About the IMF

The International Monetary Fund (IMF) is an organization oI 187 countries, working to Ioster
global monetary cooperation, secure Iinancial stability, Iacilitate international trade, promote
high employment and sustainable economic growth, and reduce poverty around the world.
Membership
The IMF currently has a near-global membership oI 187 countries. To become a member, a
country must apply and then be accepted by a majority oI the existing members. In June 2009,
the Iormer Yugoslav republic oI Kosovo joined the IMF, becoming the institution's 186th
member.
Upon joining, each member oI the IMF is assigned a quota, based broadly on its relative size in
the world economy. The IMF's membership agreed in May 2008 on a rebalancing oI its quota
system to reIlect the changing global economic realities, especially the increased weight oI
major emerging markets in the global economy. For more on the quota and voice reIorm, please
go to the section on Country Representation in the Governance section).
A member's quota delineates basic aspects oI its Iinancial and organizational relationship with
the IMF, including:
Subscriptions. A member's quota subscription determines the maximum amount oI Iinancial
resources the member is obliged to provide to the IMF. A member must pay its subscription in
Iull upon joining the IMF: up to 25 percent must be paid in the IMF's own currency, called
Special Drawing Rights (SDRs) or widely accepted currencies (such as the dollar, the euro, the
yen, or pound sterling), while the rest is paid in the member's own currency.
Joting power. The quota largely determines a member's voting power in IMF decisions. Each
IMF member has 250 basic votes plus one additional vote Ior each SDR 100,000 oI quota.
Accordingly, the United States has 371,743 votes (16.77 percent oI the total), and Palau has 281
votes (0.01 percent oI the total). The newly agreed quota and voice reIorm will result in a
signiIicant shiIt in the representation oI dynamic economies, many oI which are emerging market
countries, through a quota increase Ior 54 member countries. A tripling oI the number oI basic
votes is also envisaged as a means to give poorer countries a greater say in running the
institution.
Access to financing. The amount oI Iinancing a member can obtain Irom the IMF (its access
limit) is based on its quota. Under Stand-By and Extended Arrangements, which are types oI
loans, a member can borrow up to 200 percent oI its quota annually and 600 percent
cumulatively. However, access may be higher in exceptional circumstances.
SDR allocations. Allocations oI SDRs, the IMF's unit oI account, is used as an international
reserve asset. A member's share oI general SDR allocations is established in proportion to its
quota. The most recent general allocation oI SDRs took place in 2009.
History
The IMF has played a part in shaping the global economy since the end oI World War II.
Cooperation and reconstruction (1944-71)
During the Great Depression oI the 1930s, countries attempted to shore up their Iailing
economies by sharply raising barriers to Ioreign trade, devaluing their currencies to compete
against each other Ior export markets, and curtailing their citizens' Ireedom to hold Ioreign
exchange. These attempts proved to be selI-deIeating. World trade declined sharply (see chart
below), and employment and living standards plummeted in many countries.
This breakdown in international monetary cooperation led the IMF's Iounders to plan an
institution charged with overseeing the international monetary systemthe system oI exchange
rates and international payments that enables countries and their citizens to buy goods and
services Irom each other. The new global entity would ensure exchange rate stability and
encourage its member countries to eliminate exchange restrictions that hindered trade.
O The Bretton Woods agreement
The IMF was conceived in July 1944, when representatives oI 45 countries meeting in the town
oI Bretton Woods, New Hampshire, in the northeastern United States, agreed on a Iramework Ior
international economic cooperation, to be established aIter the Second World War. They
believed that such a Iramework was necessary to avoid a repetition oI the disastrous economic
policies that had contributed to the Great Depression.
The IMF came into Iormal existence in December 1945, when its Iirst 29 member countries
signed its Articles oI Agreement. It began operations on March 1, 1947. Later that year, France
became the Iirst country to borrow Irom the IMF.
The IMF's membership began to expand in the late 1950s and during the 1960s as many AIrican
countries became independent and applied Ior membership. But the Cold War limited the Fund's
membership, with most countries in the Soviet sphere oI inIluence not joining.
O Par value system
The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates
(the value oI their currencies in terms oI the U.S. dollar and, in the case oI the United States, the
value oI the dollar in terms oI gold) pegged at rates that could be adjusted only to correct a
"Iundamental disequilibrium" in the balance oI payments, and only with the IMF's agreement.
This par value systemalso known as the Bretton Woods systemprevailed until 1971, when
the U.S. government suspended the convertibility oI the dollar (and dollar reserves held by other
governments) into gold.

