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International Monetary Fund


The International Monetary Fund (IMF) was founded along with the World Bank in July 1944 at the Monetary and Financial Conference of the founding members of the United Nations in Bretton Woods (USA). Since 1947, it has been a specialised agency of the United Nations. After the Second World War it was responsible for ensuring compliance with the fixed exchange rate system laid down in Bretton Woods. Since 1973, most exchange rates have no longer been tied to the US dollar as was the case under the Bretton Woods system.

Currently, the IMF has 186 members (as at: October 2009). The objectives laid down in the founding agreement still shape the work of the IMF. It aims to promote international cooperation in currency policy and stable exchange rates, to facilitate the growth of international trade, to reduce imbalances in the balance of payments of members and to help members experiencing particular financial difficulties by providing loans. To be eligible for an IMF loan, recipient countries must comply with financial and economic-policy provisions, for instance putting their national budget in order. Depending on the problems facing a particular member country, the IMF can provide a variety of loans, each with its own provisions.

Special facilities for low-income countries

In addition to the IMF's normal loans, which can be awarded to any member state experiencing balance-of-payment difficulties, the Fund has set up a few Special Facilities for low-income countries. These benefit primarily developing countries. One example is the Enhanced Structural Adjustment Facility (ESAF), set up in 1988, which addresses low-income member states with serious balance-of-payments difficulties that are implementing far-reaching structural adjustment programmes. In 1999, the ESAF became the Poverty Reduction and Growth Facility (PRGF). Its main task now is to reduce poverty. Before countries are eligible to receive funds they must elaborate a Poverty Reduction Strategy Paper (PRSP). In 2008, a total of 78 countries were eligible to receive PRGF loans

Other loan facilities for crisis-induced emergencies were available in addition to the PRFG. In 2009 the IMF undertook a fundamental reform of its concessionary loan facilities. Once the reform has been fully implemented, a facility for countries with medium-term balance-of-payments difficulties, a facility for short-term and precautionary aid, as well as a central emergency facility will be established. In addition, lending terms will be relaxed and loans will be made available interest-free until (at least) December 2011 or at extremely low interest rates (in the case of the central emergency facility).

Special drawing rights

The funds of the IMF come mainly from members' contributions, which vary depending on the economic and financial strength of the respective country. After years of debate, the member states agreed in early 2008 to reform the contribution quota system, and the pertinent voting rights. The core elements of the reform are a new formula that will be used to calculate quota shares, a rise in quota shares on the basis of this new formula, the tripling of basic voting rights so as to give more weight to the views of low-income countries, and an additional Alternate Executive Director for Executive Directors elected by a large number of members, which will benefit the two African constituencies on the Executive Board.

At the end of August 2009 the total capital of the International Monetary Fund amounted to 217.4 billion special drawing rights (SDR), the equivalent of 325 billion US dollars. The special drawing right was introduced in 1969 to reduce the pressure on the US dollar. The value of an SDR is determined on a daily basis based on the currencies of the five main members (US dollar, yen, sterling and since 1999 the euro). Germany holds some 13 billion special drawing rights, which is about six per cent of the total.

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Contact

International Monetary Fund (IMF)

700 19th Street, N.W.
Washington, DC 20431
USA
Phone: +1 / 202 / 6 23 70 00
Fax: +1 / 202 / 6 23 46 61

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