The international monetary Fund (IMF) was established in 1945 and is governed by and accountable to its 188 member countries. It seeks to ensure the stability of the international monetary system. The IMF operates in three main areas: oversight of the economy of member countries, lending to countries with balance-of-payments and the provision of technical assistance to the participating countries.
Countries must agree to implement economic policies that coincide with the objectives of the IMF. Monitoring of macroeconomic and financial policies of member countries, the IMF sees risks to stability and advises on possible adjustments. This activity is known as surveillance.
How the IMF provides financial assistance
To provide financial assistance to member countries with balance of payments problems, the IMF gives money to develop the economy of these countries. This can help replenish international reserves, stabilize the currency and strengthen the conditions for economic growth. The IMF expects the country to pay off the banks, and the country needs to embark on structural adjustment policies monitored by the IMF.
Using power control, the IMF assists its member countries in the formulation of economic policy that more effectively to manage their financial situations. By providing technical assistance and training aimed at strengthening human and institutional capacities. It is very important for countries with previous policy failures, weak institutions or lack of resources.
Although the IMF does a great job of ensuring global stability, it also has its critics. Some say that the IMF exacerbates the gap between rich and poor countries. Making countries to repay the loans, critics say that financial problems are put ahead of social.
(See “introduction to the international monetary Fund.”)