WHAT WE DO?

With its near-global membership of 188 countries, the IMF is uniquely placed to help member
governments take advantage of the opportunities—and manage the challenges—posed by
globalization and economic development more generally. The IMF tracks global economic trends
and performance, alerts its member countries when it sees problems on the horizon, provides a
forum for policy dialogue, and passes on know-how to governments on how to tackle economic
difficulties.
The IMF provides policy advice and financing to members in economic difficulties and also works
with developing nations to help them achieve macroeconomic stability and reduce poverty.
Marked by massive movements of capital and abrupt shifts in comparative
advantage,globalization affects countries' policy choices in many areas, including labor, trade,
and tax policies. Helping a country benefit from globalization while avoiding potential downsides
is an important task for the IMF. The global economic crisis has highlighted just how
interconnected countries have become in today’s world economy.

Key IMF activities

The IMF supports its membership by providing
 policy advice to governments and central banks based on analysis of economic trends and
cross-country experiences;
 research, statistics, forecasts, and analysis based on tracking of global, regional, and
individual economies and markets;
 loans to help countries overcome economic difficulties;
 concessional loans to help fight poverty in developing countries; and
 technical assistance and training to help countries improve the management of their
economies.

Original aims
The IMF was founded more than 60 years ago toward the end of World War II (see History).
The founders aimed to build a framework for economic cooperation that would avoid a
repetition of the disastrous economic policies that had contributed to the Great Depression of
the 1930s and the global conflict that followed.
Since then the world has changed dramatically, bringing extensive prosperity and lifting millions
out of poverty, especially in Asia. In many ways the IMF's main purpose—to provide the global
public good of financial stability—is the same today as it was when the organization was
established. More specifically, the IMF continues to
 provide a forum for cooperation on international monetary problems
 facilitate the growth of international trade, thus promoting job creation, economic growth,
and poverty reduction;
 promote exchange rate stability and an open system of international payments; and
 lend countries foreign exchange when needed, on a temporary basis and under adequate
safeguards, to help them address balance of payments problems.

An adapting IMF
The IMF has evolved along with the global economy throughout its 65-year history, allowing the
organization to retain its central role within the international financial architecture
As the world economy struggles to restore growth and jobs after the worst crisis since the Great
Depression, the IMF has emerged as a very different institution. During the crisis, it mobilized
on many fronts to support its member countries. It increased its lending, used its cross-country
experience to advise on policy solutions, supported global policy coordination, and reformed the
 way it makes decisions. The result is an institution that is more in tune with the needs of its
188 member countries.
 Stepping up crisis lending. The IMF responded quickly to the global economic crisis, with
lending commitments reaching a record level of more than US$250 billion in 2010. This
figure includes a sharp increase in concessional lending (that’s to say, subsidized lending at
rates below those being charged by the market) to the world’s poorest nations.
 Greater lending flexibility. The IMF has overhauled its lending framework to make it
better suited to countries’ individual needs. It is also working with other regional
institutions to create a broader financial safety net, which could help prevent new crises.
 Providing analysis and advice. The IMF’s monitoring, forecasts, and policy advice,
informed by a global perspective and by experience from previous crises, have been in high
demand and have been used by the G-20.
 Drawing lessons from the crisis. The IMF is contributing to the ongoing effort to draw
lessons from the crisis for policy, regulation, and reform of the global financial architecture.
 Historic reform of governance.The IMF’s member countries also agreed to a significant
increase in the voice of dynamic emerging and developing economies in the decision
making of the institution, while preserving the voice of the low-income members.

How we do it?

The IMF’s main goal is to ensure the stability of the international monetary and financial
system. It helps resolve crises, and works with its member countries to promote growth and
alleviate poverty. It has three main tools at its disposal to carry out its mandate: surveillance,
technical assistance and training, and lending. These functions are underpinned by the IMF’s
research and statistics.
Surveillance
The IMF promotes economic stability and global growth by encouraging countries to adopt
sound economic and financial policies. To do this, it regularly monitors global, regional, and
national economic developments. It also seeks to assess the impact of the policies of individual
countries on other economies.
This process of monitoring and discussing countries’ economic and financial policies is known as
bilateral surveillance. On a regular basis—usually once each year—the IMF conducts in depth
appraisals of each member country’s economic situation. It discusses with the country’s
authorities the policies that are most conducive to a stable and prosperous economy, drawing
on experience across its membership. Member countries may agree to publish the IMF’s
assessment of their economies, with the vast majority of countries opting to do so.
The IMF also carries out extensive analysis of global and regional economic trends, known as
multilateral surveillance. Its key outputs are three semiannual publications, the World Economic
Outlook, the Global Financial Stability Report, and the Fiscal Monitor. The IMF also publishes a
series of regional economic outlooks.
The IMF recently agreed on a series of actions to enhance multilateral, financial, and bilateral
surveillance, including to better integrate the three; improve our understanding
of spillovers and the assessment of emerging and potential risks; and strengthen IMF policy
advice.
For more information on how the IMF monitors economies, go to Surveillance in the Our
Worksection.
Technical assistance and training
IMF offers technical assistance and training to help member countries strengthen their capacity
to design and implement effective policies. Technical assistance is offered in several areas,
including fiscal policy, monetary and exchange rate policies, banking and financial system
supervision and regulation, and statistics.
The IMF provides technical assistance and training mainly in four areas:
  monetary and financial policies (monetary policy instruments, banking system supervision
and restructuring, foreign management and operations, clearing settlement systems for
payments, and structural development of central banks);
 fiscal policy and management (tax and customs policies and administration, budget
formulation, expenditure management, design of social safety nets, and management of
domestic and foreign debt);
 compilation, management, dissemination, and improvement of statistical data; and
 economic and financial legislation.
For more on technical assistance, go to Technical Assistance in the Our Work section.
Lending
IMF financing provides member countries the breathing room they need to correct balance of
payments problems. A policy program supported by financing is designed by the national
authorities in close cooperation with the IMF. Continued financial support isconditional on the
effective implementation of this program.
In the most recent reforms, IMF lending instruments were improved further to provideflexible
crisis prevention tools to a broad range of members with sound fundamentals, policies, and
institutional policy frameworks.
In low-income countries, the IMF has doubled loan access limits and is boosting its lending to
the world’s poorer countries, with loans at a concessional interest rate.
For more on different types of IMF lending, go to Lending in the Our Work section.
Research and data
Supporting all three of these activities is the IMF’s economic and
financial research andstatistics. In recent years, the IMF has applied both its surveillance and
technical assistance work to the development of standards and codes of good practice in its
areas of responsibility, and to the strengthening of financial sectors. These are part of the IMF’s
continuing efforts to strengthen national and global financial systems and improve its ability to
prevent and resolve crises.

Membership

The IMF currently has a near-global membership of 188 countries. To become a member, a
country must apply and then be accepted by a majority of the existing members. In April 2012,
Republic of South Sudan joined the IMF, becoming the institution's 188 th member.
Upon joining, each member country of the IMF is assigned a quota, based broadly on its relative
size in the world economy. The IMF's membership agreed in November 2010 on a major
overhaul of its quota system to reflect the changing global economic realities, especially the
increased weight of major emerging markets in the global economy.
A member country's quota defines its financial and organizational relationship with the IMF,
including:
Subscriptions
A member country's quota subscription determines the maximum amount of financial
resources the country is obliged to provide to the IMF. A country must pay its subscription in
full upon joining the IMF: up to 25 percent must be paid in the IMF's own currency,
called Special Drawing Rights (SDRs) or widely accepted currencies (such as the dollar, the
euro, the yen, or pound sterling), while the rest is paid in the member's own currency.
Voting power
The quota largely determines a member's voting power in IMF decisions. Each IMF member's
votes are comprised of basic votes plus one additional vote for each SDR 100,000 of quota. The
number of basic votes attributed to each member is calculated as 5.502 percent of total votes.
Accordingly, the United States has 421,965 votes (16.76 percent of the total), and Tuvalu has
759 votes (0.03 percent of the total).
Access to financing
 The amount of financing a member country can obtain from the IMF is based on its quota. For
instance, under Stand-By and Extended Arrangements, which are types of loans, a member
country can borrow up to 200 percent of its quota annually and 600 percent cumulatively.
SDR allocations
SDRs are used as an international reserve asset. A member's share of general SDR allocations
is established in proportion to its quota. The most recent general allocation of SDRs took place
in 2009.

