Tatarl Anastasia,102RI

Report :The International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C.,
in the United States, of 188 countries 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 at the Bretton Woods Conference, it came into formal existence in 1945 with
29 member countries and the goal of reconstructing the international payment system. Countries
contribute funds to a pool through a quota system from which countries with payment imbalances can borrow.
As of 2010, the fund had SDR476.8 billion, about US$755.7 billion at then-current exchange rates. Through
this fund, and other activities such as statistics keeping and analysis, surveillance of its members' economies and
the demand for self-correcting policies, the IMF works to improve the economies of its member countries. The
organization's objectives stated in the Articles of Agreement are: to promote international economic
cooperation, international trade, employment, and exchange-rate stability, including by making financial
resources available to member countries to meet balance-of-paymentsneeds.Christine Lagarde is the managing
director.Official languages are Arabic,Chinese,English,French,Russian,Spanish.
History
The IMF was originally laid out as a part of the Bretton Woods system exchange agreement in 1944. During
the Great Depression, 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 co-operation created a need for oversight. The representatives of 45 governments met at theBretton
Woods Conference in the Mount Washington Hotel in Bretton Woods, New Hampshire, in the United States, to
discuss a framework for postwar international economic coperation and how to rebuild Europe.There were two
views on the role the IMF should assume as a global economic institution. British economist John Maynard
Keynesimagined that the IMF would be a coperative 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 U.S. government had during the New Dealin response to World War II. 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.[22] Most of White's plan was incorporated into the final acts adopted at
Bretton Woods.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.
What they do
With its near-global membership of 188 countries, the IMF is uniquely placed to help member governments
take advantage of the opportunitiesand manage the challengesposed by globalization and economic
development more generally. The IMF tracks global economic trends and performance, alerts its member

countries when it sees problems on the horizon, provides a forum for policy dialogue, and passes on knowhow to governments on how to tackle economic difficulties.
The IMF provides policy advice and financing to members in economic difficulties and also works with
developing nations to help them achieve macroeconomic stability and reduce poverty.
Marked by massive movements of capital and abrupt shifts in comparative advantage, globalization affects
countries' policy choices in many areas, including labor, trade, and tax policies. Helping a country benefit
from globalization while avoiding potential downsides is an important task for the IMF. The global economic
crisis has highlighted just how interconnected countries have become in todays world economy.
Key IMF activities
The IMF supports its membership by providing
policy advice to governments and central banks based on analysis of economic trends and crosscountry experiences;
research, statistics, forecasts, and analysis based on tracking of global, regional, and individual
economies and markets;
loans to help countries overcome economic difficulties;
concessional loans to help fight poverty in developing countries; and
technical assistance and training to help countries improve the management of their economies.
How they do
The IMFs main goal is to ensure the stability of the international monetary and financial system. It helps
resolve crises, and works with its member countries to promote growth and alleviate poverty. It has three
main tools at its disposal to carry out its mandate: surveillance, technical assistance and training, and
lending. These functions are underpinned by the IMFs research and statistics.
Surveillance
The IMF promotes economic stability and global growth by encouraging countries to adopt sound economic
and financial policies. To do this, it regularly monitors global, regional, and national economic
developments. It also seeks to assess the impact of the policies of individual countries on other economies.
This process of monitoring and discussing countries economic and financial policies is known as
bilateralsurveillance. On a regular basisusually once each yearthe IMF conducts in depth appraisals of
each member countrys economic situation. It discusses with the countrys authorities the policies that are
most conducive to a stable and prosperous economy, drawing on experience across its membership. Member
countries may agree to publish the IMFs assessment of their economies, with the vast majority of
countries opting to do so.
The IMF also carries out extensive analysis of global and regional economic trends, known as multilateral
surveillance. Its key outputs are three semiannual publications, the World Economic Outlook, the Global
Financial Stability Report, and the Fiscal Monitor. The IMF also publishes a series of regional economic
outlooks.
The IMF recently agreed on a series of actions to enhance multilateral, financial, and bilateral surveillance,
including to better integrate the three; improve our understanding of spillovers and the assessment of
emerging and potential risks; and strengthen IMF policy advice.

Technical assistance and training

IMF offers technical assistance and training to help member countries strengthen their capacity to design and
implement effective policies. Technical assistance is offered in several areas, including fiscal policy,
monetary and exchange rate policies, banking and financial system supervision and regulation, and statistics.
The IMF provides technical assistance and training mainly in four areas:
monetary and financial policies (monetary policy instruments, banking system supervision and
restructuring, foreign management and operations, clearing settlement systems for payments, and
structural development of central banks);
fiscal policy and management (tax and customs policies and administration, budget formulation,
expenditure management, design of social safety nets, and management of domestic and foreign
debt);
compilation, management, dissemination, and improvement of statistical data; and
economic and financial legislation.
Lending
IMF financing provides member countries the breathing room they need to correct balance of payments
problems. A policy program supported by financing is designed by the national authorities in close
cooperation with the IMF. Continued financial support is conditional on the effective implementation of this
program.
In the most recent reforms, IMF lending instruments were improved further to provide flexible crisis
prevention tools to a broad range of members with sound fundamentals, policies, and institutional policy
frameworks.
In low-income countries, the IMF has doubled loan access limits and is boosting its lending to the worlds
poorer countries, with loans at a concessional interest rate.
For more on different types of IMF lending, go to Lending in the Our Work section.
Research and data
Supporting all three of these activities is the IMFs economic and financial research andstatistics. In recent
years, the IMF has applied both its surveillance and technical assistance work to the development
of standards and codes of good practice in its areas of responsibility, and to the strengthening of financial
sectors. These are part of the IMFs continuing efforts to strengthen national and global financial systems
and improve its ability to prevent and resolve crises.
Membership
The IMF currently has a near-global membership of 188 countries. To become a member, a country must apply
and then be accepted by a majority of the existing members. In April 2012, Republic of South Sudan joined the
IMF, becoming the institution's 188th member.
Collaboration
The IMF collaborates with the World Bank, regional development banks, the World Trade
Organization(WTO), UN agencies, and other international bodies. While all of these organizations are
involved in global economic issues, each has its own unique areas of responsibility and specialization. The
IMF also works closely with the Group of Twenty (G-20) industrialized and emerging market economies and
interacts with think tanks, civil society, and the media on a daily basis.

