First Deputy Managing Director, effective January 21, 2022.
Pierre-Olivier Gourinchas Pierre-Olivier Gourinchas is a French economist who currently works as S.K. and Angela Chan Professor of Management at the University of California, Berkeley, where he also directs the Clausen Center for International Business and Policy and is a ...
replaced Gopinath as Chief Economist on January 24, 2022.


Functions

According to the IMF itself, it works to foster global growth and economic stability by providing policy advice and financing the members by working with developing countries to help them achieve macroeconomic stability and reduce poverty. The rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. Such market imperfections, together with balance-of-payments financing, provide the justification for official financing, without which many countries could only correct large external payment imbalances through measures with adverse economic consequences. The IMF provides alternate sources of financing such as the Poverty Reduction and Growth Facility. Upon the founding of the IMF, its three primary functions were: *to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and *to provide short-term capital to aid the balance of payments and prevent the spread of international economic crises. *to help mend the pieces of the international economy after the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
and
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
as well as to provide capital investments for economic growth and projects such as infrastructure. The IMF's role was fundamentally altered by the floating exchange rates after 1971. It shifted to examining the economic policies of countries with IMF loan agreements to determine whether a shortage of capital was due to economic fluctuations or economic policy. The IMF also researched what types of government policy would ensure economic recovery. A particular concern of the IMF was to prevent financial crises, such as those in
Mexico Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...
in 1982,
Brazil Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...
in 1987,
East Asia East Asia is the eastern region of Asia, which is defined in both geographical and ethno-cultural terms. The modern states of East Asia include China, Japan, Mongolia, North Korea, South Korea, and Taiwan. China, North Korea, South Korea ...
in 1997–98, and
Russia Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-ei ...
in 1998, from spreading and threatening the entire global financial and currency system. The challenge was to promote and implement a policy that reduced the frequency of crises among emerging market countries, especially the middle-income countries which are vulnerable to massive capital outflows. Rather than maintaining a position of oversight of only exchange rates, their function became one of surveillance of the overall macroeconomic performance of member countries. Their role became a lot more active because the IMF now manages economic policy rather than just exchange rates. In addition, the IMF negotiates conditions on lending and loans under their policy of
conditionality In political economy and international relations, conditionality is the use of conditions attached to the provision of benefits such as a loan, debt relief or bilateral aid. These conditions are typically imposed by international financial institu ...
, which was established in the 1950s. Low-income countries can borrow on concessional terms, which means there is a period of time with no interest rates, through the Extended Credit Facility (ECF), the Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF). Non-concessional loans, which include interest rates, are provided mainly through the Stand-By Arrangements (SBA), the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), and the Extended Fund Facility. The IMF provides emergency assistance via the Rapid Financing Instrument (RFI) to members facing urgent balance-of-payments needs.


Surveillance of the global economy

The IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its member countries. This activity is known as surveillance and facilitates international co-operation. Since the demise of the Bretton Woods system of fixed exchange rates in the early 1970s, surveillance has evolved largely by way of changes in procedures rather than through the adoption of new obligations. The responsibilities changed from those of guardians to those of overseers of members' policies. The Fund typically analyses the appropriateness of each member country's economic and financial policies for achieving orderly economic growth, and assesses the consequences of these policies for other countries and for the global economy. For instance, The IMF played a significant role in individual countries, such as Armenia and Belarus, in providing financial support to achieve stabilization financing from 2009 to 2019. The maximum sustainable debt level of a polity, which is watched closely by the IMF, was defined in 2011 by IMF economists to be 120%. Indeed, it was at this number that the Greek economy melted down in 2010. In 1995, the International Monetary Fund began to work on data dissemination standards with the view of guiding IMF member countries to disseminate their economic and financial data to the public. The International Monetary and Financial Committee (IMFC) endorsed the guidelines for the dissemination standards and they were split into two tiers: The General Data Dissemination System (GDDS) and the
Special Data Dissemination Standard Special Data Dissemination Standard (SDDS) is an International Monetary Fund standard to guide member countries in the dissemination of national statistics to the public. It was established in April 1996. Members There are currently 65 members. ...
(SDDS). The executive board approved the SDDS and GDDS in 1996 and 1997, respectively, and subsequent amendments were published in a revised ''Guide to the General Data Dissemination System''. The system is aimed primarily at statisticians and aims to improve many aspects of statistical systems in a country. It is also part of the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
Millennium Development Goals (MDG) and Poverty Reduction Strategic Papers (PRSPs). The primary objective of the GDDS is to encourage member countries to build a framework to improve data quality and statistical capacity building to evaluate statistical needs, set priorities in improving timeliness, transparency, reliability, and accessibility of financial and economic data. Some countries initially used the GDDS, but later upgraded to SDDS. Some entities that are not themselves IMF members also contribute statistical data to the systems: * Palestinian Authority – GDDS *
Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China (abbr. Hong Kong SAR or HKSAR), is a List of cities in China, city and Special administrative regions of China, special ...
– SDDS * Macau – GDDS * Institutions of the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
: ** The
European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important centra ...
for the
Eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro (€) as their primary currency and sole legal tender, and have thus fully implemented EMU pol ...
– SDDS ** Eurostat for the whole EU – SDDS, thus providing data from Cyprus (not using any DDSystem on its own) and Malta (using only GDDS on its own) A 2021 study found that the IMF's surveillance activities have "a substantial impact on sovereign debt with much greater impacts in emerging than high-income economies."


Conditionality of loans

IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial resources. The IMF does require collateral from countries for loans but also requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform. If the conditions are not met, the funds are withheld. The concept of conditionality was introduced in a 1952 executive board decision and later incorporated into the Articles of Agreement. Conditionality is associated with economic theory as well as an enforcement mechanism for repayment. Stemming primarily from the work of Jacques Polak, the theoretical underpinning of conditionality was the "monetary approach to the balance of payments".


Structural adjustment

Some of the conditions for structural adjustment can include: * Cutting expenditures or raising revenues, also known as austerity. * Focusing economic output on direct export and resource extraction, * Devaluation of currencies, * Trade liberalisation, or lifting import and export restrictions, * Increasing the stability of investment (by supplementing foreign direct investment with the opening of facilities for the domestic market), * Balancing budgets and not overspending, * Removing
price control Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of good ...
s and state subsidies, *
Privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
, or divestiture of all or part of state-owned enterprises, * Enhancing the rights of foreign investors vis-a-vis national laws, * Improving
governance Governance is the process of interactions through the laws, norms, power or language of an organized society over a social system ( family, tribe, formal or informal organization, a territory or across territories). It is done by the g ...
and fighting corruption, These conditions are known as the Washington Consensus.


