INTERNATIONAL MONETARY

FUND
THE INTERNATIONAL MONETARY FUND (IMF) IS
A MAJOR FINANCIAL AGENCY OF THE 
UNITED NATIONS, 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.
 FUNCTIONS

• UPON THE FOUNDING OF THE IMF, ITS THREE PRIMARY FUNCTIONS WERE:
• TO OVERSEE THE FIXED EXCHANGE RATE ARRANGEMENTS BETWEEN COUNTRIES,[23]
 THUS HELPING NATIONAL GOVERNMENTS MANAGE THEIR EXCHANGE RATES AND
ALLOWING THESE GOVERNMENTS TO PRIORITIZE ECONOMIC GROWTH, [24] AND
• TO PROVIDE SHORT-TERM CAPITAL TO AID THE BALANCE OF PAYMENTS[23] AND
PREVENT THE SPREAD OF INTERNATIONAL ECONOMIC CRISES.
• TO HELP MEND THE PIECES OF THE INTERNATIONAL ECONOMY AFTER THE 
GREAT DEPRESSION AND WORLD WAR II[25] AS WELL AS TO PROVIDE CAPITAL
INVESTMENTS FOR ECONOMIC GROWTH AND PROJECTS SUCH AS INFRASTRUCTURE
.
 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.[38][39] THE INCENTIVE
PROBLEM OF MORAL HAZARD—WHEN ECONOMIC AGENTS MAXIMISE
THEIR OWN UTILITY 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.