The International Monetary Fund (IMF) is an organisation of 187 countries that works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty. As of March 2011, the IMF had $111.8 billion in loans outstanding to 87 countries. Of this, $7.7 billion was on concessional terms to 65 countries.
The IMF Articles of Agreement were drawn up at the Bretton Woods Conference in 1944. Membership is open to all countries. Ratification of the articles and acceptance of conditions laid down by the Fund are conditions of membership. The purposes of the Fund are to:
Promote international monetary cooperation through consultation and collaboration
Facilitate the expansion and balanced growth of international trade, and thereby contribute to the promotion and maintenance of high levels of employment and real income
Promote exchange stability and orderly exchange arrangements
Assist in the establishment of a multilateral system of payments and the elimination of foreign exchange restrictions
Assist members through the temporary provision of financial resources to correct maladjustments in their balance of payments.
The articles have been amended six times, in 1969, 1978, 1992, 2009 and twice in 2011. The first amendment provided for the creation and allocation of SDRs. The second amendment implemented a review of the Fund's responsibilities and operations that was conducted from 1972 to 1976 following the collapse of the fixed exchange rate system. The third empowers the Fund to suspend the voting and certain related rights of a member who fails to fulfil any of the obligations under the articles, other than obligations with respect to SDRs.
The fourth amendment was to provide for a special one-time allocation of SDRs so as to equalise members' ratio of cumulative allocations to their ninth review quotas. Amendments proposed in 2008 entered into effect in February and March 2011.
The first expanded the IMP's investment authority, allowing the IMF a wider range of income sources than the previous reliance primarily on lending to member countries.
The second strengthened the representation of emerging market and developing economies in the IMF and enhanced the voice and participation of low-income countries. Fifty-four countries received quota increases totalling around $33 billion.
In November 2010, the IMF agreed wide-ranging governance reforms to reflect the increasing importance of emerging market countries while protecting the voting shares of smaller developing countries in the Fund. The proposal was for a doubling of total quotas to about $756 billion, and for more than 6 percent of quota shares to shift to dynamic emerging market and developing countries and more than 6 percent from over-represented to under-represented countries in the Fund. The proposals would also lead to a more representative, all-elected executive board.
The Board comprises one governor appointed by each member country- typically a minister of finance or central bank governor. Substantive or policy matters are transmitted in the form of a report and draft resolution to the Governors for their vote when one is required. An annual meeting of the Board, in conjunction with that of the World Bank Group, is held in late September/ early October.
The Board's International Monetary and Financial Committee (IMFC) meets in April and September. Its terms of reference are the supervision of the international monetary system, including the operation of the adjustment process and global liquidity.
The Development Committee (the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries) generally meets at the same time as the IMFC. It advises and reports to the World Bank and IMF Boards of Governors on all aspects of the real transfer of resources to developing countries. Each member country or group of member countries represented on the Executive Board appoints a member of the Committee.
This board is responsible for the Fund's daily business, including requests for financial assistance, economic consultations with member countries, and the development of Fund policies. It consists of the Managing Director, as Chair, and 24 executive directors. Of these, eight are appointed by members having the largest quotas - USA, Germany, Japan, UK, France, Russian Federation, China and Saudi Arabia - while the remainder are elected to represent the interests of constituencies made up of several countries. Elections can vary across the constituencies, with many being held every two years.
Each member has an assessed quota that is subscribed and determines voting power. Access to use of the Fund's resources is also determined in relation to quota, taking account of the member's balance of payments need and the strength of the policies it agrees to implement to restore balance of payments viability. The total of members' quotas, as of April2011, was about $384 billion.
Members may draw on non-concessional terms from the general resources of the Fund, which are derived from quota subscriptions, under credit tranches (of 25 percent of quota each). Drawings (or 'purchases') in the upper credit tranches - in other words, beyond the first credit tranche - are subject to the terms of a stand-by arrangement agreed with the member. This arrangement specifies the precise economic policy conditions that the member must meet to qualify for each purchase, and the scheduling of purchases.
Stand-by arrangements usually cover a 12- to 18-month period, but may be as long as three years. Members are expected to meet their repurchase expectations, but the Fund may extend them on request if the Executive Board agrees that the member's external position is not sufficiently strong for it to repay early without undue hardship or risk.
There is also an Extended Fund Facility under which members with structural maladjustments and experiencing balance of payments difficulties can enter into extended arrangements for up to 36 months. These can be in amounts larger than is possible under the credit tranches.