The end of the Bretton Woods System (1972-81)
By the early 1960s, the U.S. dollar's Iixed value against gold, under the Bretton Woods system oI
Iixed exchange rates, was seen as overvalued. A sizable increase in domestic spending on
President Lyndon Johnson's Great Society programs and a rise in military spending caused by
the Vietnam War gradually worsened the overvaluation oI the dollar.
O End of Bretton Woods system
The system dissolved between 1968 and 1973. In August 1971, U.S. President Richard Nixon
announced the "temporary" suspension oI the dollar's convertibility into gold. While the dollar
had struggled throughout most oI the 1960s within the parity established at Bretton Woods, this
crisis marked the breakdown oI the system. An attempt to revive the Iixed exchange rates Iailed,
and by March 1973 the major currencies began to Iloat against each other.
Since the collapse oI the Bretton Woods system, IMF members have been Iree to choose any
Iorm oI exchange arrangement they wish (except pegging their currency to gold): allowing the
currency to Iloat Ireely, pegging it to another currency or a basket oI currencies, adopting the
currency oI another country, participating in a currency bloc, or Iorming part oI a monetary
union.
O Oil shocks
Many Ieared that the collapse oI the Bretton Woods system would bring the period oI rapid
growth to an end. In Iact, the transition to Iloating exchange rates was relatively smooth, and it
was certainly timely: Ilexible exchange rates made it easier Ior economies to adjust to more
expensive oil, when the price suddenly started going up in October 1973. Floating rates have
Iacilitated adjustments to external shocks ever since.
The IMF responded to the challenges created by the oil price shocks oI the 1970s by adapting its
lending instruments. To help oil importers deal with anticipated current account deIicits and
inIlation in the Iace oI higher oil prices, it set up the Iirst oI two oil Iacilities.
O Helping poor countries
From the mid-1970s, the IMF sought to respond to the balance oI payments diIIiculties
conIronting many oI the world's poorest countries by providing concessional Iinancing through
what was known as the Trust Fund. In March 1986, the IMF created a new concessional loan
program called the Structural Adjustment Facility. The SAF was succeeded by the Enhanced
Structural Adjustment Facility in December 1987.


Debt and painful reforms (1982-89)
The oil shocks oI the 1970s, which Iorced many oil-importing countries to borrow Irom
commercial banks, and the interest rate increases in industrial countries trying to control inIlation
led to an international debt crisis.
During the 1970s, Western commercial banks lent billions oI "recycled" petrodollars, getting
deposits Irom oil exporters and lending those resources to oil-importing and developing
countries, usually at variable, or Iloating, interest rates. So when interest rates began to soar in
1979, the Iloating rates on developing countries' loans also shot up. Higher interest payments are
estimated to have cost the non-oil-producing developing countries at least $22 billion during
197881. At the same time, the price oI commodities Irom developing countries slumped
because oI the recession brought about by monetary policies. Many times, the response by
developing countries to those shocks included expansionary Iiscal policies and overvalued
exchange rates, sustained by Iurther massive borrowings.
When a crisis broke out in Mexico in 1982, the IMF coordinated the global response, even
engaging the commercial banks. It realized that nobody would beneIit iI country aIter country
Iailed to repay its debts.
The IMF's initiatives calmed the initial panic and deIused its explosive potential. But a long road
oI painIul reIorm in the debtor countries, and additional cooperative global measures, would be
necessary to eliminate the problem.
Societal Change for Eastern Europe and Asian Upheaval (1990-
2004)
The Iall oI the Berlin wall in 1989 and the dissolution oI the Soviet Union in 1991 enabled the
IMF to become a (nearly) universal institution. In three years, membership increased Irom 152
countries to 172, the most rapid increase since the inIlux oI AIrican members in the 1960s.
In order to IulIill its new responsibilities, the IMF's staII expanded by nearly 30 percent in six
years. The Executive Board increased Irom 22 seats to 24 to accommodate Directors Irom Russia
and Switzerland, and some existing Directors saw their constituencies expand by several
countries.
The IMF played a central role in helping the countries oI the Iormer Soviet bloc transition Irom
central planning to market-driven economies. This kind oI economic transIormation had never
beIore been attempted, and sometimes the process was less than smooth. For most oI the 1990s,
these countries worked closely with the IMF, beneIiting Irom its policy advice, technical
assistance, and Iinancial support.
By the end oI the decade, most economies in transition had successIully graduated to market
economy status aIter several years oI intense reIorms, with many joining the European Union in
2004.
O Asian Financial Crisis
In 1997, a wave oI Iinancial crises swept over East Asia, Irom Thailand to Indonesia to Korea
and beyond. Almost every aIIected country asked the IMF Ior both Iinancial assistance and Ior
help in reIorming economic policies. ConIlicts arose on how best to cope with the crisis, and the
IMF came under criticism that was more intense and widespread than at any other time in its
history.
From this experience, the IMF drew several lessons that would alter its responses to Iuture
events. First, it realized that it would have to pay much more attention to weaknesses in
countries` banking sectors and to the eIIects oI those weaknesses on macroeconomic stability. In
1999, the IMFtogether with the World Banklaunched the Financial Sector Assessment
Program and began conducting national assessments on a voluntary basis. Second, the Fund
realized that the institutional prerequisites Ior successIul liberalization oI international capital
Ilows were more daunting than it had previously thought. Along with the economics proIession
generally, the IMF dampened its enthusiasm Ior capital account liberalization. Third, the severity
oI the contraction in economic activity that accompanied the Asian crisis necessitated a re-
evaluation oI how Iiscal policy should be adjusted when a crisis was precipitated by a sudden
stop in Iinancial inIlows.
O Debt relief for poor countries
During the 1990s, the IMF worked closely with the World Bank to alleviate the debt burdens oI
poor countries. The Initiative Ior Heavily Indebted Poor Countries was launched in 1996, with
the aim oI ensuring that no poor country Iaces a debt burden it cannot manage. In 2005, to help
accelerate progress toward the United Nations Millennium Development Goals (MDGs), the
HIPC Initiative was supplemented by the Multilateral Debt RelieI Initiative (MDRI).
Globalization and the Crisis (2005 - present)
The IMF has been on the Iront lines oI lending to countries to help boost the global economy as
it suIIers Irom a deep crisis not seen since the Great Depression.
For most oI the Iirst decade oI the 21st century, international capital Ilows Iueled a global
expansion that enabled many countries to repay money they had borrowed Irom the IMF and
other oIIicial creditors and to accumulate Ioreign exchange reserves.
The global economic crisis that began with the collapse oI mortgage lending in the United States
in 2007, and spread around the world in 2008 was preceded by large imbalances in global capital
Ilows.
Global capital Ilows Iluctuated between 2 and 6 percent oI world GDP during 1980-95, but since
then they have risen to 15 percent oI GDP. In 2006, they totaled $7.2 trillionmore than a
tripling since 1995. The most rapid increase has been experienced by advanced economies, but
emerging markets and developing countries have also become more Iinancially integrated.
The Iounders oI the Bretton Woods system had taken it Ior granted that private capital Ilows
would never again resume the prominent role they had in the nineteenth and early twentieth
centuries, and the IMF had traditionally lent to members Iacing current account diIIiculties.
The latest global crisis uncovered a Iragility in the advanced Iinancial markets that soon led to
the worst global downturn since the Great Depression. Suddenly, the IMF was inundated with
requests Ior stand-by arrangements and other Iorms oI Iinancial and policy support.
The international community recognized that the IMF`s Iinancial resources were as important as
ever and were likely to be stretched thin beIore the crisis was over. With broad support Irom
creditor countries, the Fund`s lending capacity was tripled to around $750 billion. To use those
Iunds eIIectively, the IMF overhauled its lending policies, including by creating a Ilexible credit
line Ior countries with strong economic Iundamentals and a track record oI successIul policy
implementation. Other reIorms, including ones tailored to help low-income countries, enabled
the IMF to disburse very large sums quickly, based on the needs oI borrowing countries and not
tightly constrained by quotas, as in the past.
For more on the ideas that have shaped the IMF Irom its inception until the late 1990s, take a
look at James Boughton's "The IMF and the Force oI History: Ten Events and Ten Ideas that
Have Shaped the Institution."













