International Monetary Fund

In 1945, 45 countries established The International Monetary Fund (IMF) to
1. promote international monetary cooperation
2. expand and balance international trade
3. promote currency-exchange stability
4. establish a system of international exchange payments
5. make resources available to assist countries having BALANCE OF PAYMENTS difficulties
There are now 183 member countries in the IMF. In contrast with the WORLD BANK, the IMF does not focus directly on development issues but is responsible for stabilizing the international monetary and financial system. In its program called “Surveillance,” the IMF each year evaluates each member country’s exchange-rate policy within the overall framework of the member’s economic policies. The IMF operates from the conviction that strong and consistent economic policies within a country will lead to stable EXCHANGE RATES and a growing and prosperous world economy. In addition to the surveillance program, the IMF will extend credits and LOANS to a member country if it has balance-of-payment problems. It only extends such credits and loans to help a country bring about needed monetary and economic reform. In addition to this standard loan program, the IMF has a loan program designed to alleviate poverty and another designed to assist heavily indebted poor countries. The IMF also has a training program to assist countries in stabilizing their economy and effecting ECONOMIC GROWTH. This includes giving technical assistance in such matters as FISCAL POLICY, MONETARY POLICY, and other macroeconomic efforts. Recently the IMF has been criticized on three fronts. Critics complain that because of the IMF, some poorer countries are indebted in such a way that they cannot possibly serve their citizens. In addition, the IMF stated purpose of advancing the global economy is opposed by many who think that a global economy damages such things as the ecology, worker rights, and national identity. The IMF also receives a great deal of criticism from debtor nations who think the organization meddles in decisions to which the nations themselves have a national prerogative. For example, often the IMF will make a loan contingent on a country carrying out some economic reform. Such reforms, which critics call austerity programs, can cause economic suffering for the country’s citizens and thus creates resentment against the IMF for dictating internal country economic policies.