Benefits

These loan conditions ensure that the borrowing country will be able to repay the IMF and that the country will not attempt to solve their balance-of-payment problems in a way that would negatively impact the international economy. The incentive problem of moral hazard—when economic agents maximise their own
utility As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosophe ...
to the detriment of others because they do not bear the full consequences of their actions—is mitigated through conditions rather than providing collateral; countries in need of IMF loans do not generally possess internationally valuable collateral anyway. Conditionality also reassures the IMF that the funds lent to them will be used for the purposes defined by the Articles of Agreement and provides safeguards that country will be able to rectify its macroeconomic and structural imbalances. In the judgment of the IMF, the adoption by the member of certain corrective measures or policies will allow it to repay the IMF, thereby ensuring that the resources will be available to support other members. , borrowing countries have had a good track record for repaying credit extended under the IMF's regular lending facilities with full interest over the duration of the loan. This indicates that IMF lending does not impose a burden on creditor countries, as lending countries receive market-rate interest on most of their quota subscription, plus any of their own-currency subscriptions that are loaned out by the IMF, plus all of the reserve assets that they provide the IMF.


History


20th century

The IMF was originally laid out as a part of the Bretton Woods system exchange agreement in 1944. During the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
, countries sharply raised barriers to trade in an attempt to improve their failing economies. This led to the devaluation of national currencies and a decline in world trade. This breakdown in international monetary cooperation created a need for oversight. The representatives of 45 governments met at the Bretton Woods Conference in the Mount Washington Hotel in Bretton Woods, New Hampshire, in the United States, to discuss a framework for postwar international economic cooperation and how to rebuild Europe. There were two views on the role the IMF should assume as a global economic institution. American delegate Harry Dexter White foresaw an IMF that functioned more like a bank, making sure that borrowing states could repay their debts on time. Most of White's plan was incorporated into the final acts adopted at Bretton Woods. British economist
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
, on the other hand, imagined that the IMF would be a cooperative fund upon which member states could draw to maintain economic activity and employment through periodic crises. This view suggested an IMF that helped governments and to act as the United States government had during the New Deal to the great recession of the 1930s. The IMF formally came into existence on 27 December 1945, when the first 29 countries ratified its Articles of Agreement. By the end of 1946 the IMF had grown to 39 members. On 1 March 1947, the IMF began its financial operations, and on 8 May France became the first country to borrow from it. The IMF was one of the key organizations of the international economic system; its design allowed the system to balance the rebuilding of international capitalism with the maximization of national economic sovereignty and human welfare, also known as embedded liberalism. The IMF's influence in the global economy steadily increased as it accumulated more members. The increase reflected, in particular, the attainment of political independence by many African countries and more recently the 1991 dissolution of the Soviet Union because most countries in the Soviet sphere of influence did not join the IMF. The Bretton Woods exchange rate system prevailed until 1971 when the United States government suspended the convertibility of the US$ (and dollar reserves held by other governments) into gold. This is known as the Nixon Shock. The changes to the IMF articles of agreement reflecting these changes were ratified in 1976 by the Jamaica Accords. Later in the 1970s, large commercial banks began lending to states because they were awash in cash deposited by oil exporters. The lending of the so-called money center banks led to the IMF changing its role in the 1980s after a world recession provoked a crisis that brought the IMF back into global financial governance.


21st century

The IMF provided two major lending packages in the early 2000s to Argentina (during the 1998–2002 Argentine great depression) and Uruguay (after the
2002 Uruguay banking crisis The Uruguay banking crisis was a major banking crisis that hit Uruguay in July 2002. In this, a massive run on banks by depositors (most of them from neighboring Argentina) caused the government to freeze banking operations. The crisis was caused b ...
). However, by the mid-2000s, IMF lending was at its lowest share of world GDP since the 1970s. In May 2010, the IMF participated, in 3:11 proportion, in the first Greek bailout that totaled €110 billion, to address the great accumulation of public debt, caused by continuing large public sector deficits. As part of the bailout, the Greek government agreed to adopt austerity measures that would reduce the deficit from 11% in 2009 to "well below 3%" in 2014. The bailout did not include debt restructuring measures such as a haircut, to the chagrin of the Swiss, Brazilian, Indian, Russian, and Argentinian Directors of the IMF, with the Greek authorities themselves (at the time, PM George Papandreou and Finance Minister Giorgos Papakonstantinou) ruling out a haircut. A second bailout package of more than €100 billion was agreed over the course of a few months from October 2011, during which time Papandreou was forced from office. The so-called Troika, of which the IMF is part, are joint managers of this programme, which was approved by the executive directors of the IMF on 15 March 2012 for XDR 23.8 billion and saw private bondholders take a haircut of upwards of 50%. In the interval between May 2010 and February 2012 the private banks of Holland, France and Germany reduced exposure to Greek debt from €122 billion to €66 billion. , the largest borrowers from the IMF in order were Greece, Portugal, Ireland, Romania, and Ukraine. On 25 March 2013, a €10 billion international bailout of Cyprus was agreed by the Troika, at the cost to the Cypriots of its agreement: to close the country's second-largest bank; to impose a one-time bank deposit levy on Bank of Cyprus uninsured deposits. No insured deposit of €100k or less were to be affected under the terms of a novel bail-in scheme. The topic of sovereign debt restructuring was taken up by the IMF in April 2013, for the first time since 2005, in a report entitled "Sovereign Debt Restructuring: Recent Developments and Implications for the Fund's Legal and Policy Framework". The paper, which was discussed by the board on 20 May, summarised the recent experiences in Greece, St Kitts and Nevis, Belize, and Jamaica. An explanatory interview with Deputy Director Hugh Bredenkamp was published a few days later, as was a deconstruction by Matina Stevis of ''
The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
''. In the October 2013, Fiscal Monitor publication, the IMF suggested that a capital levy capable of reducing Euro-area government debt ratios to "end-2007 levels" would require a very high tax rate of about 10%. The Fiscal Affairs department of the IMF, headed at the time by Acting Director Sanjeev Gupta, produced a January 2014 report entitled "Fiscal Policy and Income Inequality" that stated that "Some taxes levied on wealth, especially on immovable property, are also an option for economies seeking more
progressive taxation A progressive tax is a tax in which the tax rate increases as the taxable amount increases.Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), ''Concepts of Taxation'', Dryden Press: Fort Worth, TX The term ''progr ...
... Property taxes are equitable and efficient, but underutilized in many economies ... There is considerable scope to exploit this tax more fully, both as a revenue source and as a redistributive instrument." At the end of March 2014, the IMF secured an $18 billion bailout fund for the provisional government of Ukraine in the aftermath of the Revolution of Dignity.