Working with the World Bank

The IMF and the World Bank are different, but complement each other's work. While the IMF's focus is
chiefly on macroeconomic and financial sector issues, the World Bank is concerned mainly with longer-term
development and poverty reduction. Its loans finance infrastructure projects, the reform of particular sectors
of the economy, and broader structural reforms. IMF loans assist countries in continuing to pay for imports,
stabilizing their currencies, and restoring
conditions for strong economic growth. Countries must join the IMF to be eligible for World Bank
membership.
Given the World Bank's focus on antipoverty issues, the IMF collaborates closely with the Bank in the area
of poverty reduction. Other areas of collaboration include assessments of member countries' financial
sectors, development of standards and codes, and improvement of the quality, availability, and coverage of
data on external debt.
Cooperating on financial stability, banking supervision, and trade
The IMF is a member of the Switzerland-based Financial Stability Board, which brings together government
officials responsible for financial stability in the major international financial centers, international
regulatory and supervisory bodies, committees of central bank experts, and international financial
institutions. It also works with standard-setting bodies such as theBasel Committee on Banking
Supervision and the International Association of Insurance Supervisors.
The IMF has observer status at formal meetings of the World Trade Organization (WTO). The IMF's
determination of a country's balance of payments situation plays a considerable part in the WTO's
assessment of trade restrictions applied in the event of balances of payments difficulties. The IMF is also
involved in the WTO-led Integrated Framework for Trade-Related Technical Assistance to Least Developed
Countries, and IMF staff contribute to the work of the WTO Working Group on Trade, Debt, and Finance.
Collaborating with the UN
The IMF has a Special Representative to the United Nations, located at the UN Headquarters in New York.
Collaboration between the IMF and the UN covers several areas of mutual interest, including cooperation on
tax issues and statistical services of the two organizations, as well as reciprocal attendance and participation
at regular meetings and specific conferences and events. In recent years, the IMF has worked with the
International Labor Office on issues related to employment, as well as social protection floors; the UN
Children's Fund on fiscal issues and social policy; the UN Environment Program on the green economy; and
the World Food Program on social safety nets and early assessments of vulnerability.
Working closely with the G-20
Increasingly, the IMF has been working with the Group of Twenty (G-20) industrialized and emerging
market economies. During the global financial crisis, collective action by the G-20 was critical for avoiding
even greater economic difficulties, and in subsequent meetings the G-20 leaders have continued to reaffirm
their commitment to reinvigorate economic growth. The IMF provides analysis on global economic

conditions and on how G-20 members' policies fit togetherand whether, collectively, they can achieve the
Group's goals.
Working on employment issues
The IMF's mandate includes contributing to the promotion and maintenance of high levels of employment
and real incomes through the expansion and balanced growth of international trade. Given the importance of
employment for sustainable and inclusive growth, IMF-supported programs often contain recommendations
pertaining to the labor market. That said, labor market policies are not a core area of IMF expertise. For this
reason, the Fund works with other international, regional, and local organizations in this important area. We
have an active partnership with the International Labor Organization (ILO), with whom we have been
pooling expertise to better understand the impact of macroeconomic policies on job creation.
The IMF also liaises regularly with the International Trade Union Confederation, and its affiliates. Finally,
IMF missions to member countries meet regularly with trade union representatives to gain a better
understanding of and exchange views on national labor market dynamics.

Criticism
Overseas Development Institute (ODI) research undertaken in 1980 pointed to five main criticisms of the IMF
which support the analysis that it is a pillar of what activist Titus Alexander calls global apartheid.[86] Firstly,
developed countries were seen to have a more dominant role and control over less developed countries (LDCs)
primarily due to the Western bias favoring capitalism.
Secondly, the Fund worked on the incorrect assumption that all payments disequilibria were caused
domestically. The Group of 24 (G-24), on behalf of LDC members, and theUnited 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 payments deficits due to adverse changes in theirterms of
trade, with the Fund prescribing stabilisation 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.
The third criticism was that IMF policies were anti-developmental. The 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.
Fourth, harsh policy conditions are self-defeating when a vicious circle developed when members refused loans
due to harsh conditionality, exacerbating the economy and eventually taking loans as a drastic medicine.
Conclusion

In conclusion I can say that IMF has its good and bad parts and the social opinion differs from one situation to
another.Pro IMF argument suggests that small to medium sized business are need access to capital in order to
promote their business. This is increasingly important due to increased globalization and trade amongsts
countries specifically those trying to capitalize on a certain comparitive advantage (ex. a small rice company in
china where it is able to produce rice cheaper due to the local fertile soil). This access to capital allows for
effecient firms to grow and produce products thus decreasing the overall amount of resources used and utilizing
their own local natural resources to their advantage and through trade allows for net reduction in resource
depletion. Against IMF argument suggests that IMF lenders have malicious intent when lending. That they
make loans to poor countries which they do not expect to be paid while also establishing unattainable interest
rates. This leads to an epidemic in poverty because all revenue goes to the IMF rather than being allowed to be
reinvested in the growth of that economy. There are also many political implications suggesting that the IMF
has above average political "pull" which further perpetuates the problem.