Collaborating with others

The IMF collaborates with the World Bank, regional development banks, the World Trade
Organization(WTO), UN agencies, and other international bodies. While all of these
organizations are involved in global economic issues, each has its own unique areas of
responsibility and specialization. The IMF also works closely with the Group of Twenty (G-20)
industrialized and emerging market economies and interacts with think tanks, civil society, and
the media on a daily basis.
Working with the World Bank
The IMF and the World Bank are different, but complement each other's work. While the IMF's
focus is chiefly on macroeconomic and financial sector issues, the World Bank is concerned
mainly with longer-term development and poverty reduction. Its loans finance infrastructure
projects, the reform of particular sectors of the economy, and broader structural reforms. IMF
loans assist countries in continuing to pay for imports, stabilizing their currencies, and restoring
conditions for strong economic growth. Countries must join the IMF to be eligible for World
Bank membership.
Given the World Bank's focus on antipoverty issues, the IMF collaborates closely with the Bank
in the area of poverty reduction. Other areas of collaboration include assessments of member
countries' financial sectors, development of standards and codes, and improvement of the
quality, availability, and coverage of data on external debt.
Cooperating on financial stability, banking supervision, and trade
The IMF is a member of the Switzerland-based Financial Stability Board, which brings together
government officials responsible for financial stability in the major international financial
centers, international regulatory and supervisory bodies, committees of central bank experts,
and international financial institutions. It also works with standard-setting bodies such as
the Basel Committee on Banking Supervision and the International Association of Insurance
Supervisors.
The IMF has observer status at formal meetings of the World Trade Organization (WTO). The
IMF's determination of a country's balance of payments situation plays a considerable part in
the WTO's assessment of trade restrictions applied in the event of balances of payments
difficulties. The IMF is also involved in the WTO-led Integrated Framework for Trade-Related
Technical Assistance to Least Developed Countries, and IMF staff contribute to the work of the
WTO Working Group on Trade, Debt, and Finance.
Collaborating with the UN
The IMF has a Special Representative to the United Nations, located at the UN Headquarters in
New York. Collaboration between the IMF and the UN covers several areas of mutual interest,
including cooperation on tax issues and statistical services of the two organizations, as well as
reciprocal attendance and participation at regular meetings and specific conferences and
events. In recent years, the IMF has worked with the International Labor Office on issues
related to employment, as well as social protection floors; the UN Children's Fund on fiscal
issues and social policy; the UN Environment Program on the green economy; and the World
Food Program on social safety nets and early assessments of vulnerability.
Working closely with the G-20
 Increasingly, the IMF has been working with the Group of Twenty (G-20) industrialized and
emerging market economies. During the global financial crisis, collective action by the G-20 was
critical for avoiding even greater economic difficulties, and in subsequent meetings the G-20
leaders have continued to reaffirm their commitment to reinvigorate economic growth. The IMF
provides analysis on global economic conditions and on how G-20 members' policies fit
together—and whether, collectively, they can achieve the Group's goals.
Working on employment issues
The IMF's mandate includes contributing to the promotion and maintenance of high levels of
employment and real incomes through the expansion and balanced growth of international
trade. Given the importance of employment for sustainable and inclusive growth, IMF-supported
programs often contain recommendations pertaining to the labor market. That said, labor
market policies are not a core area of IMF expertise. For this reason, the Fund works with other
international, regional, and local organizations in this important area. We have an active
partnership with the International Labor Organization (ILO), with whom we have been pooling
expertise to better understand the impact of macroeconomic policies on job creation.
The IMF also liaises regularly with the International Trade Union Confederation, and its
affiliates. Finally, IMF missions to member countries meet regularly with trade union
representatives to gain a better understanding of and exchange views on national labor market
dynamics.
Engaging with think tanks, civil society, and the media
The IMF also engages on a regular basis with the academic community, civil society
organizations (CSOs), and the media.
IMF staff at all levels frequently meet with members of the academic community to exchange
ideas and receive new input. The IMF also has an active outreach programinvolving CSOs.
IMF management and senior staff communicate with the media on a daily basis. Additionally, a
biweekly press briefing is held at the IMF headquarters, during which a spokesperson takes live
questions from journalists.

Organization and Finances

The IMF has a management team and 17 departments that carry out its country, policy, analytical,
and technical work. One department is charged with managing the IMF's resources. This section also
explains where the IMF gets its resources and how they are used.

Management

The IMF is led by a Managing Director, who is head of the staff and Chairman of the Executive
Board. The Managing Director is assisted by a First Deputy Managing Director and three other
Deputy Managing Directors. The Management team oversees the work of the staff and
maintains high-level contacts with member governments, the media, non-governmental
organizations, think tanks, and other institutions.
Managing Director: Duties and selection
According to the IMF's Articles of Agreement, the Managing Director "shall be chief of the
operating staff of the Fund and shall conduct, under the direction of the Executive Board, the
ordinary business of the Fund. Subject to the general control of the Executive Board, he shall be
responsible for the organization, appointment, and dismissal of the staff of the Fund."
The IMF's Executive Board is responsible for selecting the Managing Director. Any Executive
Director may submit a nomination for the position, consistent with past practice. When more
than one candidate is nominated, as has been the case in recent years, the Executive Board
aims to reach a decision by consensus.
The current management team
 Managing Director, Christine Lagarde, a French national, joined the IMF as
Managing Director in July 2011. Before coming to the IMF, she was
France's Minister for Economy, Finance and Industry.

David Lipton, of the United States, joined the IMF as Special Advisor to the Managing Director in
July 2011. On September 1, 2011 he became First Deputy Managing Director. Prior to joining
the Fund, Lipton served as Special Assistant to the President and as Senior Director for
International Economic Affairs at the U.S. National Economic Council and U.S. National Security
Council at the White House.

Naoyuki Shinohara, a Japanese national, joined the IMF as Deputy Managing Director in March
2010. Previously, he was Japan's Vice-Minister of Finance for International Affairs.

Nemat Shafik, from Egypt, became Deputy Managing Director of the IMF in April, 2011.
Previously she had worked at the U.K. Department for International Development (DFID), the
World Bank, and the International Finance Corp.
 Min Zhu, from China, joined the IMF as Special Advisor to the Managing Director in May 2010.
On July 26, 2011 he became Deputy Managing Director. Before coming to the IMF, Min Zhu was
a Deputy Governor of the People’s Bank of China and previously worked at the World Bank.

Staff of International Servants

The IMF currently employs about 2,400 staff, half of whom are economists. Most of them work
at the IMF's Washington, D.C., headquarters but a few serve in member countries around the
world in small IMF overseas offices or as resident representatives.
With its nearly universal membership, the IMF strives to employ a staff that is as diverse and
broadly based geographically as possible.
The IMF has nine functional departments that carry out its policy, analytical, and technical work
and manage its financial resources.
Communications Department: Works to promote public understanding of and support for the
IMF and its policies.
Finance Department: Mobilizes, manages, and safeguards the IMF's financial resources.
Fiscal Affairs Department: Provides policy and technical advice on public finance issues to
member countries. Prepares the Fiscal Monitor. Read bio of the Director, Carlo Cottarelli
Institute for Capacity Development: Provides training in macroeconomic analysis and policy
for officials of member countries and IMF staff.
Legal Department: Advises management, the Executive Board, and the staff on the applicable
rules of law. Prepares decisions and other legal instruments and provides technical assistance to
member countries. Read bio of the Director, Sean Hagan
Monetary and Capital Markets Department: Monitors financial sectors and capital markets,
and monetary and foreign exchange systems, arrangements, and operations. Prepares
the Global Financial Stability Report. Read bio of the Director, José Viñals
Research Department: Monitors the global economy and the economies and policies of
member countries and undertakes research on issues relevant to the IMF. Prepares theWorld
Economic Outlook. Read bio of the Director, Olivier Blanchard
Statistics Department: Develops internationally accepted methodologies and standards.
Provides technical assistance and training to promote best practices in the dissemination of
economic and financial statistics. Director, Louis Marc Ducharme
Strategy, Policy, and Review Department: Designs, implements, and evaluates IMF policies
on surveillance and the use of its financial resources. Read bio of the Director, Siddharth Tiwari
The IMF's five area, or regional, departments are responsible for advising member countries on
macroeconomic policies and the financial sector, and for putting together, when needed,
financial arrangements to support economic reform programs.

Conversations with IMF Staff

 Antoinette Sayeh, Director of the African Department

African Department: Covers 45 countries. Read bio of the Director, Antoinette Sayeh
Asia and Pacific Department: Covers 33 countries. Read bio of the Director, Anoop Singh
 European Department: Covers 46 countries (44 of which are IMF members). Read bio of the
Director, Reza Moghadam
Middle East and Central Asia Department: Covers 31 countries. Read bio of the Director,
Masood Ahmed
Western Hemisphere Department: Covers 34 countries. Read bio of the Director, Alejandro
Werner
The IMF also has three support departments:
Human Resources Department: Provides staff with a full range of information and personnel
services. Manages the system of compensation and benefits, oversees staff training, offers
career and education counseling, and provides legal services. Read bio of the Director, Mark
Plant
Secretary's Department: Organizes and reports on the activities of the IMF's governing
bodies and provides secretariat services to them. Assists management in preparing the work
program of the Executive Board and other official bodies. It is the creator and custodian of IMF
records.
Technology and General Services Department: Provides services to manage information;
facilitates communication, including across languages; and helps build an effective work
environment. Read bio of the Director, Frank Harnischfeger
IMF offices around the world
The IMF has small offices in countries around the world. These comprise resident representative
posts; overseas offices (Guatemala City, New York, Paris, Tokyo, Warsaw); and regional
technical assistance centers and training institutes.
Organizational Chart

Quotas

Each member country's quota broadly reflects the size of its economy: the larger a country's
economy in terms of output and the larger and more variable its trade, the larger its quota
tends to be. For example, the world's biggest economy, the United States, has the largest quota
in the IMF.
Quotas, together with the equal number of basic votes each member has, determine
countries'voting power. They also help determine how much countries can borrow from the IMF
and their share in allocations of special drawing rights or SDRs (the reserve currency created by
the IMF in 1969).
Countries pay 25 percent of their quota subscriptions in SDRs or major currencies, such as U.S.
dollars, euros, pounds sterling, or Japanese yen. They pay the remaining 75 percent in their
own currencies. The IMF's lending resources come mainly from the money that countries pay as
these quota subscriptions when they become members.
Quota reviews
Quotas are normally reviewed every five years and can be increased when deemed necessary
by the Board of Governors. The 14th General Review of Quotas was completed two years ahead
of the original schedule in December 2010, with a decision to double the IMF's quota resources
to SDR 476.8 billion.
A review of the formula currently used to determine quotas, which formed the basis to work
from during the 14th General Review, will be completed by January 2013. Completion of the
15th General Review of Quotas will be brought forward by about two years to January 2014.
Recent reforms
In recent years, the IMF began a number of reforms related to rebalancing members' quotas to
ensure they continue to broadly reflect countries' relative size in the world economy.
In 2011, the number of basic votes was nearly tripled, which helped to ensure poorer countries
maintained a say in running the institution.
 Once they take effect, a further set of quota and voice reforms will produce a shift of 6 percent
of quota shares to the dynamic emerging market and developing countries. This will result in a
significant shift in the representation of these countries in IMF decision making.