Response and analysis of coronavirus

In late 2019, the IMF estimated global growth in 2020 to reach 3.4%, but due to the coronavirus, in November 2020, it expected the global economy to shrink by 4.4%. In March 2020,
Kristalina Georgieva Kristalina Ivanova Georgieva-Kinova ( bg, Кристалина Иванова Георгиева-Кинова; ; born 13 August 1953) is a Bulgarian economist serving as managing director of the International Monetary Fund since 2019. She was ...
announced that the IMF stood ready to mobilize $1 trillion as its response to the
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
. This was in addition to the $50 billion fund it had announced two weeks earlier, of which $5 billion had already been requested by
Iran Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...
. One day earlier on 11 March, the UK called to pledge £150 million to the IMF catastrophe relief fund. It came to light on 27 March that "more than 80 poor and middle-income countries" had sought a bailout due to the coronavirus. On 13 April 2020, the IMF said that it "would provide immediate debt relief to 25 member countries under its
Catastrophe Containment and Relief Trust The Catastrophe Containment and Relief Trust is a bailout fund of the International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartere ...
(CCRT)" programme. In November 2020, the Fund warned the economic recovery may be losing momentum as COVID-19 infections rise again and that more economic help would be needed.


Member countries

Not all member countries of the IMF are sovereign states, and therefore not all "member countries" of the IMF are members of the United Nations. Amidst "member countries" of the IMF that are not member states of the UN are non-sovereign areas with special jurisdictions that are officially under the sovereignty of full UN member states, such as Aruba, Curaçao, Hong Kong, and
Macao Macau or Macao (; ; ; ), officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a po ...
, as well as
Kosovo Kosovo ( sq, Kosova or ; sr-Cyrl, Косово ), officially the Republic of Kosovo ( sq, Republika e Kosovës, links=no; sr, Република Косово, Republika Kosovo, links=no), is a international recognition of Kosovo, partiall ...
. The corporate members appoint ''ex-officio'' voting members, who are listed below. All members of the IMF are also International Bank for Reconstruction and Development (IBRD) members and vice versa. Former members are
Cuba Cuba ( , ), officially the Republic of Cuba ( es, República de Cuba, links=no ), is an island country comprising the island of Cuba, as well as Isla de la Juventud and several minor archipelagos. Cuba is located where the northern Caribb ...
(which left in 1964), and
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the no ...
, which was ejected from the IMF in 1980 after losing the support of then United States President
Jimmy Carter James Earl Carter Jr. (born October 1, 1924) is an American politician who served as the 39th president of the United States from 1977 to 1981. A member of the Democratic Party (United States), Democratic Party, he previously served as th ...
and was replaced by the
People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, slig ...
. However, "Taiwan Province of China" is still listed in the official IMF indices. Apart from Cuba, the other UN states that do not belong to the IMF are
Liechtenstein Liechtenstein (), officially the Principality of Liechtenstein (german: link=no, Fürstentum Liechtenstein), is a German language, German-speaking microstate located in the Alps between Austria and Switzerland. Liechtenstein is a semi-constit ...
,
Monaco Monaco (; ), officially the Principality of Monaco (french: Principauté de Monaco; Ligurian: ; oc, Principat de Mónegue), is a sovereign city-state and microstate on the French Riviera a few kilometres west of the Italian region of Lig ...
and North Korea. However,
Andorra , image_flag = Flag of Andorra.svg , image_coat = Coat of arms of Andorra.svg , symbol_type = Coat of arms , national_motto = la, Virtus Unita Fortior, label=none (Latin)"United virtue is stro ...
became the 190th member on 16 October 2020. The former
Czechoslovakia , rue, Чеськословеньско, , yi, טשעכאסלאוואקיי, , common_name = Czechoslovakia , life_span = 1918–19391945–1992 , p1 = Austria-Hungary , image_p1 ...
was expelled in 1954 for "failing to provide required data" and was readmitted in 1990, after the Velvet Revolution.
Poland Poland, officially the Republic of Poland, is a country in Central Europe. It is divided into 16 administrative provinces called voivodeships, covering an area of . Poland has a population of over 38 million and is the fifth-most populou ...
withdrew in 1950—allegedly pressured by the
Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nationa ...
—but returned in 1986.


Qualifications

Any country may apply to be a part of the IMF. Post-IMF formation, in the early postwar period, rules for IMF membership were left relatively loose. Members needed to make periodic membership payments towards their quota, to refrain from currency restrictions unless granted IMF permission, to abide by the Code of Conduct in the IMF Articles of Agreement, and to provide national economic information. However, stricter rules were imposed on governments that applied to the IMF for funding. The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates secured at rates that could be adjusted only to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement.


Benefits

Member countries of the IMF have access to information on the economic policies of all member countries, the opportunity to influence other members' economic policies, technical assistance in banking, fiscal affairs, and exchange matters, financial support in times of payment difficulties, and increased opportunities for trade and investment.


Leadership


Board of Governors

The Board of Governors consists of one governor and one alternate governor for each member country. Each member country appoints its two governors. The Board normally meets once a year and is responsible for electing or appointing an executive director to the executive board. While the Board of Governors is officially responsible for approving quota increases, special drawing right allocations, the admittance of new members, compulsory withdrawal of members, and amendments to the Articles of Agreement and By-Laws, in practice it has delegated most of its powers to the IMF's executive board. The Board of Governors is advised by the International Monetary and Financial Committee and the Development Committee. The International Monetary and Financial Committee has 24 members and monitors developments in global liquidity and the transfer of resources to developing countries. The Development Committee has 25 members and advises on critical development issues and on financial resources required to promote economic development in developing countries. They also advise on trade and environmental issues. The Board of Governors reports directly to the managing director of the IMF, Kristalina Georgieva.


Executive Board

24 Executive Directors make up the executive board. The executive directors represent all 189 member countries in a geographically based roster. Countries with large economies have their own executive director, but most countries are grouped in constituencies representing four or more countries. Following the ''2008 Amendment on Voice and Participation'' which came into effect in March 2011, seven countries each appoint an executive director: the United States, Japan, China, Germany, France, the United Kingdom, and Saudi Arabia. The remaining 17 Directors represent constituencies consisting of 2 to 23 countries. This Board usually meets several times each week. The Board membership and constituency is scheduled for periodic review every eight years.


