INTERNATIONAL MONETARY FUND

An international institution charged with maintaining international monetary stability.

The International Monetary Fund (IMF) is an international organization that provides temporary financial assistance to any of its 184 member countries in order to correct their payment imbalances. The IMF was established during the conference at Bretton Woods, New Hampshire, in 1944 because the Allies wanted to avoid the competitive currency devaluations, exchange controls, and bilateral agreements that the world had witnessed prior to World War II. The IMF's main goal was to promote stable currencies in order to enhance international commerce.

Originally, the IMF's position was that restoring payments equilibrium could be achieved within a year by eliminating excess demand. It was not until 1974 that the IMF established the external fund facility to provide its members with up to three years of financial assistance and also introduced a long-term approach, termed the enhanced structural adjustment facility. In exchange for this financing, the IMF demands that borrowers make fundamental changes in their economies to prevent future balance of payments problems. These changes range from stabilization of the exchange rate and of government deficits to structural adjustment of the economy through privatization of state enterprises and liberalization of trade.

By article IV of its charter, the IMF was given the right to monitor on a yearly basis the exchange rate, monetary and fiscal policies, structural policies, and financial and banking policies of every member. It has been heavily involved in many Middle Eastern countries. It has been involved in Egypt and other North African countries since the 1970s. It became involved in Lebanon during the 1990s and finally in Sudan and Yemen through its Heavily Indebted Poor Countries Initiative (HIPC). One Middle Eastern country, Saudi Arabia, enjoys a permanent voting position on the IMF board of governors.

see also economics.

Bibliography

Spero, Joan. The Politics of International Economic Relations. London: Allen and Unwin, 1978.

Vreeland, James. The IMF and Economic Development. Cambridge, U.K.: Cambridge University Press, 2003.

david waldner
updated by khalil gebara