Gold

The IMF holds a relatively large amount of gold among its assets, not only for reasons of
financial soundness, but also to meet unforeseen contingencies.
The IMF holds about 90.5 million ounces, or 2,814.1 metric tons, of gold at designated
depositories. The IMF's total gold holdings are valued on its balance sheet at about $4.9 billion
(SDR 3.2 billion) on the basis of historical cost. The IMF's holdings amount to about $160 billion
(as determined by end-February 2012 market prices).
Gold and the international monetary system
Gold played a central role in the international monetary system after World War II. The
countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates
pegged in terms of the dollar and, in the case of the United States, the value of the dollar in
terms of gold. This "par value system" ceased to work after 1971
Until the late 1970s, 25 percent of member countries' initial quota subscriptions and subsequent
quota increases had to be paid for with gold. Payment of charges and repayments to the IMF by
its members constituted other sources of gold.
Use of Gold in the IMF
The IMF's Articles of Agreement strictly limit the use of the gold following the Second
Amendment in 1978. But in some circumstances, the IMF may sell gold or accept gold as
payment from member countries.
In September 2009, the IMF's Executive Board approved the total sale of 403.3 metric tons of
gold as a key step in implementing the new income model to help put the IMF's finances on a
sound long-term footing. The IMF sold this gold in two phases—the first phase was set aside
exclusively for off-market sales to official holders.
A total of 212 metric tons was sold during this first phase, comprising sales to theReserve Bank
of India, the Bank of Mauritius, and the Central Bank of Sri Lanka. An additional amount was
later sold to the Bangladesh Bank. In February 2010, the on-market phase of its gold sales
program began. So as to avoid disruption to the gold market, these sales were phased over
time. In December 2010, the IMF concluded the gold sales program with total sales of 403.3
metric tons of gold. Total proceeds amounted to about $15 billion (SDR 9.5 billion).
Proceeds equivalent to the book value of the gold sold, about $4.2 billion (SDR 2.7 billion),
were retained in the IMF's General Resources Account. Profits from the gold sales were invested
in an income-generating fund to supplement IMF income. In February 2012, the Executive
Board approved the distribution to all IMF member countries of about $1.1 billion (SDR 700
million) in reserves attributed to a portion of the windfall profits from recent IMF gold sales,
with the expectation that member countries would return equivalent amounts to support
concessional lending to low-income countries. The distribution will be effected only when
members provide satisfactory assurances that they would make new Poverty Reduction and
Growth Trust subsidy contributions equivalent to at least 90 percent of the amount distributed—
i.e. about $1 billion (SDR 630 million).
The selling of gold by the IMF is rare as it requires an Executive Board decision with an 85
percent majority of the total voting power. Prior to the recent sale of gold, the last time gold
was sold by the institution was through off-market transactions completed in April 2001, with
12.9 million ounces traded. This transaction was approved by the membership as a means to
finance the IMF's participation in the Heavily Indebted Poor Countries Initiative and the
continuation of the Poverty Reduction and Growth Facility.
Borrowing Arrangements

If the IMF believes that its resources might fall short of members' needs—for example, in the
event of a major financial crisis—it can supplement its own resources by borrowing. It has had
a range of bilateral borrowing arrangements in the 1970s and 1980s. Currently it has two
standing multilateral borrowing arrangements and one bilateral borrowing agreement.
Through the New Arrangements to Borrow (NAB) and the"> General Arrangements to
Borrow (GAB), a number of member countries and institutions stand ready to lend additional
funds to the IMF. These credit arrangements between the IMF and a group of members and
institutions can provide supplementary resources of up to roughly $26 billion (SDR 17 billion)
under the General Arrangements and roughly $565 billion (SDR 370.0 billion) under the New
Arrangements to the IMF to forestall or cope with an impairment of the international monetary
system or to deal with an exceptional situation that poses a threat to the stability of that
system.
In April 2009, the Group of Twenty industrialized and emerging market economies agreed to
triple the Fund’s lending capacity to $750 billion, enabling it to inject extra liquidity into the
world economy during this time of crisis. The additional support will come from several sources,
including contributions from member countriesthat have pledged to help boost the Fund’s
lending capacity.

HISTORY

Cooperation and reconstruction

(1944–71)
During the Great Depression of the 1930s, countries attempted to shore up their failing
economies by sharply raising barriers to foreign trade, devaluing their currencies to compete
against each other for export markets, and curtailing their citizens' freedom to hold foreign
exchange. These attempts proved to be self-defeating. World trade declined sharply (see chart
below), and employment and living standards plummeted in many countries.
This breakdown in international monetary cooperation led the IMF's founders to plan an
institution charged with overseeing the international monetary system—the system of exchange
rates and international payments that enables countries and their citizens to buy goods and
services from each other. The new global entity would ensure exchange rate stability and
encourage its member countries to eliminate exchange restrictions that hindered trade.

The Bretton Woods agreement

The IMF was conceived in July 1944, when representatives of 45 countries meeting in the town
of Bretton Woods, New Hampshire, in the northeastern United States, agreed on a framework
for international economic cooperation, to be established after the Second World War. They
believed that such a framework was necessary to avoid a repetition of the disastrous economic
policies that had contributed to the Great Depression.
The IMF came into formal existence in December 1945, when its first 29 member countries
signed its Articles of Agreement. It began operations on March 1, 1947. Later that year, France
became the first country to borrow from the IMF.
The IMF's membership began to expand in the late 1950s and during the 1960s as many
African countries became independent and applied for membership. But the Cold War limited
the Fund's membership, with most countries in the Soviet sphere of influence not joining.
Par value system
The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates
(the value of their currencies in terms of the U.S. dollar and, in the case of the United States,
the value of the dollar in terms of gold) pegged at rates that could be adjusted only to correct a
"fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement.
This par value system—also known as the Bretton Woods system—prevailed until 1971, when
the U.S. government suspended the convertibility of the dollar (and dollar reserves held by
other governments) into gold.

The end of the Bretton Woods

System (1972–81)
By the early 1960s, the U.S. dollar's fixed value against gold, under the Bretton Woods system
of fixed exchange rates, was seen as overvalued. A sizable increase in domestic spending on
President Lyndon Johnson's Great Society programs and a rise in military spending caused by
the Vietnam War gradually worsened the overvaluation of the dollar.
End of Bretton Woods system
The system dissolved between 1968 and 1973. In August 1971, U.S. President Richard Nixon
announced the "temporary" suspension of the dollar's convertibility into gold. While the dollar
had struggled throughout most of the 1960s within the parity established at Bretton Woods,
this crisis marked the breakdown of the system. An attempt to revive the fixed exchange rates
failed, and by March 1973 the major currencies began to float against each other.
Since the collapse of the Bretton Woods system, IMF members have been free to choose any
form of exchange arrangement they wish (except pegging their currency to gold): allowing the
currency to float freely, pegging it to another currency or a basket of currencies, adopting the
currency of another country, participating in a currency bloc, or forming part of a monetary
union.
Oil shocks
Many feared that the collapse of the Bretton Woods system would bring the period of rapid
growth to an end. In fact, the transition to floating exchange rates was relatively smooth, and it
was certainly timely: flexible exchange rates made it easier for economies to adjust to more
expensive oil, when the price suddenly started going up in October 1973. Floating rates have
facilitated adjustments to external shocks ever since.
The IMF responded to the challenges created by the oil price shocks of the 1970s by adapting
its lending instruments. To help oil importers deal with anticipated current account deficits and
inflation in the face of higher oil prices, it set up the first of two oil facilities.
Helping poor countries
From the mid-1970s, the IMF sought to respond to the balance of payments difficulties
confronting many of the world's poorest countries by providing concessional financing through
what was known as the Trust Fund. In March 1986, the IMF created a new concessional loan
program called the Structural Adjustment Facility. The SAF was succeeded by the Enhanced
Structural Adjustment Facility in December 1987.
Debt and painful reforms (1982–
89)
The oil shocks of the 1970s, which forced many oil-importing countries to borrow from
commercial banks, and the interest rate increases in industrial countries trying to control
inflation led to an international debt crisis.
During the 1970s, Western commercial banks lent billions of "recycled" petrodollars, getting
deposits from oil exporters and lending those resources to oil-importing and developing
countries, usually at variable, or floating, interest rates. So when interest rates began to soar in
1979, the floating rates on developing countries' loans also shot up. Higher interest payments
are estimated to have cost the non-oil-producing developing countries at least $22 billion during
1978–81. At the same time, the price of commodities from developing countries slumped
because of the recession brought about by monetary policies. Many times, the response by
developing countries to those shocks included expansionary fiscal policies and overvalued
exchange rates, sustained by further massive borrowings.
When a crisis broke out in Mexico in 1982, the IMF coordinated the global response, even
engaging the commercial banks. It realized that nobody would benefit if country after country
failed to repay its debts.
The IMF's initiatives calmed the initial panic and defused its explosive potential. But a long road
of painful reform in the debtor countries, and additional cooperative global measures, would be
necessary to eliminate the problem.