Managing Director

The IMF is led by a managing director, who is head of the
staff Staff may refer to: Pole * Staff, a weapon used in stick-fighting ** Quarterstaff, a European pole weapon * Staff of office, a pole that indicates a position * Staff (railway signalling), a token authorizing a locomotive driver to use a particula ...
and serves as Chairman of the executive board. The managing director is the most powerful position at the IMF. Historically, the IMF's managing director has been a European citizen and the president of the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
has been an
American citizen Citizenship of the United States is a legal status that entails Americans with specific rights, duties, protections, and benefits in the United States. It serves as a foundation of fundamental rights derived from and protected by the Constit ...
. However, this standard is increasingly being questioned and competition for these two posts may soon open up to include other qualified candidates from any part of the world.. In August 2019, the International Monetary Fund has removed the age limit which is 65 or over for its managing director position. In 2011, the world's largest developing countries, the BRIC states, issued a statement declaring that the tradition of appointing a European as managing director undermined the legitimacy of the IMF and called for the appointment to be merit-based.


List of Managing Directors

Former managing director Dominique Strauss-Kahn was arrested in connection with charges of sexually assaulting a New York hotel room attendant and resigned on 18 May. The charges were later dropped. On 28 June 2011 Christine Lagarde was confirmed as managing director of the IMF for a five-year term starting on 5 July 2011. She was re-elected by consensus for a second five-year term, starting 5 July 2016, being the only candidate nominated for the post of managing director.


First Deputy Managing Director

The managing director is assisted by a First Deputy managing director (FDMD) who, by convention, has always been a citizen of the United States. Together, the managing director and their First Deputy lead th
senior management of the IMF
Like the managing director, the First Deputy traditionally serves a five-year term.


List of First Deputy Managing Directors


Chief Economist

The chief economist leads the research division of the IMF and is a "senior official" of the IMF.


List of Chief Economists


Voting power

Voting power in the IMF is based on a quota system. Each member has a number of basic votes, equal to 5.502% of the total votes, plus one additional vote for each special drawing right (SDR) of 100,000 of a member country's quota.. The SDR is the unit of account of the IMF and represents a potential claim to currency. It is based on a basket of key international currencies. The basic votes generate a slight bias in favour of small countries, but the additional votes determined by SDR outweigh this bias. Changes in the voting shares require approval by a super-majority of 85% of voting power. In December 2015, the United States Congress adopted a legislation authorising the 2010 Quota and Governance Reforms. As a result, * all 190 members' quotas will increase from a total of about XDR 238.5 billion to about XDR 477 billion, while the quota shares and voting power of the IMF's poorest member countries will be protected. * more than 6 percent of quota shares will shift to dynamic emerging market and developing countries and also from over-represented to under-represented members. * four emerging market countries (Brazil, China, India, and Russia) will be among the ten largest members of the IMF. Other top 10 members are the United States, Japan, Germany, France, the United Kingdom and Italy.


Effects of the quota system

The IMF's quota system was created to raise funds for loans. Each IMF member country is assigned a quota, or contribution, that reflects the country's relative size in the global economy. Each member's quota also determines its relative voting power. Thus, financial contributions from member governments are linked to voting power in the organization. This system follows the logic of a shareholder-controlled organization: wealthy countries have more say in the making and revision of rules. Since decision making at the IMF reflects each member's relative economic position in the world, wealthier countries that provide more money to the IMF have more influence than poorer members that contribute less; nonetheless, the IMF focuses on redistribution.


Inflexibility of voting power

Quotas are normally reviewed every five years and can be increased when deemed necessary by the Board of Governors. IMF voting shares are relatively inflexible: countries that grow economically have tended to become under-represented as their voting power lags behind. Currently, reforming the representation of developing countries within the IMF has been suggested. These countries' economies represent a large portion of the global economic system but this is not reflected in the IMF's decision-making process through the nature of the quota system. Joseph Stiglitz argues, "There is a need to provide more effective voice and representation for developing countries, which now represent a much larger portion of world economic activity since 1944, when the IMF was created." In 2008, a number of quota reforms were passed including shifting 6% of quota shares to dynamic emerging markets and developing countries.


Overcoming borrower/creditor divide

The IMF's membership is divided along income lines: certain countries provide financial resources while others use these resources. Both developed country "creditors" and developing country "borrowers" are members of the IMF. The developed countries provide the financial resources but rarely enter into IMF loan agreements; they are the creditors. Conversely, the developing countries use the lending services but contribute little to the pool of money available to lend because their quotas are smaller; they are the borrowers. Thus, tension is created around governance issues because these two groups, creditors and borrowers, have fundamentally different interests. The criticism is that the system of voting power distribution through a quota system institutionalizes borrower subordination and creditor dominance. The resulting division of the IMF's membership into borrowers and non-borrowers has increased the controversy around conditionality because the borrowers are interested in increasing loan access while creditors want to maintain reassurance that the loans will be repaid.


Use

A recent source revealed that the average overall use of IMF credit per decade increased, in real terms, by 21% between the 1970s and 1980s, and increased again by just over 22% from the 1980s to the 1991–2005 period. Another study has suggested that since 1950 the continent of Africa alone has received $300 billion from the IMF, the World Bank, and affiliate institutions. A study by Bumba Mukherjee found that developing democratic countries benefit more from IMF programs than developing autocratic countries because policy-making, and the process of deciding where loaned money is used, is more transparent within a democracy. One study done by Randall Stone found that although earlier studies found little impact of IMF programs on balance of payments, more recent studies using more sophisticated methods and larger samples "usually found IMF programs improved the balance of payments".


