What is the International Monetary Fund (IMF)?

We explain to you what the International Monetary Fund is, its history, objectives, functions and member countries. In addition, the World Bank.

1. What is the International Monetary Fund (IMF)?

The International Monetary Fund, known by its acronym IMF, is an international organization dedicated to international economic cooperation , the promotion of international trade and the promotion of exchange and labor stability. To this end, it offers various financial aid strategies and support for local economic policies.

In other words, the International Monetary Fund is the main international organization dedicated to maintaining the macroeconomic system . It is made up of 189 different countries that make a percentage of their international financial reserves available to the fund. Its headquarters are located in Washington, United States.

However, this organization operates with a corporate spirit, and not according to the horizontality of most international diplomatic or political institutions (one country = one vote). In other words, the countries that have the highest financial participation quotas in the IMF are the ones with the highest voting power in their decisions and in their policies.

From time to time a review of these quotas is made and emerging economies have the option of gaining greater participation.

The structure of the International Monetary Fund consists of a Board of Governors that makes decisions and elects a Board of Directors that functions as its executive arm. With only 24 directors, each represents more than one country, or a specific region.

2. History of the International Monetary Fund

The IMF was officially founded in 1945 , at the end of World War II , although it had already emerged as an idea the previous year, during the Bretton Woods Agreements. The IMF was created to ensure the stability of the economic and financial system of the world , after the brutal economic depression of 1929.

The IMF emerged from the World Bank, the International Bank for Reconstruction and Development (IBRD) and the General Agreement on Tariffs (GATT), as part of a series of organizations designed to preserve economic stability and lay the foundations for the advent of a world trade.

In all this there was a noticeable influence of the United States , victorious power of World War II (which then faced the Cold War against the Soviet Union). Therefore, economic integration plans, such as the creation of a world bank with its own currency, were dismissed to maintain the primacy of the dollar.

With the disappearance of the fixed exchange rate, since 1976 the IMF focused its attention on developing nations and participation in international economic crises. Many of the criticisms of his management come from that time, accused of collaborating with right-wing Latin American dictatorships.

In addition, he is criticized for fostering a model of neoliberal capitalism that openly favors the interests of the United States, even when it means subjecting poorer nations to cruel and strict economic regimes.

3. IMF Objectives

The International Monetary Fund pursues the fundamental objective of promoting economic exchange and international trade in the world, especially among less industrialized countries and in need of assistance to achieve economic and financial growth quotas.

It also offers loans and economic supervision to countries devastated by some crisis or misgovernment. Thus, its main goal is to be the institution that fosters economic growth on the planet, in order to sustain the balance of the system and prevent severe or crisis economic fluctuations

4. IMF Functions

Among the different functions that the IMF performs we can find:

• Provide financial support to countries in need, in the form of multi-million dollar loans accompanied by a certain margin of economic supervision.
• Advise the economic policies of developing nations that request the guardianship of the institution.
• Keep a record of the economic performance of the countries that make up the Fund and make recommendations in this regard.
• Perform measurements, statistical analyzes and predictions on the global, regional and national economic situation.

5. IMF member countries

There are currently 189 member countries of the International Monetary Fund, of which 29 are also founding countries. These nations are:

6. International Monetary Fund and World Bank

Both the IMF and the World Bank were created at the Bretton Woods Conference of 1944 , and since then they carry out complementary, although autonomous, tasks. The World Bank has dealt with the fight against poverty and underdevelopment in less industrialized countries.

For its part, the IMF seeks to stabilize the global financial system. Thus, while the World Bank emphasizes the strengthening of the private sector of nations, the International Monetary Fund offers tutelage and economic counseling to their respective State agencies.