Societal Change for Eastern

Europe and Asian Upheaval
(1990-2004)
The fall of the Berlin wall in 1989 and the dissolution of the Soviet Union in 1991 enabled the
IMF to become a (nearly) universal institution. In three years, membership increased from 152
countries to 172, the most rapid increase since the influx of African members in the 1960s.
In order to fulfill its new responsibilities, the IMF's staff expanded by nearly 30 percent in six
years. The Executive Board increased from 22 seats to 24 to accommodate Directors from
Russia and Switzerland, and some existing Directors saw their constituencies expand by several
countries.
The IMF played a central role in helping the countries of the former Soviet bloc transition from
central planning to market-driven economies. This kind of economic transformation had never
before been attempted, and sometimes the process was less than smooth. For most of the
1990s, these countries worked closely with the IMF, benefiting from its policy advice, technical
assistance, and financial support.
By the end of the decade, most economies in transition had successfully graduated to market
economy status after several years of intense reforms, with many joining the European Union in
2004.
Asian Financial Crisis
In 1997, a wave of financial crises swept over East Asia, from Thailand to Indonesia to Korea
and beyond. Almost every affected country asked the IMF for both financial assistance and for
help in reforming economic policies. Conflicts arose on how best to cope with the crisis, and the
IMF came under criticism that was more intense and widespread than at any other time in its
history.
From this experience, the IMF drew several lessons that would alter its responses to future
events. First, it realized that it would have to pay much more attention to weaknesses in
countries’ banking sectors and to the effects of those weaknesses on macroeconomic stability.
In 1999, the IMF—together with the World Bank—launched the Financial Sector Assessment
Program and began conducting national assessments on a voluntary basis. Second, the Fund
realized that the institutional prerequisites for successful liberalization of international capital
flows were more daunting than it had previously thought. Along with the economics profession
generally, the IMF dampened its enthusiasm for capital account liberalization. Third, the
severity of the contraction in economic activity that accompanied the Asian crisis necessitated a
re-evaluation of how fiscal policy should be adjusted when a crisis was precipitated by a sudden
stop in financial inflows.
Debt relief for poor countries
During the 1990s, the IMF worked closely with the World Bank to alleviate the debt burdens of
poor countries. The Initiative for Heavily Indebted Poor Countries was launched in 1996, with
the aim of ensuring that no poor country faces a debt burden it cannot manage. In 2005, to
help accelerate progress toward the United NationsMillennium Development Goals (MDGs), the
HIPC Initiative was supplemented by theMultilateral Debt Relief Initiative (MDRI).

Globalization and the Crisis

(2005 - present)
The IMF has been on the front lines of lending to countries to help boost the global economy as
it suffers from a deep crisis not seen since the Great Depression.
For most of the first decade of the 21st century, international capital flows fueled a global
expansion that enabled many countries to repay money they had borrowed from the IMF and
other official creditors and to accumulate foreign exchange reserves.
The global economic crisis that began with the collapse of mortgage lending in the United
States in 2007, and spread around the world in 2008 was preceded by large imbalances in
global capital flows.
Global capital flows fluctuated between 2 and 6 percent of world GDP during 1980-95, but since
then they have risen to 15 percent of GDP. In 2006, they totaled $7.2 trillion—more than a
tripling since 1995. The most rapid increase has been experienced by advanced economies, but
emerging markets and developing countries have also become more financially integrated.
The founders of the Bretton Woods system had taken it for granted that private capital flows
would never again resume the prominent role they had in the nineteenth and early twentieth
centuries, and the IMF had traditionally lent to members facing current account difficulties.
The latest global crisis uncovered a fragility in the advanced financial markets that soon led to
the worst global downturn since the Great Depression. Suddenly, the IMF was inundated with
requests for stand-by arrangements and other forms of financial and policy support.
The international community recognized that the IMF’s financial resources were as important as
ever and were likely to be stretched thin before the crisis was over. With broad support from
creditor countries, the Fund’s lending capacity was tripled to around $750 billion. To use those
funds effectively, the IMF overhauled its lending policies, including by creating a flexible credit
line for countries with strong economic fundamentals and a track record of successful policy
implementation. Other reforms, including ones tailored to help low-income countries, enabled
the IMF to disburse very large sums quickly, based on the needs of borrowing countries and not
tightly constrained by quotas, as in the past.
For more on the ideas that have shaped the IMF from its inception until the late 1990s, take a
look at James Boughton's "The IMF and the Force of History: Ten Events and Ten Ideas that
Have Shaped the Institution."

Governance
The IMF is accountable to the governments of its member countries

Governance Structure
The IMF's mandate and governance have evolved along with changes in the global economy,
allowing the organization to retain a central role within the international financial architecture.
The diagram below provides a stylized view of the IMF's current governance structure.

Board of Governors
The Board of Governors is the highest decision-making body of the IMF. It consists of one
governor and one alternate governor for each member country. The governor is appointed by
the member country and is usually the minister of finance or the head of the central bank.
While the Board of Governors has delegated most of its powers to the IMF's Executive Board, it
retains the right to approve quota increases, special drawing right (SDR) allocations, the
admittance of new members, compulsory withdrawal of members, and amendments to
the Articles of Agreement and By-Laws.
The Board of Governors also elects or appoints executive directors and is the ultimate arbiter on
issues related to the interpretation of the IMF's Articles of Agreement. Voting by the Board of
Governors usually takes place by mail-in ballot.
The Boards of Governors of the IMF and the World Bank Group normally meet once a year,
during the IMF-World Bank Spring and Annual Meetings, to discuss the work of their respective
institutions. The Meetings, which take place in September or October, have customarily been
held in Washington for two consecutive years and in another member country in the third year.
The Annual Meetings usually include two days of plenary sessions, during which Governors
consult with one another and present their countries' views on current issues in international
economics and finance. During the Meetings, the Boards of Governors also make decisions on
how current international monetary issues should be addressed and approve corresponding
resolutions.
The Annual Meetings are chaired by a Governor of the World Bank and the IMF, with the
chairmanship rotating among the membership each year. Every two years, at the time of the
Annual Meetings, the Governors of the Bank and the Fund elect Executive Directors to their
respective Executive Boards.

Ministerial Committees
The IMF Board of Governors is advised by two ministerial committees, the International
Monetary and Financial Committee (IMFC) and theDevelopment Committee.
The IMFC has 24 members, drawn from the pool of 187 governors. Its structure mirrors that of
the Executive Board and its 24 constituencies. As such, the IMFC represents all the member
countries of the Fund.
The IMFC meets twice a year, during the Spring and Annual Meetings. The Committee discusses
matters of common concern affecting the global economy and also advises the IMF on the
direction its work. At the end of the Meetings, the Committee issues a joint communiqué
summarizing its views. These communiqués provide guidance for the IMF's work program
during the six months leading up to the next Spring or Annual Meetings. There is no formal
voting at the IMFC, which operates by consensus.
The Development Committee is a joint committee, tasked with advising the Boards of
Governors of the IMF and the World Bank on issues related to economic development in
emerging and developing countries. The committee has 24 members (usually ministers of
finance or development). It represents the full membership of the IMF and the World Bank and
mainly serves as a forum for building intergovernmental consensus on critical development
issues.
The Executive Board
The IMF's 24-member Executive Board takes care of the daily business of the IMF. Together,
these 24 board members represent all 188 countries. Large economies, such as the United
States and China, have their own seat at the table but most countries are grouped in
constituencies representing 4 or more countries. The largest constituency includes 24 countries.
The Board discusses everything from the IMF staff's annual health checks of member countries'
economies to economic policy issues relevant to the global economy. The board normally makes
decisions based on consensus but sometimes formal votes are taken. At the end of most formal
discussions, the Board issues what is known as a summing up, which summarizes its views.
Informal discussions may be held to discuss complex policy issues still at a preliminary stage.
Governance Reform
To be effective, the IMF must be seen as representing the interests of all its 188 member
countries. For this reason, it is crucial that its governance structure reflect today’s world
economy. In 2010, the IMF agreed wide-ranging governance reforms to reflect the increasing
importance of emerging market countries. The reforms also ensure that smaller developing
countries will retain their influence in the IMF.