Exceptional Access Framework – sovereign debt

The Exceptional Access Framework was created in 2003 when John B. Taylor was Under Secretary of the
US Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and ...
for International Affairs. The new Framework became fully operational in February 2003 and it was applied in the subsequent decisions on Argentina and Brazil. Its purpose was to place some sensible rules and limits on the way the IMF makes loans to support governments with debt problem—especially in emerging markets—and thereby move away from the bailout mentality of the 1990s. Such a reform was essential for ending the crisis atmosphere that then existed in emerging markets. The reform was closely related to and put in place nearly simultaneously with the actions of several emerging market countries to place collective action clauses in their bond contracts. In 2010, the framework was abandoned so the IMF could make loans to Greece in an unsustainable and political situation. The topic of sovereign debt restructuring was taken up by IMF staff in April 2013 for the first time since 2005, in a report entitled "Sovereign Debt Restructuring: Recent Developments and Implications for the Fund's Legal and Policy Framework". The paper, which was discussed by the board on 20 May, summarised the recent experiences in Greece, St Kitts and Nevis, Belize, and Jamaica. An explanatory interview with Deputy Director Hugh Bredenkamp was published a few days later, as was a deconstruction by Matina Stevis of ''
The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
''. The staff was directed to formulate an updated policy, which was accomplished on 22 May 2014 with a report entitled "The Fund's Lending Framework and Sovereign Debt: Preliminary Considerations", and taken up by the executive board on 13 June."The Fund's Lending Framework and Sovereign Debt – Preliminary Considerations" 22 May 2014
(also bears date June 2014; team of 20 led by Reza Bakir and supervised by Olivier Blanchard, Sean Hagan,
Hugh Bredenkamp Hugh may refer to: *Hugh (given name) Noblemen and clergy French * Hugh the Great (died 956), Duke of the Franks * Hugh Magnus of France (1007–1025), co-King of France under his father, Robert II * Hugh, Duke of Alsace (died 895), modern-day ...
, and Peter Dattels)
The staff proposed that "in circumstances where a (Sovereign) member has lost market access and debt is considered sustainable ... the IMF would be able to provide Exceptional Access on the basis of a debt operation that involves an extension of maturities", which was labeled a "reprofiling operation". These reprofiling operations would "generally be less costly to the debtor and creditors—and thus to the system overall—relative to either an upfront debt reduction operation or a bail-out that is followed by debt reduction ... (and) would be envisaged only when both (a) a member has lost market access and (b) debt is assessed to be sustainable, but not with high probability ... Creditors will only agree if they understand that such an amendment is necessary to avoid a worse outcome: namely, a default and/or an operation involving debt reduction ... Collective action clauses, which now exist in most—but not all—bonds would be relied upon to address collective action problems."


Impact

According to a 2002 study by Randall W. Stone, the academic literature on the IMF shows "no consensus on the long-term effects of IMF programs on growth". Some research has found that IMF loans can reduce the chance of a future banking crisis, while other studies have found that they can increase the risk of political crises. IMF programs can reduce the effects of a currency crisis. Some research has found that IMF programs are less effective in countries which possess a developed-country patron (be it by foreign aid, membership of postcolonial institutions or UN voting patterns), seemingly due to this patron allowing countries to flaunt IMF program rules as these rules are not consistently enforced. Some research has found that IMF loans reduce economic growth due to creating an economic moral hazard, reducing public investment, reducing incentives to create a robust domestic policies and reducing private investor confidence. Other research has indicated that IMF loans can have a positive impact on economic growth and that their effects are highly nuanced.


Criticisms

Overseas Development Institute (ODI) research undertaken in 1980 included criticisms of the IMF which support the analysis that it is a pillar of what activist Titus Alexander calls global apartheid. * Developed countries were seen to have a more dominant role and control over
less developed countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
(LDCs). * The Fund worked on the incorrect assumption that all payments
disequilibria In economics, economic equilibrium is a situation in which economic forces such as supply and demand are balanced and in the absence of external influences the ( equilibrium) values of economic variables will not change. For example, in the s ...
were caused domestically. The Group of 24 (G-24), on behalf of LDC members, and the United Nations Conference on Trade and Development (UNCTAD) complained that the IMF did not distinguish sufficiently between disequilibria with predominantly external as opposed to internal causes. This criticism was voiced in the aftermath of the 1973 oil crisis. Then LDCs found themselves with payment deficits due to adverse changes in their terms of trade, with the Fund prescribing stabilization programmes similar to those suggested for deficits caused by government over-spending. Faced with long-term, externally generated disequilibria, the G-24 argued for more time for LDCs to adjust their economies. * Some IMF policies may be anti-developmental; the report said that deflationary effects of IMF programmes quickly led to losses of output and employment in economies where incomes were low and unemployment was high. Moreover, the burden of the deflation is disproportionately borne by the poor. * The IMF's initial policies were based in theory and influenced by differing opinions and departmental rivalries. Critics suggest that its intentions to implement these policies in countries with widely varying economic circumstances were misinformed and lacked economic rationale. ODI conclusions were that the IMF's very nature of promoting market-oriented approaches attracted unavoidable criticism. On the other hand, the IMF could serve as a scapegoat while allowing governments to blame international bankers. The ODI conceded that the IMF was insensitive to political aspirations of LDCs while its policy conditions were inflexible. 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, which some believe 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 privatisation of strategically vital national resources. Others attribute the crisis to Argentina's misdesigned fiscal federalism, which caused subnational spending to increase rapidly. 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. The current—as of early 2006—trend toward 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 has been ascribed to this crisis. In 2006, a senior ActionAid policy analyst Akanksha Marphatia stated that IMF policies in Africa undermine any possibility of meeting the Millennium Development Goals (MDGs) due to imposed restrictions that prevent spending on important sectors, such as education and health. In an interview (2008-05-19), the former Romanian Prime Minister
Călin Popescu-Tăriceanu Călin Constantin Anton Popescu-Tăriceanu (; born 14 January 1952) is a Romanian politician who was Prime Minister of Romania from 29 December 2004 to 22 December 2008. He was also president of the National Liberal Party (PNL) and the vice-pr ...
claimed that "Since 2005, IMF is constantly making mistakes when it appreciates the country's economic performances". Former Tanzanian President Julius Nyerere, who claimed that debt-ridden African states were ceding sovereignty to the IMF and the World Bank, famously asked, "Who elected the IMF to be the ministry of finance for every country in the world?" Former chief economist of IMF and former Reserve Bank of India (RBI) Governor
Raghuram Rajan Raghuram Govind Rajan (born 3 February 1963) is an Indian economist and the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business. Quote: "I am an Indian citizen. I have always ...
who predicted the
financial crisis of 2007–08 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of f ...
criticised the IMF for remaining a sideline player to the developed world. He criticised the IMF for praising the monetary policies of the US, which he believed were wreaking havoc in emerging markets. He had been critical of "ultra-loose money policies" of some unnamed countries. Countries such as Zambia have not received proper aid with long-lasting effects, leading to concern from economists. Since 2005, Zambia (as well as 29 other African countries) did receive debt write-offs, which helped with the country's medical and education funds. However, Zambia returned to a debt of over half its GDP in less than a decade. American economist William Easterly, sceptical of the IMF's methods, had initially warned that "debt relief would simply encourage more reckless borrowing by crooked governments unless it was accompanied by reforms to speed up economic growth and improve governance", according to ''
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Eco ...
''.


