The IMF states that “Transparency helps economies function better and makes them less vulnerable to crises,” and argues transparency of both member countries and the IMF will lead to better policy-making and accountability. But the IMF has been criticised for being a secretive organisation, and though it has reformed its policies on transparency throughout the years, critics say it is still not letting the light shine through.
The IMF provides policy advice, helps countries design policy programs and issues loans when “sufficient financing on affordable terms cannot be obtained to meet net international payments.” The loans are funded by quota contributions from member countries.
Following a sharp decrease in the early 2000s, IMF lending again increased considerably in 2008 as result of the economic and financial crisis.
In recent years the IMF has implemented a package of reforms to enhance the institution's governance and expand the role played by emerging countries. This reform process has speeded up as a result of the economic and financial crisis and the measures agreed upon by the G20.
Quota subscriptions generate most of the IMF’s financial resources.
Each member country of the IMF is assigned a quota based on its relative size in the world economy.
For each country, the quota determines:
its financial contribution to the IMF;
the amount of financing it can obtain from the IMF;
its voting power.
As of 2004 the IMF consisted of 184 member countries, which pay an initial quota subscription to become members. The organization works to achieve and enhance a stable world economy through the promotion of open financial disclosure among member nations, the provision of loans during periods of economic crises, and technical assistance provided through educational and promotional means.
The World Bank and International Monetary Fund (IMF) were created at the end of World War II by the U.S. and British governments. They were created to ensure new world economic order and peace, it was necessary to restore stability in monetary system at international level and find effective means to reconstruct the war ravaged economies of the European countries.
During the Bretton Woods Conference, agreements were signed to establish the International Monetary Fund (IMF), International Bank for Reconstruction and Development (IBRD or World Bank), and the General Agreement on Tariffs and Trade (GATT).
The International Monetary Fund came into existence on December 27, 1945, when 29 countries signed the treaty called Articles of Agreement. In 1946, the board of governors convened the first meeting of the IMF in Savannah, Georgia, U.S., to elect its executive directors and decide the location of the organization's permanent headquarters and to draft the bylaws. They decided to select Washington D.C. as the permanent headquarters of the IMF. The financial operations of the IMF started on March 1, 1947. The statutory goals of the IMF are to oversee exchange rates, giving financial and technical assistance to the member countries and to address global economic problems.
A meeting of 730 delegates, from the 44 allied nations, was held at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, United States. The meeting lasted for 22 days - July 1 to July 22, 1944, and the main issue was regulation of the post-war international monetary and financial order. The main debate was between the U.S. and the U.K. delegations, regarding the nature of the impending organization. The British delegation argued for a fund which could help the member nations economically, during the times of crisis, whereas the U.S. delegation wanted a bank-like institution, from where the member countries could borrow money, which would have to be repaid in time. Finally, the U.S. view was accepted.
As the Second World War ends, the job of rebuilding national economies begins. The IMF is charged with overseeing the international monetary system to ensure exchange rate stability and encouraging members to eliminate exchange restrictions that hinder trade.
The IMF promotes international monetary cooperation and exchange rate stability, facilitates the balanced growth of international trade, and provides resources to help members in balance of payments difficulties or to assist with poverty reduction.