Country Representation
Unlike the General Assembly of the United Nations, where each country has one vote, decision
making at the IMF was designed to reflect the position of each member country in the global
economy. Each IMF member country is assigned a quota that determines its financial
commitment to the IMF, as well as its voting power.
To be effective, the IMF must be seen as representing the interests of all of its 188 member
countries, from its smallest shareholder Tuvalu, to its largest, the United States.
In November 2010, the IMF agreed on reform of its framework for making decisions to reflect
the increasing importance of emerging market and developing economies.
Giving more say to emerging markets
In recent years, emerging market countries have experienced strong growth and now play a
much larger role in the world economy.
The reforms will produce a shift of 6 percent of quota shares to dynamic emerging market and
developing countries. This realignment will give more say to a group of countries known as the
BRICS: Brazil, Russia, India, and China.
Protecting the voice of low-income countries
The reform package also contains measures to protect the voice of the poorest countries in the
IMF. Without these measures, this group of countries would have seen its voting shares decline.
Timeline for implementing the reform
The Board of Governors, the IMF’s highest decision-making body, must ratify the new
agreement by an 85 percent majority before it comes into effect.
The plan is for the reform to be implemented in 2012.

Accountability
The IMF is accountable to its 188 member governments, and is also scrutinized by multiple
stakeholders, from political leaders and officials to, the media, civil society, academia, and its
own internal watchdog. The IMF, in turn, encourages its own members to be as open as
possible about their economic policies to encourage their accountability and transparency.
Engagement with intergovernmental groups
Official groups, such as the Group of Twenty (G-20) industrialized and emerging market
countries (G-20) and the Group of Eight (G-8) are also actively engaged in the work of the IMF.
The G-20 consists of the 20 leading and emerging economies of the world, and includes all G-8
countries plus Argentina, Australia, Brazil, China, India, Indonesia, Korea, Mexico, Saudi Arabia,
South Africa, and Turkey, as well as the European Union. The G-20 discusses and coordinates
international financial stability and is a key player in shaping the work of the IMF. Its meetings
usually take place twice a year at the level of heads of state and government, with several
other ministerial-level meetings, including finance ministers and central bank governors, held a
few times a year.
The G-8 finance ministers and central bank governors meet at least twice annually to monitor
developments in the world economy and assess economic policies. The Managing Director of the
IMF is usually invited to participate in those discussions. The G-8 functions as a forum for
discussion of economic and financial issues among the major industrial countries—Canada,
France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States.
Civil society, think tanks, and the media
The IMF's work is scrutinized by the media, the academic community, and civil society
organizations (CSOs).
IMF management and senior staff communicate with the media on a daily basis. Additionally, a
biweekly press briefing is held at the IMF Headquarters, during which a spokesperson takes live
questions from journalists. Journalists who cannot be present are invited to submit their
questions via the online media briefing center.
IMF staff at all levels frequently meet with members of the academic community to exchange
ideas and receive new input. The IMF also has an active outreach programinvolving CSOs.
Internal watchdog
The IMF's work is reviewed on a regular basis by an internal watchdog, the Independent
Evaluation Office, established in 2001. The IEO is fully independent from IMF management and
operates at arm's length from the Executive Board, although the Board appoints its director.
The IEO's mission is to enhance the learning culture within the IMF, strengthen its external
credibility, promote greater understanding of the work of the Fund, and support institutional
governance and oversight.
The IEO establishes its own work program, selecting topics for review based on suggestions
from stakeholders inside and outside the IMF. Its recommendations strongly influence the
Fund's work.
Ethics office and code of conduct
The IMF also has its own Ethics Office. Established as an independent arm of the Fund in 2000,
the Office provides advice and guidance to IMF staff, and undertakes investigations into
allegations of unethical behavior and misconduct. An Integrity Hotline—a 24-hour
whistleblowing system—was launched in 2008. The Ethics Office publishes an Annual Report,
which is published on the IMF’s website.
Upon joining the IMF, all staff sign an agreement that commits them to adhere to the IMF’s
ethics rules, which include a Code of Conduct and rules for financial disclosure. A separate Code
of Conduct applies to IMF Executive Directors. The IMF’s Executive Board has also set
out Applicable Standards of Conduct for the Managing Director.
Transparency
The IMF also encourages its member countries to be as open as possible about their economic
policies. Greater openness encourages public discussion of economic policy, enhances the
accountability of policymakers, and facilitates the functioning of financial markets.
To that effect, the IMF's Executive Board has adopted a transparency policy to encourage
publication of member countries' policies and data. This policy designates the publication status
of most categories of Board documents as "voluntary but presumed." This means that
publication requires the member's explicit consent but is expected to take place within 30 days
following the Board discussion.
In taking these steps to enhance transparency, the Executive Board has had to consider how to
balance the IMF's responsibility to oversee the international monetary system with its role as a
confidential advisor to its members. The IMF regularly reviews its transparency policy.

Our Work
The IMF's fundamental mission is to help ensure stability in the international system. It does so
in three ways: keeping track of the global economy and the economies of member countries;
lending to countries with balance of payments difficulties; and giving practical help to members.

Surveillance
When a country joins the IMF, it agrees to subject its economic and financial policies to the
scrutiny of the international community. It also makes a commitment to pursue policies that are
conducive to orderly economic growth and reasonable price stability, to avoid manipulating
exchange rates for unfair competitive advantage, and to provide the IMF with data about its
economy. The IMF's regular monitoring of economies and associated provision of policy advice
is intended to identify weaknesses that are causing or could lead to financial or economic
instability. This process is known assurveillance.
Country surveillance
Country surveillance is an ongoing process that culminates in regular (usually annual)
comprehensive consultations with individual member countries, with discussions in between as
needed. The consultations are known as "Article IV consultations" because they are required by
Article IV of the IMF's Articles of Agreement. During an Article IV consultation, an IMF team of
economists visits a country to assess economic and financial developments and discuss the
country's economic and financial policies with government and central bank officials. IMF staff
missions also often meet with parliamentarians and representatives of business, labor unions,
and civil society.
The team reports its findings to IMF management and then presents them for discussion to the
Executive Board, which represents all of the IMF's member countries. A summary of the Board's
views is subsequently transmitted to the country's government. In this way, the views of the
global community and the lessons of international experience are brought to bear on national
policies. Summaries of most discussions are released in Press Releases and are posted on the
IMF's web site, as are most of the country reports prepared by the staff.
Regional surveillance
Regional surveillance involves examination by the IMF of policies pursued under currency
unions—including the euro area, the West African Economic and Monetary Union, the Central
African Economic and Monetary Community, and the Eastern Caribbean Currency
Union. Regional economic outlook reports are also prepared to discuss economic developments
and key policy issues in Asia Pacific, Europe, Middle East and Central Asia, Sub-Saharan Africa,
and the Western Hemisphere.
Global surveillance
Global surveillance entails reviews by the IMF's Executive Board of global economic trends and
developments. The main reviews are based on theWorld Economic Outlook reports, the Global
Financial Stability Report, which covers developments, prospects, and policy issues in
international financial markets, and the Fiscal Monitor, which analyzes the latest developments
in public finance. All three reports are published twice a year, with updates being provided on a
quarterly basis. In addition, the Executive Board holds more frequent informal discussions on
world economic and market developments.

Technical Assistance
The IMF shares its expertise with member countries by providing technical assistance and
training in a wide range of areas, such as central banking, monetary and exchange rate policy,
tax policy and administration, and official statistics. The objective is to help improve the design
and implementation of members' economic policies, including by strengthening skills in
institutions such as finance ministries, central banks, and statistical agencies. The IMF has also
given advice to countries that have had to reestablish government institutions following severe
civil unrest or war.
In 2008, the IMF embarked on an ambitious reformeffort to enhance the impact of its technical
assistance. The reforms emphasize better prioritization, enhanced performance measurement,
more transparent costing and stronger partnerships with donors.
Beneficiaries of technical assistance
Technical assistance is one of the IMF's core activities. It is concentrated in critical areas of
macroeconomic policy where the Fund has the greatest comparative advantage. Thanks to its
near-universal membership, the IMF's technical assistance program is informed by experience
and knowledge gained across diverse regions and countries at different levels of development.
About 80 percent of the IMF's technical assistance goes to low- and lower-middle-income
countries, in particular in sub-Saharan Africa and Asia. Post-conflict countries are major
beneficiaries. The IMF is also providing technical assistance aimed at strengthening the
architecture of the international financial system, building capacity to design and implement
poverty-reducing and growth programs, and helping heavily indebted poor countries (HIPC) in
debt reduction and management.
Types of technical assistance
The IMF's technical assistance takes different forms, according to needs, ranging from long-
term hands-on capacity building to short-notice policy support in a financial crisis. Technical
assistance is delivered in a variety of ways. IMF staff may visit member countries to advise
government and central bank officials on specific issues, or the IMF may provide resident
specialists on a short- or a long-term basis. Technical assistance is integrated with country
reform agendas as well as the IMF's surveillance and lending operations.
The IMF is providing an increasing part of its technical assistance through regional
centerslocated in Côte d'Ivoire, Gabon, Mauritius, and Tanzania for Africa; in Barbados and
Guatemala for Central America and the Caribbean; in Lebanon for the Middle East; and in Fiji
for the Pacific Islands. The IMF also offers training courses for government and central bank
officials of member countries at its headquarters in Washington, D.C., and at regional training
centers in Austria, Brazil, China, Singapore, Tunisia, and the United Arab Emirates.
Partnership with donors
Bilateral and multilateral donors are playing an increasingly important role in enabling the IMF
to meet country needs in this area, with their contributions now financing about two thirds of
the IMF's field delivery of technical assistance. Strong partnerships between recipient countries
and donors enable IMF technical assistance to be developed on the basis of a more inclusive
dialogue and within the context of a coherent development framework. The benefits of donor
contributions thus go beyond the financial aspect.
The IMF is currently seeking to leverage the comparative advantages of its technical assistance
to expand donor financing to meet the needs of recipient countries. As part of this effort, the
Fund is strengthening its partnerships with donors by engaging them on a broader, longer-term
and more strategic basis.
The idea is to pool donor resources in multi-donor trust funds that would supplement the IMF's
own resources for technical assistance while leveraging the Fund's expertise and experience.
Expansion of the multi-donor trust fund model is envisaged on a regional and topical basis,
offering donors different entry points according to their priorities. To this end, the IMF is
establishing a series of topical trust funds, covering such topics as anti-money
laundering/combating the financing of terrorism; fragile states; public financial management;
management of natural resource wealth, public debt sustainability and management, statistics
and data provision; and financial sector stability and development.