Conditionality

The IMF has been criticised for being "out of touch" with local economic conditions, cultures, and environments in the countries they are requiring policy reform. The economic advice the IMF gives might not always take into consideration the difference between what spending means on paper and how it is felt by citizens. Countries charge that with excessive conditionality, they do not "own" the programmes and the links are broken between a recipient country's people, its government, and the goals being pursued by the IMF. Jeffrey Sachs argues that the IMF's "usual prescription is 'budgetary belt tightening to countries who are much too poor to own belts. Sachs wrote that the IMF's role as a generalist institution specialising in macroeconomic issues needs reform.
Conditionality In political economy and international relations, conditionality is the use of conditions attached to the provision of benefits such as a loan, debt relief or bilateral aid. These conditions are typically imposed by international financial institu ...
has also been criticised because a country can pledge collateral of "acceptable assets" to obtain waivers—if one assumes that all countries are able to provide "acceptable collateral". One view is that conditionality undermines domestic political institutions. The recipient governments are sacrificing policy autonomy in exchange for funds, which can lead to public resentment of the local leadership for accepting and enforcing the IMF conditions. Political instability can result from more leadership turnover as political leaders are replaced in electoral backlashes. IMF conditions are often criticised for reducing government services, thus increasing unemployment. Another criticism is that IMF policies are only designed to address poor governance, excessive government spending, excessive government intervention in markets, and too much state ownership. This assumes that this narrow range of issues represents the only possible problems; everything is standardised and differing contexts are ignored. A country may also be compelled to accept conditions it would not normally accept had they not been in a financial crisis in need of assistance. On top of that, regardless of what methodologies and data sets used, it comes to same the conclusion of exacerbating income inequality. With Gini coefficient, it became clear that countries with IMF policies face increased income inequality. It is claimed that conditionalities retard social stability and hence inhibit the stated goals of the IMF, while Structural Adjustment Programmes lead to an increase in poverty in recipient countries.Hertz, Noreena. ''The Debt Threat''. New York:
Harper Collins Publishers HarperCollins Publishers LLC is one of the Big Five English-language publishing companies, alongside Penguin Random House, Simon & Schuster, Hachette, and Macmillan. The company is headquartered in New York City and is a subsidiary of News Cor ...
, 2004.
The IMF sometimes advocates " austerity programmes", cutting public spending and increasing taxes even when the economy is weak, to bring budgets closer to a balance, thus reducing budget deficits. Countries are often advised to lower their corporate tax rate. In ''
Globalization and Its Discontents ''Globalization and Its Discontents'' is a book published in 2002 by the 2001 Nobel laureate Joseph E. Stiglitz. The title is a reference to Freud's Civilization and Its Discontents. The book draws on Stiglitz's personal experience as chairman ...
'', Joseph E. Stiglitz, former chief economist and senior vice-president at the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, criticises these policies.Stiglitz, Joseph. ''Globalization and its Discontents''. New York: WW Norton & Company, 2002. He argues that by converting to a more monetarist approach, the purpose of the fund is no longer valid, as it was designed to provide funds for countries to carry out Keynesian reflations, and that the IMF "was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community." Stiglitz concludes, "Modern high-tech warfare is designed to remove physical contact: dropping bombs from 50,000 feet ensures that one does not 'feel' what one does. Modern economic management is similar: from one's luxury hotel, one can callously impose policies about which one would think twice if one knew the people whose lives one was destroying." The researchers Eric Toussaint and Damien Millet argue that the IMF's policies amount to a new form of colonisation that does not need a military presence: International politics play an important role in IMF decision making. The clout of member states is roughly proportional to its contribution to IMF finances. The United States has the greatest number of votes and therefore wields the most influence. Domestic politics often come into play, with politicians in developing countries using conditionality to gain leverage over the opposition to influence policy.


Reform


Function and policies

The IMF is only one of many international organisations, and it is a generalist institution that deals only with macroeconomic issues; its core areas of concern in developing countries are very narrow. One proposed reform is a movement towards close partnership with other specialist agencies such as UNICEF, the
Food and Agriculture Organization The Food and Agriculture Organization of the United Nations (FAO)french: link=no, Organisation des Nations unies pour l'alimentation et l'agriculture; it, Organizzazione delle Nazioni Unite per l'Alimentazione e l'Agricoltura is an intern ...
(FAO), and the United Nations Development Program (UNDP). Jeffrey Sachs argues in '' The End of Poverty'' that the IMF and the World Bank have "the brightest economists and the lead in advising poor countries on how to break out of poverty, but the problem is development economics". Development economics needs the reform, not the IMF. He also notes that IMF loan conditions should be paired with other reforms—e.g., trade reform in developed nations,
debt cancellation Debt relief or debt cancellation is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. From antiquity through the 19th century, it refers to domestic debts, in particu ...
, and increased financial assistance for investments in basic infrastructure. IMF loan conditions cannot stand alone and produce change; they need to be partnered with other reforms or other conditions as applicable.


US influence and voting reform

The scholarly consensus is that IMF decision-making is not simply technocratic, but also guided by political and economic concerns.. The United States is the IMF's most powerful member, and its influence reaches even into decision-making concerning individual loan agreements.. The United States has historically been openly opposed to losing what Treasury Secretary Jacob Lew described in 2015 as its "leadership role" at the IMF, and the United States' "ability to shape international norms and practices". Emerging markets were not well-represented for most of the IMF's history: Despite being the most populous country, China's vote share was the sixth largest; Brazil's vote share was smaller than Belgium's. Reforms to give more powers to emerging economies were agreed by the G20 in 2010. The reforms could not pass, however, until they were ratified by the US Congress, since 85% of the Fund's voting power was required for the reforms to take effect, and the Americans held more than 16% of voting power at the time. After repeated criticism, the United States finally ratified the voting reforms at the end of 2015. The
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
countries maintained their overwhelming majority of voting share, and the United States in particular retained its share at over 16%. The criticism of the American-and-European dominated IMF has led to what some consider 'disenfranchising the world' from the governance of the IMF.
Raúl Prebisch Raúl Prebisch (April 17, 1901April 29, 1986) was an Argentine economist known for his contributions to structuralist economics such as the Prebisch–Singer hypothesis, which formed the basis of economic dependency theory. He became the executi ...
, the founding secretary-general of the UN Conference on Trade and Development (UNCTAD), wrote that one of "the conspicuous deficiencies of the general economic theory, from the point of view of the periphery, is its false sense of universality."


