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The International Monetary Fund:
A Look Back
u The International Monetary Fund (IMF) was created in July 1944, under the Bretton
Woods system which consisted of three international organizations:

1) The International Monetary Fund (IMF): With the purpose of creating international
monetary co-operation.
2) The International Bank of Reconstruction and Development (IBRD): With the
purpose of international development assistance and Investment.
3) The International Trade Organization (ITO): With the Purpose of international trade
organization.

u These three elements of the Bretton Woods system were conceived in a context of
war, with the memories of high unemployment, hyperinflation, depression and
fluctuating exchange rates which characterized the 1930¶s.
u However, The International Trade Organization was rejected by US Congress, and
in place the General Agreement of Tariffs and Trade was developed, and enacted in
1948 in replace of the ITO.
Mission
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: 187 countries

 : Washington, DC

 
: 24 Directors representing

countries or groups of countries

 : approximately 2,360 from 146 countries

   : US$333 billion (as of 2/28/10)

    !  "#"$#%&': US$191

billion, of which US$121 billion have not been
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u Originally, IMF was a special purpose lender for

countries with balance of payment problems under
fixed rate currency exchange system

u Monitoring function only for countries in trouble

under original system



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V  
 IMF Surveillance
u Significance

u Evolution and its Role

(i)overseeing the international monetary system to ensure its

effective operation, and

(ii) monitoring each member's compliance with its policy

obligations. To ensure that surveillance remains effective, the
IMF is constantly reviewing its policy framework

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u Supports the development of the productive resources of

member countries by helping them to effectively manage their
economic policy and financial affairs.
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u Macroeconomic policy,
u Tax policy and revenue administration,
u Expenditure management,
u Monetary policy,
u The exchange rate system,
u Financial sector sustainability, and
u Macroeconomic and financial statistics
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u Provide loans to member countries experiencing
balance of payments problems

u To rebuild their international reserves; stabilize their

currencies; continue paying for imports; and restore
conditions for strong economic growth while
undertaking policies to correct the underlying
problems
Where does the IMF get it͛s
Money from?
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International Bank for Reconstruction and Development
(IBRD)

Multinational Investment Guarantee Agency (MIGA)

International Finance Corporation (IFC)

International Development Association (IDA)

International center for the settlement of Investment

disputes (ICSID)
World Bank Mission

u Build capacity
u Infrastructure creation
u Development of Financial
Systems
u Combating corruption
u Research, Consultancy and
Training
Functions Of The World Bank
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Why borrowing from the World
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World Bank and IMF: Differences
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