The International Monetary Fund (IMF) is an international organization that promotes global economic growth and financial stability. It encourages international trade and reduces poverty. You should also know that the body (IMF) secures international monetary cooperation, stabilizes currency exchange rates, and expands international liquidity (access to hard currencies).
Its role in shaping the world economy is enormous. Therefore, we will be looking at the role of the International Monetary Fund role, its structure, members, and the history of this organization.
History of International Monetary Fund
The International Monetary Fund (IMF) was established at the Bretton Woods Conference in 1944. Its goal was to rebuild Europe following World War II. The Conference also established a modified gold standard to aid countries in maintaining their currency’s value.
The planners intended to stay away from the trade barriers and high-interest rates that contributed to the Great Depression. This downturn resulted in massive physical and economic ruin in Europe, as well as the Great Depression, which wreaked havoc on both Europe and the United States.
Read Also: Don’t Only Borrow Money, Address Nigeria’s Security Problems – Wike to Buhari
These events sparked a desire to develop a new monetary system that would stabilize currency exchange rates without relying solely on gold as a reserve currency. After the Bretton Woods system disintegrated in the 1970s, the IMF pushed for a floating exchange rate system.
Thereby making market forces decide the value of currencies in relation to one another.
Members Of International Monetary Fund
The IMF currently has 189 member nations. Each of which has a proportional representation on the executive board based on its financial importance. Anguilla, Aruba, Barbados, Cabo Verde, Curacao, Hong Kong, Macao, Montserrat, Netherlands Antilles, Saint Maarten, and Timor-Leste are among the IMF’s 11 non-sovereign members.
The Board of Governors sits at the apex of the organization’s hierarchy. The IMF’s day-to-day operations are managed by a 24-member Executive Board that represents the whole membership and it is also assisted by IMF personnel.
The Managing Director is the IMF’s chief of staff and the Executive Board’s chairman. He is aided by four Deputy Managing Directors.
International Monetary Fund Structure
Ms. Kristalina Georgieva, from Bulgaria, is Managing Director and Chairman of the Executive Board from October 1, 2019. She is the chief of the IMF’s 2,700 employees from 147 countries. She supervises the work of four Deputy Managing Directors.
Kristalina is also the Chair of the Executive Board, which has a total of 24 members. The IMF Governance Structure starts with the Governing Board, which establishes policy and direction for the organization. Its members are the finance ministers or central bank leaders of the member countries.
They meet each year in conjunction with the World Bank. These committees examine and give recommendations on the international monetary system.
The Role of International Monetary Fund on World Economy
Examine Global Conditions
The IMF plays the role of examining and evaluating the economies of all of its members. As a result, it has a deeper understanding of the world economy than any other institution. The International Monetary Fund’s objective is to promote global economic growth and financial stability as well as international commerce and poverty reduction.
Through its capacity-building programs, the IMF provides member nations with technical support, training, and policy advice. These programs include training in data collection and analysis, which feed into the IMF’s project of monitoring national and global economies.
These capacity-building or development initiatives are focused on the IMF’s core areas of competence which include anything from taxation to central bank operations to macroeconomic data reporting. Cross-cutting concerns such as income inequality, gender equality, corruption, and climate change are also addressed through such training.
The IMF makes loans to countries that are experiencing economic distress to prevent or mitigate financial crises. This also includes emergency loans. The aim is to help them rebuild their international reserves, stabilize their currencies. To continue paying for imports, and restore conditions for strong economic growth, while correcting underlying problems.
The International Monetary Fund (IMF) keeps a close eye on the international monetary system and global economic trends, in order to identify risks and make policy recommendations for growth and financial stability. The Fund also conducts a regular health check of its 190 member countries’ economic and financial policies. In addition, the IMF identifies potential threats to its member countries’ economic stability and advises their governments on potential policy changes.
The difference between International Monetary Fund and World Bank Group
The International Monetary Fund (IMF) helps to keep the international monetary system stable and keeps track of the world’s currencies. The IMF also monitors the global economy and the economies of its members, lends to countries with balance-of-payments problems, and provides practical assistance to its members.
While the World Bank Group collaborates with developing countries to alleviate poverty, increase shared prosperity, and promote long-term development.
Also Read: 10 Best Ways To Receive Money In Nigeria From Abroad
Other Facts about International Monetary Fund
1. The amount available for lending is $1 trillion
3. 76 Recipient countries of Emergency pandemic financing
3. $303 million for technical advice, training, and learning
The International monetary fund has played a vital role in shaping the economy of many nations. The impact of IMF loans has been a hot topic of discussion. Opponents of the IMF believe that the loans allow members to engage in risky domestic economic policies, knowing that the IMF will bail them out if necessary.
Critics claim that this safety net delays important reforms and encourages long-term dependency. Opponents further claim that the IMF bails out foreign lenders that have made poor loans, encouraging them to approve riskier international ventures in the future.
However, the role of IMF cannot be denied in the areas of reducing the poverty nature of its members. And also the various programs it organizes for its members as well as restore economic growth in their various nations. Please if you love this article leave us a comment.