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About the IMF

About the IMF



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Published by kiran808
IMF info
IMF info

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Published by: kiran808 on Jan 01, 2010
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About the IMF
The IMF is an international organization of 184 member countries. It was establishedto promote international monetary cooperation, exchange stability, and orderlyexchange arrangements; to foster economic growth and high levels of employment;and to provide temporary financial assistance to countries to help ease balance of  payments adjustment.Since the IMF was established its purposes have remained unchanged but itsoperations—which involve surveillance, financial assistance, and technical assistance —have developed to meet the changing needs of its member countries in an evolvingworld economy.
Growth in IMF Membership, 1945 - 2003
(number of countries)
The International Monetary Fund is frequently in the news, but its role and functionsare often misunderstood. This pamphlet aims to explain them.Further information on the IMF can be obtained from the IMF's website(
), including the full text of the IMF's
 Annual Report 
, the biweekly
 IMF Survey
and its annual
Supplement on the IMF 
, Fact Sheets, pamphlets, and other  publications. This pamphlet was prepared by staff of the IMF's External RelationsDepartment.
A Global Institution
The IMF's Role at a Glance
The International Monetary Fund was established by international treaty in 1945 tohelp promote the health of the world economy. Headquartered in Washington, D.C.,it is governed by its almost global membership of 184 countries.The IMF is the
central institution
of the international monetary system—the systemof international payments and exchange rates among national currencies that enables business to take place between countries.It aims to
prevent crises
in the system by encouraging countries to adopt soundeconomic policies; it is also—as its name suggests— 
a fund
that can be tapped bymembers needing temporary financing to address balance of payments problems.
The IMF works for global prosperity by promoting
the balanced expansion of world trade,
stability of exchange rates,
avoidance of competitive devaluations, and
orderly correction of balance of payments problemsThe IMF's
statutory purposes
include promoting the balanced expansion of worldtrade, the stability of exchange rates, the avoidance of competitive currencydevaluations, and the orderly correction of a country's balance of payments problems.To serve these purposes, the IMF:
economic and financial developments and policies, in member countries and at the global level, and gives
policy advice
to its members basedon its more than fifty years of experience. For example:
 In its annual review of the Japanese economy for 2003, the IMF Executive Board urged Japan to adopt a comprehensive approach to revitalize thecorporate and financial sectors of its economy, tackle deflation, and address fiscal imbalances.The IMF commended Mexico in 2003 for good economic management, but  said structural reform of the tax system, energy sector, the labor market, and  judicial system was needed to help the country compete in the global economy. In its Spring 2004
World Economic Outlook 
 , the IMF said an orderlyresolution of global imbalances, notably the large U.S. current account deficit and surpluses elsewhere, was needed as the global economy recovered and moved toward higher interest rates.
to member countries with balance of payments problems, not just to provide temporary financing but to support adjustment and reform policiesaimed at correcting the underlying problems. For example:
 During the 1997-98 Asian financial crisis, the IMF acted swiftly to help Korea bolster its reserves. It pledged $21 billion to assist Korea to reform itseconomy, restructure its financial and corporate sectors, and recover fromrecession. Within four years, Korea had recovered sufficiently to repay theloans and, at the same time, rebuild its reserves. In October 2000, the IMF approved an additional $52 million loan for Kenyato help it cope with the effects of a severe drought, as part of a three-year $193 million loan under the IMF's Poverty Reduction and Growth Facility, aconcessional lending program for low-income countries.
 provides the governments and central banks of its member countries with
technical assistance
and training in its areas of expertise. For example:
 Following the collapse of the Soviet Union, the IMF stepped in to help the Baltic states, Russia, and other former Soviet countries set up treasury systems for their central banks as part of the transition from centrally planned to market-based economic systems
.As the only international agency whose mandated activities involve active dialoguewith virtually every country on economic policies, the IMF is the principal
for discussing not only national economic policies in a global context, but also issuesimportant to the stability of the international monetary and financial system. These
include countries' choice of exchange rate arrangements, the avoidance of destabilizing international capital flows, and the design of internationally recognizedstandards and codes for policies and institutions.By working to strengthen the international financial system and to accelerate progresstoward reducing poverty, as well as promoting sound economic policies among all itsmember countries, the IMF is helping to make globalization work for the benefit of all.
Box 1The IMF's Main Business: Macroeconomic and Financial Sector Policies
In its oversight of member countries' economic policies, the IMF looks mainly at the performance of an economy as a whole—often referred to as its
. This comprises total spending (and its major components likeconsumer spending and business investment), output, employment, and inflation, aswell as the country's balance of payments—that is, the balance of a country'stransactions with the rest of the world.The IMF focuses mainly on a country's
macroeconomic policies
 —that is, policiesrelating to the government's budget, the management of interest rates, money, andcredit, and the exchange rate—and
financial sector
 policies, including the regulationand supervision of banks and other financial institutions. In addition, the IMF paysdue attention to
 policies that affect macroeconomic performance— including labor market policies that affect employment and wage behavior. The IMFadvises each member on how its policies in these areas may be improved to allow themore effective pursuit of goals such as high employment, low inflation, andsustainable economic growth—that is, growth that can be sustained without leading tosuch difficulties as inflation and balance of payments problems.
Adapting to Meet New Challenges
As the development of the world economy since 1945 has brought new challenges,the work of the IMF has evolved and the institution has adapted so as to be able tocontinue serving its purposes effectively. Especially since the early 1990s, enormouseconomic challenges have been associated with globalization-the increasinginternational integration of markets and economies. These have included the need todeal with turbulence in emerging financial markets, notably in Asia and LatinAmerica; to help a number of countries make the transition from central planning tomarket-oriented systems and enter the global market economy; and to promoteeconomic growth and poverty reduction in the poorest countries at risk of being left behind by globalization.The IMF has responded partly by introducing reforms aimed at strengthening thearchitecture—or framework of rules and institutions—of the international monetaryand financial system and by enhancing its own contribution to the prevention andresolution of financial crises. It has also given new emphasis to the goals of enhancing economic growth and reducing poverty in the world's poorest countries.And reform is continuing.In September 2000, at the annual meetings of the IMF and World Bank, the IMF'sthen Managing Director Horst Köhler set out some major priorities for the work of 

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