Everyone is familiar with the International Monetary Fund or the IMF which consists of about 189 member countries in total. The primary goal of the organization is the establishment of a global economy with three different methods.
First of all, it keeps an eye on different global conditions, and it also identifies the risks. Second of all, it provides advice to the members on the improvement of the economy. Third, it also provides technical support and assistance to the members for the prevention of the financial crises.
The Structure of IMF
Christine Lagarde has been the Managing Director of the IMF since June in the year 2011. She also supervises an executive board that has 24 members in total. The IMF provided her with the position for about five years in total till July 5th, 2016.
IMF’s Managing Director supervises about 2700 employees from nearly 147 countries in total. There are four deputy Managing Directors under her as well.
The governing structure of the IMF begins right with the governing board of the organization. The board is responsible for setting policies and direction. The finance ministers and the leaders of the central banks are the ones that are the members of the board. They all have connections with the World Bank.
The Objectives of IMF
- Survey The Global Conditions: One rare ability of the IMF is to review and look into the different economies that the member countries have. So, it will be able to check the global economy very quickly.
There are various analytical reports presented by the IMF. These reports help in providing the World Economic Outlook, the Fiscal Monitor and the Financial Stability Report every single year.
Apart from that, it also delves right into the country and region-specific assessments as well. It is also responsible for improving different policies. Hence the IMF will be able to identify the various countries that are a threat to global stability.
- Provide Advice to Member Countries: The IMF also has taken up the role for preventing several crises in the countries. With the help of different standards that the members follow, a financial crisis can be easily averted.
Let us provide an example. The members all agree to give foreign exchange reserves. It will help in boosting the economy during a recession.
- Providing Assistance and Loans: When the members require loans for balancing stability, paying issues and other problems, the IMF offers short term loans to them. It helps in the restoration of sustainable growth in the member countries.
Most people confuse the IMF with the World Bank due to its capability of lending funds. However, that is not the case.
The Members of IMF
When it comes to the members, there are about 189 of them in there. So, it can be easy to list out the names that are not the members. Seven countries don’t come under the list of the members, and they are East Timor, Cuba, North Korea, Taiwan, Monaco, Vatican City, and Liechtenstein.
Apart from that, the non-sovereign members of the IMF include Aruba, Anguilla, Barbados, Curacao, Cabo Verde, Netherlands Antilles, Hong Kong, Montserrat, Macao, Saint Maarten, and Timor-Leste which is a total of 11 countries.
The members are not provided with equal votes. However, there is a quota system of voting which is dependent on the economic size of the country.
Roles Of IMF
After the global financial crisis that happened in the year 2008, the IMF roles have increased a lot. The surveillance report in IMF warned the countries about the economic crisis, but after ignoring it, the nations are now more in need for the financial surveillance that comes with IMF.
The members are all requested to provide their policies to the IMF surveillance which will be them utilized to give better decisions.
History of IMF
IMF was rocked entirely in the year 2011 after the alleged sex scandal involving the then IMF Executive Director Dominique Strauss-Kahn who was arrested for charges of sexual assault on a hotel maid. It was after the dropping of the allegations that the official retired from his position.
Debates were going around the countries about electing a Director from their states. That was a reflection of the economic clout that happened.
The Bretton Woods conference that happened in the year 1944 saw the creation of the IMF. It was also sought after to build in Europe after the end of World War II.