The International Monetary Fund, commonly known as the IMF, is an international organization that offers financial assistance to member countries and has been involved in the growth of financial markets and is committed to the growth of developing countries and was created as an outcome of the Bretton Woods Conference
The IMF has a board of governors at the top with one governor and one alternate governor from each member country. Accountable to the governments of the member nations, its day to day functioning is overseen by a 24-member executive board. The head of the IMF staff is the Managing Director, with three deputy managing directors to assist him.
Functions and Role of the IMF
Stability
The IMF is also called “The Fund”, and fulfills its primary duty of ensuring stability in the international monetary system, a system that controls exchange rates and the system of payments for international trade. It is this system that helps to promote sustained economic growth and assists in reducing poverty while also improving the general standard of living of people. The IMF has a significant role to play in the financial sector of countries and its responsibilities have increased in the aftermath of the global financial crisis so that it can contribute to global economic stability.
Accountability and Supervision through Surveillance
The IMF plays a crucial role in ensuring stability in the international monetary system to avert any future crisis and through a formal surveillance system it keeps track of the economic policies of countries and reviews their financial development. It advises all its 187 member countries and provides its assessments through reports while also publishing its views on the global economic outlook.
Financial assistance
The IMF provides financial assistance to countries, helping them change their adverse balance of payments problem, and has since the recent global financial crisis, improved upon its crisis prevention tools. It provides more financial assistance to low income nations with zero interest, and has double its previously assigned loan limits.
Special Drawing Rights-SDRs
The IMF also grants SDRs to member countries as an additional reserve asset which supplements their official reserves. These can be exchanged among countries for currencies as well, and the IMF is considering a larger role for SDRs in promoting monetary stability in the international financial markets.
Technical assistance and training
Through technical assistance and training the IMF helps member countries to design appropriate financial policies and implement them effectively. This is in areas like tax policies, expenditure management, banking, exchange rate policies and so on.
The role of the IMF has been compared to that of a financial firefighter that can douse the fires of financial crises with emergency measures like loans and grants, aid and technical assistance. It is a highly influential intergovernmental organization in global economic affairs.
