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The
International Monetary Fund, founded in 1944, is a voluntary financial
institution with a membership of 184 countries. It fosters among
these countries cooperative monetary policies that stabilize the
exchange of one national currency for another. It thereby encourages
international trade. The IMF provides a mechanism in which each
member country can cooperate with the others to promote its domestic
economic prosperity and that of the entire membership. The IMF maintains
an extensive database of statistics on members’ economies and
on the world economy as a whole, which it shares with every member
country. At the request of a member, it extends technical assistance
in financial, fiscal, and economic matters. If persuaded that a
member country, behind in payments to other countries, will implement
reform policies, the IMF will lend money to tide that member over
until the reforms take effect.
The
purposes of the IMF are clearly expressed in Article I of its constitution,
the Articles of Agreement:
- To
promote international monetary cooperation through a permanent
institution which provides the machinery for consultation and
collaboration on international monetary problems.
- To
facilitate the expansion and balanced growth of international
trade, and to contribute thereby to the promotion and maintenance
of high levels of employment and real income and to the development
of the productive resources of all members as primary objectives
of economic policy.
- To
promote exchange stability, to maintain orderly exchange arrangements
among members, and to avoid competitive exchange depreciation.
- To
assist in the establishment of a multilateral system of payments
in respect of current transactions between members and in the
elimination of foreign exchange restrictions which hamper the
growth of world trade.
- 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
accordance with the above, to shorten the duration and lessen
the degree of disequilibrium in the international balances of
payments of members.
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Until
the middle of the twentieth century, monetary and economic cooperation
between countries was practically unknown. That changed during the
1940s with the founding of the IMF, which established, for the first
time, a permanent mechanism to encourage this cooperation. The philosophy
underlying the IMF approach is that cooperation leads to prosperity.
Cooperation by IMF members in eliminating restrictions on the exchange
of currencies and the timely payment for goods and services has
been a major factor in bringing about the economic miracle of the
second half of the century. Success by IMF members in meeting the
challenges of integrating developing countries into the world economy
in the 1960s and 1970s, resolving the debt crisis of the 1980s,
encouraging the former Communist economies and tackling the crises
of the 1990s, and expanding the benefits of globalization further
indicates that international cooperation is indispensable for prosperity
in today’s economy.
The
IMF encourages its members to be open and transparent about their
economic policies. The more that member countries are informed about
economic conditions in other countries, the better they can exploit
opportunities in international trade and investments. As trade increases,
so does employment in both the exporting and importing country.
As a result, standards of living are raised throughout the entire
membership.
The
IMF is not an aid institution that subsidizes development projects
in emerging economies. It is, however, committed to the reduction
of global poverty. It urges on its member countries transparent
policies, economic stability, honest government, and the rule of
law. It is convinced that only under these conditions will economies
grow and the needs of the poor be met. Under the proper safeguards,
the IMF lends to all member countries, but only to meet current
international obligations. For poor countries, it makes such loans
at low interest rates and with a longer-than-normal pay-back period.
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Coordination
of economic policies by IMF members and their cooperation in
addressing international monetary challenges have played a major
role in transforming the world economy since the IMF was founded
in 1944. Although progress has not always been even, standards
of living have been rising in all countries as the world enters
the twenty-first century. The IMF is convinced that continued
cooperation by its member countries on monetary and economic
policies will be a decisive factor in reducing poverty, meeting
the challenges and opportunities of globalism, and promoting
growth and the spread of prosperity in this millennium. |
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