Support of dictatorships

The role of the Bretton Woods institutions has been controversial since the late
Cold War The Cold War is a term commonly used to refer to a period of geopolitical tension between the United States and the Soviet Union and their respective allies, the Western Bloc and the Eastern Bloc. The term '' cold war'' is used because t ...
, because of claims that the IMF policy makers supported military dictatorships friendly to American and European corporations, but also other anti-communist and Communist regimes (such as Mobutu's Zaire and Ceaușescu's Romania, respectively). Critics also claim that the IMF is generally apathetic or hostile to human rights, and labour rights. The controversy has helped spark the
anti-globalization movement The anti-globalization movement or counter-globalization movement, is a social movement critical of economic globalization. The movement is also commonly referred to as the global justice movement, alter-globalization movement, anti-globalist m ...
. An example of IMF's support for a dictatorship was its ongoing support for Mobutu's rule in Zaire, although its own envoy,
Erwin Blumenthal Erwin may refer to: People Given name * Erwin Chargaff (1905–2002), Austrian biochemist * Erwin Dold (1919–2012), German concentration camp commandant in World War 2 * Erwin Hauer (1926–2017), Austrian-born American sculptor * Egon Erwin K ...
, provided a sobering report about the entrenched corruption and embezzlement and the inability of the country to pay back any loans. Arguments in favour of the IMF say that economic stability is a precursor to democracy; however, critics highlight various examples in which democratised countries fell after receiving IMF loans. A 2017 study found no evidence of IMF lending programs undermining democracy in borrowing countries. To the contrary, it found "evidence for modest but definitively positive conditional differences in the democracy scores of participating and non-participating countries." On 28 June 2021 the IMF approved a US$1 billion loan to the Ugandan government despite protests from Ugandans who protested in Washington, London and South-Africa.


Impact on access to food

A number of civil society organisations have criticised the IMF's policies for their impact on access to food, particularly in developing countries. In October 2008, former United States president
Bill Clinton William Jefferson Clinton (né Blythe III; born August 19, 1946) is an American politician who served as the 42nd president of the United States from 1993 to 2001. He previously served as governor of Arkansas from 1979 to 1981 and again ...
delivered a speech to the United Nations on
World Food Day World Food Day is an international day celebrated every year worldwide on October 16 to commemorate the date of the founding of the United Nations Food and Agriculture Organization in 1945. The day is celebrated widely by many other organizatio ...
, criticising the World Bank and IMF for their policies on food and agriculture: The FPIF remarked that there is a recurring pattern: "the destabilization of peasant producers by a one-two punch of IMF-
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
structural adjustment programs that gutted government investment in the countryside followed by the massive influx of subsidized U.S. and European Union agricultural imports after the WTO's Agreement on Agriculture pried open markets."


Impact on public health

A 2009 study concluded that the strict conditions resulted in thousands of deaths in Eastern Europe by
tuberculosis Tuberculosis (TB) is an infectious disease usually caused by '' Mycobacterium tuberculosis'' (MTB) bacteria. Tuberculosis generally affects the lungs, but it can also affect other parts of the body. Most infections show no symptoms, ...
as
public health care Publicly funded healthcare is a form of health care financing designed to meet the cost of all or most healthcare needs from a publicly managed fund. Usually this is under some form of democratic accountability, the right of access to which are se ...
had to be weakened. In the 21 countries to which the IMF had given loans,
tuberculosis Tuberculosis (TB) is an infectious disease usually caused by '' Mycobacterium tuberculosis'' (MTB) bacteria. Tuberculosis generally affects the lungs, but it can also affect other parts of the body. Most infections show no symptoms, ...
deaths rose by 16.6%. A 2017 systematic review on studies conducted on the impact that Structural adjustment programs have on child and maternal health found that these programs have a detrimental effect on maternal and child health among other adverse effects. In 2009, a book by Rick Rowden titled ''The Deadly Ideas of
Neoliberalism Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent f ...
: How the IMF has Undermined Public Health and the Fight Against AIDS'', claimed that the IMF's monetarist approach towards prioritising price stability (low inflation) and fiscal restraint (low budget deficits) was unnecessarily restrictive and has prevented developing countries from scaling up long-term investment in public health infrastructure. The book claimed the consequences have been chronically underfunded public health systems, leading to demoralising working conditions that have fuelled a " brain drain" of medical personnel, all of which has undermined public health and the fight against
HIV/AIDS Human immunodeficiency virus infection and acquired immunodeficiency syndrome (HIV/AIDS) is a spectrum of conditions caused by infection with the human immunodeficiency virus (HIV), a retrovirus. Following initial infection an individual ...
in developing countries. In 2016, the IMF's research department published a report titled "Neoliberalism: Oversold?" which, while praising some aspects of the " neoliberal agenda", claims that the organisation has been "overselling" fiscal austerity policies and financial deregulation, which they claim has exacerbated both financial crises and economic inequality around the world.


Impact on environment

IMF policies have been repeatedly criticised for making it difficult for indebted countries to say no to environmentally harmful projects that nevertheless generate
revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive rev ...
s such as oil, coal, and forest-destroying lumber and agriculture projects. Ecuador, for example, had to defy IMF advice repeatedly to pursue the protection of its rainforests, though paradoxically this need was cited in the IMF argument to provide support to Ecuador. The IMF acknowledged this paradox in the 2010 report that proposed the IMF Green Fund, a mechanism to issue
special drawing rights Special drawing rights (SDRs, code ) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency ''per se''. They represent a claim ...
directly to pay for climate harm prevention and potentially other ecological protection as pursued generally by other
environmental finance Environmental finance is a field within finance that employs market-based environmental policy instruments to improve the ecological impact of investment strategies. The primary objective of environmental finance is to regress the negative impac ...
. While the response to these moves was generally positive possibly because ecological protection and energy and infrastructure transformation are more politically neutral than pressures to change social policy, some experts voiced concern that the IMF was not representative, and that the IMF proposals to generate only US$200 billion a year by 2020 with the SDRs as seed funds, did not go far enough to undo the general incentive to pursue destructive projects inherent in the world commodity trading and banking systems—criticisms often levelled at the World Trade Organization and large global banking institutions. In the context of the
European debt crisis The European debt crisis, often also referred to as the eurozone crisis or the European sovereign debt crisis, is a multi-year debt crisis that took place in the European Union (EU) from 2009 until the mid to late 2010s. Several eurozone me ...
, some observers noted that Spain and California, two troubled economies within respectively the European Union and the United States, and also Germany, the primary and politically most fragile supporter of a euro currency bailout would benefit from IMF recognition of their leadership in green technology, and directly from Green Fund-generated demand for their exports, which could also improve their credit ratings.