A Flexible Credit Line (FCL) was announced on 24 March 2009, and subsequently expanded in August 2010, to address actual or potential balance of payments needs for countries with strong fundamentals, policies and track records of policy implementation. Countries seeking to use the FCL need to meet a set of up-front criteria, rather than facing ex-post or ongoing conditions. Having met the up-front criteria, a country then has the choice of drawing on the credit line at any time or to treat it as a precautionary instrument.
At the time the FCL was expanded, a Precautionary Credit Line (PCL) was added to the toolkit for countries with sound fundamentals and policy track records but that face moderate vulnerabilities preventing them from meeting the high FCL qualification standards. The PCL combines some Up-front criteria with ex-post conditions that focus on the vulnerabilities identified.
At the same time as the FCL was introduced, the Fund announced an enhanced framework for its Stand-By Arrangements (SBA). The enhanced framework allows countries ineligible for the FCL to have high access to the SBA funds on a precautionary basis, allows frontloading of access, reduces the frequency of reviews and provides greater flexibility for country-specific circumstances in determining the programme for reviews.
In September 1999, a new Poverty Reduction and Growth Facility (PRGF) replaced and strengthened the IMP's concessional lending under the former Enhanced Structural Adjustment Facility (ESAF). The ESAF had provided concessional loans to qualifying low-income countries, aimed at strengthening balance of payments and fostering growth.
The PRGF has broadened this initiative to explicitly include lasting poverty reduction as well as to encourage sustainable growth. The PRGF provides a vehicle for integrating mutually reinforcing macroeconomic, structural and social policies, and is geared much more towards using social indicators to measure progress.
Under the PRGF, low-income countries may borrow on concessional terms through three main facilities:
The Extended Credit Facility, which is designed to provide medium-term support to address protracted balance of payments problems;
The Standby Credit Facility (SCF), which addresses short-term balance of payments needs and includes an option to use the SCF on a precautionary basis;
The Rapid Credit Facility (RCF), which is for emergency assistance with limited conditionality in the event of an urgent balance of payments need. These changes were agreed in tandem with commitments to enhance the Heavily Indebted Poor Countries (HIPCs) initiative.
The Fund has created and allocated Special Drawing Rights (SDRs) to supplement member countries' reserves and thereby improve the liquidity of the international monetary system. Members may use SDRs to acquire currency from other members for use in alleviating balance of payments difficulties, and in a variety of other transactions. Members in strong balance of payments positions may be designated to accept SDRs from other members with a weak balance of payments in exchange for currency.
Allocations of SDRs are made over two basic periods that generally run to five years. The US dollar value of the SDR is posted daily on the IMF's website.
The IMF has 187 member countries :
Afghanistan, Islamic Republic Albania Algeria Angola Antigua and Barbuda Argentina Armenia Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bhutan Bolivia Bosnia and Herzegovina Botswana Brazil Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Central African Republic Chad Chile China Colombia Comoros Congo Congo Costa Rica Côte d'Ivoire Croatia Cyprus Czech Republic Denmark Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Fiji, Republic Finland France Gabon Gambia Georgia Germany Ghana Greece Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras Hungary Iceland India Indonesia Iran, Islamic Republic Iraq Ireland Israel Italy Jamaica Japan Jordan Kazakhstan Kenya Kiribati Korea Kosovo Kuwait Kyrgyz Republic Lao People's Democratic Republic Latvia Lebanon Lesotho Liberia Libya Lithuania Luxembourg Macedonia, former Yugoslav Republic Madagascar Malawi Malaysia Maldives Mali Malta Marshall Islands Mauritania Mauritius Mexico Micronesia, Federated States Moldova Mongolia Montenegro Morocco Mozambique Myanmar Namibia Nepal Netherlands New Zealand Nicaragua Niger Nigeria Norway Oman Pakistan Palau Panama Papua New Guinea Paraguay Peru Philippines Poland Portugal Qatar Romania Russian Federation Rwanda Samoa San Marino São Tomé and Príncipe Saudi Arabia Senegal Serbia Seychelles Sierra Leone Singapore Slovak Republic Slovenia Solomon Islands Somalia South Africa South Sudan, Republic Spain Sri Lanka St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Sudan Suriname Swaziland Sweden Switzerland Syrian Arab Republic Tajikistan Tanzania Thailand Timor-Leste Togo Tonga Trinidad and Tobago Tunisia Turkey Turkmenistan Tuvalu Uganda Ukraine United Arab Emirates United Kingdom United States Uruguay Uzbekistan Vanuatu Venezuela, República Bolivariana de Vietnam Yemen, Republic Zambia Zimbabwe
The Board of Governors of the IMF and the Board of Governors of the World Bank Group normally meet once a year to discuss the work of their respective institutions.
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