International Monetary Fund
The International Monetary Fund (IMF), headquartered in Washington D.C., was formed in 1944 to promote monetary cooperation among the members. The organisation has 190 member countries that provide the finance for its operations.
A 24-member executive board oversees the day-to-day operations of the IMF. The executive board is chaired by a managing director who is aided by four deputy managing directors.
Functions of the IMF
Provides financial assistance to members with a balance of payments problem
The IMF grants loans to countries having a balance of payments (BOP) problem. When there is a BOP deficit, total payments exceed total receipts from international transactions. The loans from the IMF will boost the capacity to pay for their imports. However, there are usually conditions (known as conditionalities) attached to loans, e.g. deregulation, elimination of subsidies, reducing budget deficit and devaluation.
Lending during emergencies
Financial assistance is also given to help a country navigate emergency situations caused by internal or external factors, e.g. COVID-19, weak insitutions, etc. This would cushion their effects as actions are taken to restore their economies.
The IMF identifies risks that may arise in the international monetary system and global economy and offers policy recommendations to member countries in order to prevent economic instability.
Technical assistance and training
It works with member countries to boost their capacity to formulate and execute effective policies which can promote economic growth and reduce poverty. In addition, it offers training to members through courses and seminars. Its training institutes are available to government officials, central banks and the financial sector.
Promoting free trade
The IMF promotes exchange rate stability by reducing or removing exchage restrictions which can hamper free trade. Also, it seeks to eliminate competitive devaluation that suppress free trade.