IMF and globalization

Globalization Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term ''globalization'' first appeared in the early 20t ...
encompasses three institutions: global financial markets and transnational companies, national governments linked to each other in economic and military alliances led by the United States, and rising "global governments" such as World Trade Organization (WTO), IMF, and
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
.
Charles Derber Charles Derber is an American Professor of Sociology at Boston College. Derber's work focuses on the crises of capitalism, globalization, corporate power, American militarism, the culture of hegemony, the climate crisis, and the new peace and gl ...
argues in his book ''People Before Profit,'' "These interacting institutions create a new global power system where sovereignty is globalized, taking power and constitutional authority away from nations and giving it to global markets and international bodies". Titus Alexander argues that this system institutionalises global inequality between western countries and the Majority World in a form of global apartheid, in which the IMF is a key pillar. The establishment of globalised economic institutions has been both a symptom of and a stimulus for globalisation. The development of the World Bank, the IMF, regional development banks such as the European Bank for Reconstruction and Development (EBRD), and multilateral trade institutions such as the WTO signals a move away from the dominance of the state as the primary actor analysed in international affairs. Globalization has thus been transformative in terms of limiting of state sovereignty over the economy.


Impact on gender equality

The IMF says they support women's empowerment and tries to promote their rights in countries with a significant gender gap.


Scandals

Managing Director Lagarde (2011-2019) was convicted of giving preferential treatment to businessman-turned-politician
Bernard Tapie Bernard Roger Tapie (; 26 January 1943 – 3 October 2021) was a French businessman, politician and occasional actor, singer, and TV host. He was Minister of City Affairs in the government of Pierre Bérégovoy. Life and career Tapie was bor ...
as he pursued a legal challenge against the French government. At the time, Lagarde was the French economic minister. Within hours of her conviction, in which she escaped any punishment, the fund's 24-member executive board put to rest any speculation that she might have to resign, praising her "outstanding leadership" and the "wide respect" she commands around the world. Former IMF Managing Director Rodrigo Rato was arrested in 2015 for alleged fraud, embezzlement and money laundering. In 2017, the Audiencia Nacional found Rato guilty of embezzlement and sentenced him to 4 years' imprisonment. In 2018, the sentence was confirmed by the Supreme Court of Spain.


Alternatives

In March 2011, the Ministers of Economy and Finance of the African Union proposed to establish an African Monetary Fund. At the
6th BRICS summit The 6th BRICS summit was the sixth annual diplomatic meeting of the BRICS, a grouping of major emerging economies that includes Brazil, Russia, India, China and South Africa. It was hosted by Brazil, as the first host country of the current f ...
in July 2014 the
BRICS BRICS is an acronym for five leading emerging economies: Brazil, Russia, India, China, and South Africa. The first four were initially grouped as "BRIC" (or "the BRICs") in 2001 by Goldman Sachs economist Jim O'Neill, who coined the te ...
nations (Brazil, Russia, India, China, and South Africa) announced the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$100 billion, a framework to provide liquidity through
currency swap In finance, a currency swap (more typically termed a cross-currency swap, XCS) is an interest rate derivative (IRD). In particular it is a linear IRD, and one of the most liquid benchmark products spanning multiple currencies simultaneously. ...
s in response to actual or potential short-term balance-of-payments pressures. In 2014, the China-led
Asian Infrastructure Investment Bank The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that aims to improve economic and social outcomes in Asia. The bank currently has 105 members, including 14 prospective members from around the world. The br ...
was established.


In the media

''
Life and Debt ''Life and Debt'' is a 2001 American documentary film directed by Stephanie Black. It examines the economic and social situation in Jamaica, and specifically how the International Monetary Fund and the World Bank's structural adjustment policies ...
'', a documentary film, deals with the IMF's policies' influence on Jamaica and its economy from a critical point of view. ''
Debtocracy ''Debtocracy'' ( el, Χρεοκρατία ''Chreokratía'') is a 2011 left-wing documentary film by Katerina Kitidi and Aris Chatzistefanou. The documentary examines the causes of the Greek debt crisis in 2010 and advocates for the default of " ...
'', a 2011 independent Greek documentary film, also criticises the IMF. Portuguese musician
José Mário Branco José Mário Branco (25 May 1942 – 19 November 2019) was a Portuguese singer-songwriter, actor, and record producer. Biography José Mário Branco was born in Porto, the son of primary school teachers, and became politically involved in the ...
's 1982 album '' FMI'' is inspired by the IMF's intervention in Portugal through monitored stabilisation programs in 1977–78. In the 2015 film, '' Our Brand Is Crisis'', the IMF is mentioned as a point of political contention, where the Bolivian population fears its electoral interference.


See also

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Notes


References


Footnotes


Bibliography

* * * * * * * * *


Further reading

* * Copelovitch, Mark. 2010. '' The International Monetary Fund in the Global Economy: Banks, Bonds, and Bailouts''. Cambridge University Press. *deVries, Margaret Garritsen. ''The IMF in a Changing World, 1945–85'', International Monetary Fund, 1986. * James, H. ''International Monetary Cooperation since Bretton Woods'', Oxford, 1996. * Joicey, N. and Pickford, S. "The International Monetary Fund and Global Economic Cooperation" in Nicholas Bayne and Stephen Woolcock,
The New Economic Diplomacy: Decision-Making and Negotiation in International Relations
', (Ashgate Publishing, 2011). * Keynes, J.M. ''The Collected Writings, Vol. XXVI. Activities 1941–1946: Shaping the Post-War World: Bretton Woods and Reparations'', Cambridge, 1980. * Moschella, M.
Governing Risk: The IMF and Global Financial Crises
' (Palgrave Macmillan; 2010). * Skidelsky, R. ''John Maynard Keynes: Fighting for Britain'', London, 2000. * Truman, E
Strengthening IMF Surveillance: A Comprehensive Proposal
Policy Brief 10–29,
Peterson Institute for International Economics The Peterson Institute for International Economics (PIIE), known until 2006 as the Institute for International Economics (IIE), is an American think tank based in Washington, D.C. It was founded by C. Fred Bergsten in 1981 and has been led b ...
, 2010. * Weiss, Martin A
''The International Monetary Fund.''
(Washington, DC: Congressional Research Service, 24 May 2018). * Woods, N. ''The Globalizers: The IMF, the World Bank, and Their Borrowers'', Ithaca, 2006 *Woods, Ngaire and Lombardi, Domenico. (2006). Uneven Patterns of Governance: How Developing Countries are Represented in the IMF. Review of International Political Economy. Volume 13, Number 3: 480–515.


External links

* {{DEFAULTSORT:International Monetary Fund 1945 in economics Global policy organizations International development organizations International finance institutions Organizations based in Washington, D.C. Organizations established in 1945 United Nations Development Group United Nations Economic and Social Council United Nations specialized agencies