Lending by the IMF

A country in severe financial trouble, unable to pay its international bills, poses potential
problems for the stability of the international financial system, which the IMF was created to
protect. Any member country, whether rich, middle-income, or poor, can turn to the IMF for
financing if it has a balance of payments need—that is, if it cannot find sufficient financing on
affordable terms in the capital markets to make its international payments and maintain a safe
level of reserves.
IMF loans are meant to help member countries tackle balance of payments problems, stabilize
their economies, and restore sustainable economic growth. This crisis resolution role is at the
core of IMF lending. At the same time, the global financial crisis has highlighted the need for
effective global financial safety nets to help countries cope with adverse shocks. A key objective
of recent lending reforms has therefore been to complement the traditional crisis resolution role
of the IMF with more effective tools for crisis prevention.
The IMF is not a development bank and, unlike the World Bank and other development
agencies, it does not finance projects.
The changing nature of lending
About four out of five member countries have used IMF credit at least once. But the amount of
loans outstanding and the number of borrowers have fluctuated significantly over time.
In the first two decades of the IMF's existence, more than half of its lending went to industrial
countries. But since the late 1970s, these countries have been able to meet their financing
needs in the capital markets.
The oil shock of the 1970s and the debt crisis of the 1980s led many lower- and lower-middle-
income countries to borrow from the IMF.
In the 1990s, the transition process in central and eastern Europe and the crises in emerging
market economies led to a further increase in the demand for IMF resources.
In 2004, benign economic conditions worldwide meant that many countries began to repay their
loans to the IMF. As a consequence, the demand for the Fund’s resources dropped off sharply .
But in 2008, the IMF began making loans to countries hit by the global financial crisis The IMF
currently has programs with more than 50 countries around the world and has committed more
than $325 billion in resources to its member countries since the start of the global financial
crisis.
While the financial crisis has sparked renewed demand for IMF financing, the decline in lending
that preceded the financial crisis also reflected a need to adapt the IMF's lending instruments to
the changing needs of member countries. In response, the IMF conducted a wide-ranging
review of its lending facilities and terms on which it provides loans.
In March 2009, the Fund announced a major overhaul of its lending framework, including
modernizing conditionality, introducing a new flexible credit line, enhancing the flexibility of the
Fund’s regular stand-by lending arrangement, doubling access limits on loans, adapting its cost
structures for high-access and precautionary lending, and streamlining instruments that were
seldom used. It has also speeded up lending procedures and redesigned its Exogenous Shocks
Facility to make it easier to access for low-income countries. More reforms have since been
undertaken, most recently in November 2011.
Lending to preserve financial stability
Article I of the IMF's Articles of Agreement states that the purpose of lending by the IMF is "...to
give confidence to members by making the general resources of the Fund temporarily available
to them under adequate safeguards, thus providing them with opportunity to correct
maladjustments in their balance of payments without resorting to measures destructive of
national or international prosperity."
In practice, the purpose of the IMF's lending has changed dramatically since the organization
was created. Over time, the IMF's financial assistance has evolved from helping countries deal
with short-term trade fluctuations to supporting adjustment and addressing a wide range of
balance of payments problems resulting from terms of trade shocks, natural disasters, post-
conflict situations, broad economic transition, poverty reduction and economic development,
sovereign debt restructuring, and confidence-driven banking and currency crises.
Today, IMF lending serves three main purposes.
First, it can smooth adjustment to various shocks, helping a member country avoid disruptive
economic adjustment or sovereign default, something that would be extremely costly, both for
the country itself and possibly for other countries through economic and financial ripple effects
(known as contagion).
Second, IMF programs can help unlock other financing, acting as a catalyst for other lenders.
This is because the program can serve as a signal that the country has adopted sound policies,
reinforcing policy credibility and increasing investors' confidence.
Third, IMF lending can help prevent crisis. The experience is clear: capital account crises
typically inflict substantial costs on countries themselves and on other countries through
contagion. The best way to deal with capital account problems is to nip them in the bud before
they develop into a full-blown crisis.
Conditions for lending
When a member country approaches the IMF for financing, it may be in or near a state of
economic crisis, with its currency under attack in foreign exchange markets and its international
reserves depleted, economic activity stagnant or falling, and a large number of firms and
households going bankrupt. In difficult economic times, the IMF helps countries to protect the
most vulnerable in a crisis.
The IMF aims to ensure that conditions linked to IMF loan disbursements are focused and
adequately tailored to the varying strengths of members' policies and fundamentals. To this
end, the IMF discusses with the country the economic policies that may be expected to address
the problems most effectively. The IMF and the government agree on a program of policies
aimed at achieving specific, quantified goals in support of the overall objectives of the
authorities' economic program. For example, the country may commit to fiscal or foreign
exchange reserve targets.
The IMF discusses with the country the economic policies that may be expected to address the
problems most effectively. The IMF and the government agree on a program of policies aimed
at achieving specific, quantified goals in support of the overall objectives of the authorities'
economic program. For example, the country may commit to fiscal or foreign exchange reserve
targets.
Loans are typically disbursed in a number of installments over the life of the program, with each
installment conditional on targets being met. Programs typically last up to 3 years, depending
on the nature of the country's problems, but can be followed by another program if needed. The
government outlines the details of its economic program in a "letter of intent" to the Managing
Director of the IMF. Such letters may be revised if circumstances change.
For countries in crisis, IMF loans usually provide only a small portion of the resources needed to
finance their balance of payments. But IMF loans also signal that a country's economic policies
are on the right track, which reassures investors and the official community, helping countries
find additional financing from other sources.
Main lending facilities
In an economic crisis, countries often need financing to help them overcome their balance of
payments problems. Since its creation in June 1952, the IMF’s Stand-By Arrangement
(SBA) has been used time and again by member countries, it is the IMF’s workhorse lending
instrument for emerging market countries. Rates are non-concessional, although they are
almost always lower than what countries would pay to raise financing from private markets. The
SBA was upgraded in 2009 to be more flexible and responsive to member countries’ needs.
Borrowing limits were doubled with more funds available up front, and conditions were
streamlined and simplified. The new framework also enables broader high-access borrowing on
a precautionary basis.
The Flexible Credit Line (FCL) is for countries with very strong fundamentals, policies, and track
records of policy implementation. It represents a significant shift in how the IMF delivers Fund
financial assistance, particularly with recent enhancements, as it has no ongoing (ex post)
conditions and no caps on the size of the credit line. The FCL is a renewable credit line, which at
the country’s discretion could be for either 1-2 years, with a review of eligibility after the first
year. There is the flexibility to either treat the credit line as precautionary or draw on it at any
time after the FCL is approved. Once a country qualifies (according to pre-set criteria), it can
tap all resources available under the credit line at any time, as disbursements would not be
phased and conditioned on particular policies as with traditional IMF-supported programs. This
is justified by the very strong track records of countries that qualify to the FCL, which give
confidence that their economic policies will remain strong or that corrective measures will be
taken in the face of shocks.
The Precautionary and Liquidity Line (PLL) builds on the strengths and broadens the scope of
the Precautionary Credit Line (PCL). The PLL provides financing to meet actual or potential
balance of payments needs of countries with sound policies, and is intended to serve as
insurance and help resolve crises. It combines a qualification process (similar to that for the
FCL) with focused ex-post conditionality aimed at addressing vulnerabilities identified during
qualification. Its qualification requirements signal the strength of qualifying countries’
fundamentals and policies, thus contributing to consolidation of market confidence in the
country’s policy plans. The PLL is designed to provide liquidity to countries with sound policies
under broad circumstances, including countries affected by regional or global economic and
financial stress.
The Rapid Financing Instrument (RFI) provides rapid and low-access financial assistance to
member countries facing an urgent balance of payments need, without the need for a full-
fledged program. It can provide support to meet a broad range of urgent needs, including those
arising from commodity price shocks, natural disasters, post-conflict situations and emergencies
resulting from fragility.
The Extended Fund Facility is used to help countries address balance of payments difficulties
related partly to structural problems that may take longer to correct than macroeconomic
imbalances. A program supported by an extended arrangement usually includes measures to
improve the way markets and institutions function, such as tax and financial sector reforms,
privatization of public enterprises.
The Trade Integration Mechanism allows the IMF to provide loans under one of its facilities to a
developing country whose balance of payments is suffering because of multilateral trade
liberalization, either because its export earnings decline when it loses preferential access to
certain markets or because prices for food imports go up when agricultural subsidies are
eliminated.
Lending to low-income countries
To help low-income countries weather the severe impact of the global financial crisis, the IMF
has revamped its concessional lending facilities to make them more flexible and meet increasing
demand for financial assistance from countries in need. These changes became effective in
January 2010. Once additional loan and subsidy resources are mobilized, these changes will
boost available resources for low-income countries to $17 billion through 2014. To ensure
resources are available for lending to low-income countries beyond 2014, the IMF approved an
additional $2.7 billion in remaining windfall profits from gold sales as part of a strategy to make
lending to low-income countries sustainable.
Three types of loans were created under the new Poverty Reduction and Growth Trust (PRGT)
as part of this broader reform: the Extended Credit Facility, the Rapid Credit Facility and the
Standby Credit Facility.
The Extended Credit Facility (ECF) provides financial assistance to countries with protracted
balance of payments problems. The ECF succeeds the Poverty Reduction and Growth Facility
(PRGF) as the Fund’s main tool for providing medium-term support LICs, with higher levels of
access, more concessional financing terms, more flexible program design features, as well as
streamlined and more focused conditionality.
The Rapid Credit Facility (RCF) provides rapid financial assistance with limited conditionality to
low-income countries (LICs) facing an urgent balance of payments need. The RCF streamlines
the Fund’s emergency assistance, provides significantly higher levels of concessionality, can be
used flexibly in a wide range of circumstances, and places greater emphasis on the country’s
poverty reduction and growth objectives.
The Standby Credit Facility (SCF) provides financial assistance to low-income countries (LICs)
with short-term balance of payments needs. It provides support under a wide range of
circumstances, allows for high access, carries a low interest rate, can be used on a
precautionary basis, and places emphasis on countries’ poverty reduction and growth
objectives.
Several low-income countries have made significant progress in recent years toward economic
stability and no longer require IMF financial assistance. But many of these countries still seek
the IMF's advice, and the monitoring and endorsement of their economic policies that comes
with it. To help these countries, the IMF has created a program for policy support and signaling,
called the Policy Support Instrument.
Debt relief
In addition to concessional loans, some low-income countries are also eligible for debts to be
written off under two key initiatives.
The Heavily Indebted Poor Countries (HIPC) Initiative, introduced in 1996 and enhanced in
1999, whereby creditors provide debt relief, in a coordinated manner, with a view to restoring
debt sustainability; and
The Multilateral Debt Relief Initiative (MDRI), under which the IMF, the International
Development Association (IDA) of the World Bank, and the African Development Fund (AfDF)
canceled 100 percent of their debt claims on certain countries to help them advance toward
the Millennium Development Goals.

