IMF is the acronym for the International Monetary Fund. It is an international organization that follows the macroeconomic policies of its member countries in overseeing the global financial system. This is particularly those member countries that have an impact on exchange rates and the balance of payments. The expressed objectives of the organization are to stabilize international exchange rates as well as to foster development. There are also leveraged loans available but mostly to the poorer countries. The headquarters of the IMF are located in Washington DC in the United States and the present head economist is Olivier Blanchard.
July 1944 was the official date of establishment of the International Monetary Fund. It was established at the United Nations Monetary and Financial Conference. It started with 45 members and had as its primary goal the mission of stabilizing exchange rates and help with the reconstruction of the world’s international payment system. The delegates from the United Nations Monetary and Financial Conference agreed to a framework for economic cooperation. Countries who had payment problems could borrow from a pool of funds contributed by the member countries, but, on a temporary basis.
The IMF works to facilitate international trade, promote high employment and sustainable economic growth, foster financial stability, global monetary cooperation and reduce poverty. All member countries are apart of the Board of Governors of the IMF.
As the global economy increased steadily the IMF’s influence grew as it accrued more members. The member countries have more than quadrupled since the IMF was established. This was a direct reflection on the political independence that many developing countries as well as the collapse of the Soviet bloc had attained. The IMF is even more committed to serving its purposes as the growing membership and the changes in the world economy have caused them to continue this trend of commitment.
An agreement was made to sell part of the gold reserves of the IMF after a shortfall in revenue occurred in 2008. This agreement was arrived at by the executive board of the International Monetary Fund. A new framework for the fund was decided on, on April 7, 2008 which was set to close a projected $400 million budget deficit over the next few years. Sharp spending cuts of $100 million up to year 2011 and staff dismissals of about 380 staff members was apart of the budget proposal.
The ongoing global crisis has resulted in the IMF needing additional financial resources to meet the probable needs of its member countries. This decision was taken at the 2009 G – Summit in London. G – 20 leaders vowed to augment the IMF’s supplemental cash tenfold to $500 billion as well as to allocate $250 billion to member countries through Special Drawing Rights. This is also a part of the decision taken at the G – 20 summit in London.