What does the IMF do?

What is the International Monetary Fund?
The International Monetary Fund (IMF) is an international organization that provides financial assistance and advice to its member countries. The IMF creates and maintains the international monetary system through which international payments among countries take place. In effect, the IMF helps governments by lending them public funds.
What is its mission?
The IMF seeks to foster global monetary cooperation, secure financial stability, facilitate international trade and provide sustainable economic growth.
Who makes up the IMF?
The IMF is a specialized agency of the United Nations with 188 member countries. 24 executive directors representing all of its member countries oversee it. The IMF was created in 1945 and has its headquarters is in Washington, DC.
What does it do?
The IMF offers its assistance in three ways:·

  • The IMF reviews global economic and financial policies and then provides advice to individual countries, regions, and global economies as a whole.
  • The IMF provides financial assistance and gives loans to countries with collapsed economies or balance of payment problems such as those with severe devaluation of its currency or a major depletion of its foreign reserves.
  • The IMF gives technical assistance and training in areas such as tax policies, exchange rate policies, and banking and financial regulations to help member countries strengthen their capacity to design and implement effective economic policies.
How does it work?
The IMF gets its funding from quota subscriptions paid by the member states. The size of each quota is determined by how much each government can pay according to the size of its economy. The quota then determines the weight and voting rights each country has within the IMF – as well as how much financing it can receive.The IMF then issues an international reserve asset known as the special drawing rights (SDR) as its form of payment. The SDR is a unit of account based on a basket of currencies including the US dollar, Japanese yen, Euro, and British pound by which member states can exchange with one another in order to settle international accounts. Each member country is assigned a certain amount of SDR based on how much quota the country contributes to the IMF. Countries issued with loans must also implement the structural adjustment policies and economic reform program prescribed by the IMF and make it a priority to pay back what it has borrowed.
How much can the IMF lend?
In total, the IMF has USD 362 billion in quotas and USD 1 trillion of additional resources to borrow.
Which countries are the biggest borrowers to date?
Greece, Portugal, Ireland, Ukraine
Which countries have the biggest precautionary loans to date?
Mexico, Poland, Colombia, Morocco
How is the IMF responding to the current debt crisis In Europe and the United States?
Unlike in previous years when the IMF was the dominant and preferred lender to flailing economies in Asia and Latin America, the IMF has had a somewhat minor role in the European bailout. This, despite the Fund’s commitment to lend out $268 billion of its resources.In light of this, the IMF has been calling for reforms and new policies:

  • An increase of the IMF’s quota capital to $677 billion
  • The shrinking of its line of credit with member states which must be renewed every 6 months
  • A revisit of its voting rights where emerging markets like Brazil, China and India will have more shares. Currently, these countries have only 8% of the voting rights despite contributing 19% of the global output.

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