Tackling Current Challenges

The global economic crisis created the worst recession since the Great Depression of the 1930s.
The crisis began in the mortgage markets in the United States in 2007 and swiftly escalated
into a crisis that affected activity and institutions worldwide. The IMF mobilized on many fronts
to support its member countries, increasing its lending, using its cross-country experience to
advise on policy solutions, and introducing reforms to modernize its operations and become
more responsive to member countries’ needs. As the apex of the crisis shifted to Europe, the
Fund has become actively engaged in the region and is also working with the G-20 to support a
multilateral approach.
Here’s some of the issues that top the agenda:
Stepping up crisis lending
As part of its efforts to support countries during the global economic crisis, the IMF has beefed up its lending
capacity. It has approved a major overhaul of how it lends money by offering higher amounts and tailoring loan
terms to countries’ varying strengths and circumstances. More recently, further reforms strengthen the IMF’s
capacity to respond to and prevent crises. In particular:
 Doubling of lending access limits for low-income member countries and streamlining procedures to reduce
perceived stigma attached to borrowing from the Fund
 Introducing and refining a Flexible Credit Line (FCL) for countries with robust policy frameworks and a strong
track record in economic performance; a Precautionary and Liquidity Line (PLL) for countries that have sound
economic policies and fundamentals, but are still facing vulnerabilities; and a Rapid Financing Instrument (RFI)
for countries facing an urgent financing need but that do not need a full-fledged economic program
 Modernizing conditionality to ensure that conditions linked to IMF loan disbursements are focused and
adequately tailored to the varying strengths of members’ policies
 Focusing more on social spending and more concessional terms for low-income countries
The IMF has committed more than $300 billion to crisis-hit countries—including Greece, Ireland, Portugal,
Romania, and Ukraine—and has extended credit to Mexico, Poland, and Colombia under a new flexible credit line.
The IMF is also stepping up its lending to low-income countries to help prevent the crisis undermining recent
economic gains and keep poverty reduction efforts on track.

A partner in Europe
The IMF is actively engaged in Europe as a provider of policy advice, financing, and technical assistance. We work
both independently and, in European Union countries, in cooperation with European institutions, such as the
European Commission and the European Central Bank as part of the so-called troika. The IMF's work in Europe has
intensified since the start of the global financial crisis in 2008, and has been further stepped up since mid-2010 as
a result of the sovereign debt crisis in the euro area. The IMF has recommended that Europe focus on structural
reforms to boost economic growth, such as product and services market reforms, as well as labor market and
pension changes. The IMF has also urged eurozone members to make a more determined, collective response to
the crisis by taking concrete steps toward a complete monetary union, including a unified banking system and
more fiscal integration. Read our Factsheet on Europe and visit our webpage that pulls together IMF information
about Europe. See also article on fixing the flaws in EMU.

Supporting low-income countries

The IMF has upgraded its support for low-income countries, reflecting the changing nature of economic conditions
in these countries and their increased vulnerabilities due to the effects of the global economic crisis. It has
overhauled its lending instruments, especially to address more directly countries' needs for short-term and
emergency support. The IMF support package includes:

 Mobilizing additional resources, including from sales of an agreed amount of IMF gold, to boost the IMF’s
concessional lending capacity to up to $17 billion through 2014, including up to $8 billion in the first two years.
This exceeds the call by the Group of Twenty for $6 billion in new lending over two to three years.
 Providing interest relief, with zero payments on outstanding IMF concessional loans through end-2012 to help
low-income countries cope with the crisis.
 Commiting resources to secure the long-term sustainability of IMF lending to low-income countries beyond
2014.

Reinforcing multilateralism
The 2008 global financial crisis highlighted the tremendous benefits from international cooperation. Without the
cooperation spearheaded by the Group of Twenty industrialized and emerging market economies (G-20) the crisis
could have been much worse. At their2009 Pittsburgh Summit G-20 countries pledged to adopt policies that would
ensure a lasting recovery and a brighter economic future, launching the "Framework for Strong, Sustainable, and
Balanced Growth."
The backbone of this framework is a multilateral process, where G-20 countries together set out objectives and the
policies needed to get there. And, most importantly, they undertake to check on their progress toward meeting
those shared objectives—done through the G-20Mutual Assessment Process or MAP. At the request of the G-20,
the IMF provides thetechnical analysis needed to evaluate how members’ policies fit together—and whether,
collectively, they can achieve the G-20’s goals.
The IMF’s Executive Board has also been considering a range of options to enhance multilateral, bilateral, and
financial surveillance, and to better integrate the three. It has launched “spillover reports” for the five most
systemic economies—China, the euro area, Japan, United Kingdom, and the United States—to assess the impact of
policies by one country or area on the rest of the world. The IMF recently strengthened the ways in which it keeps
an eye on country economies with its global analysis, and as Managing Director Christine Lagarde has stressed, the
IMF must continue to pay more attention to understanding interconnectedness and incorporating this
understanding into risk and policy analysis.

Strengthening the international monetary system

The current International Monetary System—the set of internationally agreed rules, conventions, and supporting
institutions that facilitate international trade and cross-border investment, and the flow of capital among
countries—has certainly delivered a lot. But it has a number of well-known weaknesses, including the lack of an
automatic and orderly mechanism for resolving the buildup of real and financial imbalances; volatile capital flows
and exchange rates that can have deleterious economic effects; and related to the above, the rapid, unabated
accumulation of international reserves, concentrated on a narrow supply.
Addressing these problems is crucial to achieving the global public good of economic and financial stability, by
ensuring an orderly rebalancing of demand growth, which is essential for a sustained and strong global recovery,
and reducing systemic risk. The IMF’s recent review of its mandate and resultant reforms—to surveillance and
its lending toolkit—go some way towards addressing these concerns but further reforms are being pursued.
 Implementing organizational changes
The IMF must represent the interests of all of its 188 member countries, from its smallest shareholder Tuvalu, to
its largest, the United States. Unlike the General Assembly of the United Nations or the World Trade Organization,
where each country has one vote, decision making at the IMF was designed to reflect the position of each member
country in the global economy. Each IMF member country is assigned a quota that determines its financial
commitment to the IMF, as well as its voting power.
In recent years, emerging market countries such as China, India, Brazil, and Russia have experienced strong
growth and now play a larger role in the world economy. In December 2010, the IMF agreed on reform of its
framework for making decisions to reflect the increasing importance of emerging market and developing
economies.
When fully implemented, the reforms will produce a shift of more than 6 percent of quota shares to dynamic
emerging market and developing countries. The reform contains measures to protect the voice of the poorest
countries in the IMF. Without these measures, this group of countries would have seen its voting shares decline.
The reform will enter into force once three fifths of the IMF’s membership―which currently amounts to 113
countries― representing 85 percent of total voting power have accepted the proposed amendment. Watch
a video on the latest efforts on reforming IMF governance.

World Bank History

Conceived during World War II at Bretton Woods, New Hampshire, the World Bank initially helped rebuild Europe
after the war. Its first loan of $250 million was to France in 1947 for post-war reconstruction. Reconstruction has
remained an important focus of the Bank's work, given the natural disasters, humanitarian emergencies, and post-
conflict rehabilitation needs that affect developing and transition economies.

Today's Bank, however, has sharpened its focus on poverty reduction as the overarching goal of all its
work. It once had a homogeneous staff of engineers and financial analysts, based solely in Washington,
D.C. Today, it has a multidisciplinary and diverse staff including economists, public policy experts,
sectoral experts, and social scientists. 40 percent of staff are now based in country offices.

The Bank itself is bigger, broader, and far more complex. It has become a Group, encompassing five
closely associated development institutions: the International Bank for Reconstruction and
Development (IBRD), the International Development Association (IDA), theInternational Finance
Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for
Settlement of Investment Disputes (ICSID).

Transition

During the 1980s, the Bank was pushed in many directions: early in the decade, the Bank was brought
face to face with macroeconomic and debt rescheduling issues; later in the decade, social and
environmental issues assumed center stage, and an increasingly vocal civil society accused the Bank of
not observing its own policies in some highprofile projects.

To address concerns about the quality of Bank operations, the Wapenhans Report was released and
soon after, steps toward reform were taken, including the creation of an Inspection Panel to investigate
claims against the Bank. However, criticism increased, reaching a peak in 1994 at the Annual Meetings in
Madrid.

Reform and Renewal

Since then, the Bank Group has made much progress. All five institutions have been working - separately
and in collaboration - to improve internal efficiency and external effectiveness. Clients report to be broadly
pleased with the changes they see in Bank Group service levels, commitment, deliveries, and quality.

More than ever before, the Bank is playing an important role in the global policy arena. It has effectively
engaged with partners and clients in complex emergencies from post-conflict work in Bosnia to post-crisis
assistance in East Asia to post-hurricane clean-up in central America to post-earthquake support in
Turkey and in Kosovo and East Timor.

Notwithstanding these considerable progress, the Bank Group's agenda is not yet complete, nor can it
ever be, while the challenges of development continue to grow.

What We Do
The World Bank Group has set two goals for the world to achieve by 2030:

 End extreme poverty by decreasing the percentage of people living on less than $1.25 a day to no more than 3%

 Promote shared prosperity by fostering the income growth of the bottom 40% for every country

The World Bank is a vital source of financial and technical assistance to developing countries around the world. We

are not a bank in the ordinary sense but a unique partnership to reduce poverty and support development. The

World Bank Group comprises five institutions managed by their member countries.

Established in 1944, the World Bank Group is headquartered in Washington, D.C. We have more than 10,000

employees in more than 120 offices worldwide.

Financial Products and Services

We provide low-interest loans, interest-free credits, and grants to developing countries. These support a wide array

of investments in such areas as education, health, public administration, infrastructure, financial and private sector

development, agriculture, and environmental and natural resource management. Some of our projects are cofinanced

with governments, other multilateral institutions, commercial banks, export credit agencies, and private sector

investors.

We also provide or facilitate financing through trust fund partnerships with bilateral and multilateral donors.

Many partners have asked the Bank to help manage initiatives that address needs across a wide range of sectors and

developing regions.

Innovative Knowledge Sharing

We offer support to developing countries through policy advice, research and analysis, and technical assistance. Our

analytical work often underpins World Bank financing and helps inform developing countries’ own investments. In

addition, we support capacity development in the countries we serve. We also sponsor, host, or participate in many

conferences and forums on issues of development, often in collaboration with partners.

 To ensure that countries can access the best global expertise and help generate cutting-edge knowledge, the Bank is

constantly seeking to improve the way it shares its knowledge and engages with clients and the public at large. Key

priorities include:

 Results: We continue to sharpen our focus on helping developing countries deliver measurable results.

 Reform: We are working to improve every aspect of our work: how projects are designed, how information is

made available (Access to Information), and how to bring our operations closer to client governments and

communities.

 Open Development: We offer a growing range of free, easy-to-access tools, research and knowledge to help

people address the world's development challenges. For example, the Open Data website offers free access to

comprehensive, downloadable indicators about development in countries around the globe. We have also

made World Bank Live—live discussions open to participants worldwide—a key part of our Spring and Annual

Meetings with the International Monetary Fund.

Collectively, the World Bank Group is*:

 The world’s largest funder of education

 The world’s largest external funder of the fight against HIV/AIDS
 A leader in the fight against corruption worldwide
 A strong supporter of debt relief
 The largest international financier of biodiversity projects
 The largest international financier of water supply and sanitation projects
 Introductory Article
Article I: Purposes
Article II: Membership
 1. Original members
 2. Other members
Article III: Quotas and Subscriptions
 1. Quotas and payment of subscriptions
 2. Adjustment of quotas
 3. Payments when quotas are changed
 4. Substitution of securities for currency
Article IV: Obligations Regarding Exchange Arrangements
 1. General obligations of members
 2. General exchange arrangements
 3. Surveillance over exchange arrangements
 4. Par values
 5. Separate currencies within a member’s territories
Article V: Operations and Transactions of the Fund
 1. Agencies dealing with the Fund
 2. Limitation on the Fund’s operations and transactions
 3. Conditions governing use of the Fund’s general resources
 4. Waiver of conditions
 5. Ineligibility to use the Fund’s general resources
 6. Other purchases and sales of special drawing rights by the Fund
 7. Repurchase by a member of its currency held by the Fund
 8. Charges
 9. Remuneration
 10. Computations
 11. Maintenance of value
 12. Other operations and transactions
Article VI: Capital Transfers
 1. Use of the Fund’s general resources for capital transfers
 2. Special provisions for capital transfers
 3. Controls of capital transfers
Article VII: Replenishment and Scarce Currencies
 1. Measures to replenish the Fund’s holdings of currencies
 2. General scarcity of currency
 3. Scarcity of the Fund’s holdings
 4. Administration of restrictions
 5. Effect of other international agreements on restrictions
Article VIII: General Obligations of Members
 1. Introduction
 2. Avoidance of restrictions on current payments
 3. Avoidance of discriminatory currency practices
 4. Convertibility of foreign-held balances
 5. Furnishing of information
 6. Consultation between members regarding existing international agreements
 7. Obligation to collaborate regarding policies on reserve assets
Article IX: Status, Immunities, and Privileges
 1. Purposes of Article
 2. Status of the Fund
 3. Immunity from judicial process
 4. Immunity from other action
 5. Immunity of archives
 6. Freedom of assets from restrictions
 7. Privilege for communications
 8. Immunities and privileges of officers and employees
 9. Immunities from taxation
 10. Application of Article
Article X: Relations with Other International Organizations
Article XI: Relations with Non-Member Countries
 1. Undertakings regarding relations with non-member countries
 2. Restrictions on transactions with non-member countries
Article XII: Organization and Management
 1. Structure of the Fund
 2. Board of Governors
 3. Executive Board
 4. Managing Director and staff
 5. Voting
 6. Reserves, distribution of net income, and investment
 7. Publication of reports
 8. Communication of views to members
Article XIII: Offices and Depositories
 1. Location of offices
 2. Depositories
 3. Guarantee of the Fund’s assets
Article XIV: Transitional Arrangements
 1. Notification to the Fund
 2. Exchange restrictions
 3. Action of the Fund relating to restrictions
Article XV: Special Drawing Rights
 1. Authority to allocate special drawing rights
 2. Valuation of the special drawing right
Article XVI: General Department and Special Drawing Rights Department
 1. Separation of operations and transactions
 2. Separation of assets and property
 3. Recording and information
Article XVII: Participants and Other Holders of Special Drawing Rights
 1. Participants
 2. Fund as a holder
 3. Other holders
Article XVIII: Allocation and Cancellation of Special Drawing Rights
 1. Principles and considerations governing allocation and cancellation
 2. Allocation and cancellation
 3. Unexpected major developments
 4. Decisions on allocations and cancellations
Article XIX: Operations and Transactions in Special Drawing Rights
 1. Use of special drawing rights
 2. Operations and transactions between participants
 3. Requirement of need
 4. Obligation to provide currency
 5. Designation of participants to provide currency
 6. Reconstitution
 7. Exchange rates
Article XX: Special Drawing Rights Department Interest and Charges
 1. Interest
 2. Charges
 3. Rate of interest and charges
 4. Assessments
 5. Payment of interest, charges, and assessments
Article XXI: Administration of the General Department and the Special
Drawing Rights Department
Article XXII: General Obligations of Participants
Article XXIII: Suspension of Operations and Transactions in Special Drawing
Rights
 1. Emergency provisions
 2. Failure to fulfill obligations
Article XXIV: Termination of Participation
 1. Right to terminate participation
 2. Settlement on termination
 3. Interest and charges
 4. Settlement of obligation to the Fund
 5. Settlement of obligation to a terminating participant
 6. General Resources Account transactions
Article XXV: Liquidation of the Special Drawing Rights Department
Article XXVI: Withdrawal from Membership
 1. Right of members to withdraw
 2. Compulsory withdrawal
 3. Settlement of accounts with members withdrawing
Article XXVII: Emergency Provisions
 1. Temporary suspension
 2. Liquidation of the Fund
Article XXVIII: Amendments
Article XXIX: Interpretation
Article XXX: Explanation of Terms
Article XXXI: Final Provisions
 1. Entry into force
 2. Signature