Key IMF activities
The IMF supports its membership by providing
O pollcy advlce Lo governmenLs and cenLral banks based on analysls of economlc Lrends and cross
counLry experlences
O research sLaLlsLlcs forecasLs and analysls based on Lracklng of global reglonal and lndlvldual
economles and markeLs
O loans Lo help counLrles overcome economlc dlfflculLles
O concesslonal loans Lo help flghL poverLy ln developlng counLrles and
O Lechnlcal asslsLance and Lralnlng Lo help counLrles lmprove Lhe managemenL of Lhelr economles
IMF and tbe global financial crisis
Original aims
The IMF was Iounded more than 60 years ago toward the end oI World War II. The Iounders
aimed to build a Iramework Ior economic cooperation that would avoid a repetition oI the
disastrous economic policies that had contributed to the Great Depression oI the 1930s and the
global conIlict that Iollowed.
Since then the world has changed dramatically, bringing extensive prosperity and liIting millions
out oI poverty, especially in Asia. In many ways the IMF's main purposeto provide the global
public good oI Iinancial stabilityis the same today as it was when the organization was
established. More speciIically, the IMF continues to
O provlde a forum for cooperaLlon on lnLernaLlonal moneLary problems
O faclllLaLe Lhe growLh of lnLernaLlonal Lrade Lhus promoLlng [ob creaLlon economlc growLh and
poverLy reducLlon
O promoLe exchange raLe sLablllLy and an open sysLem of lnLernaLlonal paymenLs and
O lend counLrles forelgn exchange when needed on a Lemporary basls and under adequaLe
safeguards Lo help Lhem address balance of paymenLs problems


.
An adapting IMF
The IMF has evolved along with the global economy throughout its 65-year history, allowing the
organization to retain its central role within the international Iinancial architecture
As the world economy struggles to restore growth and jobs aIter the worst crisis since the Great
Depression, the IMF has emerged as a very diIIerent institution. During the crisis, it mobilized
on many Ironts to support its member countries. It increased its lending, used its cross-country
experience to advise on policy solutions, supported global policy coordination, and reIormed the
way it makes decisions. The result is an institution that is more in tune with the needs oI its 187
member countries.
O Stepp|ng up cr|s|s |end|ng 1he lMl responded qulckly Lo Lhe global economlc crlsls wlLh
lendlng commlLmenLs reachlng a record level of more Lhan uS$230 bllllon ln 2010 1hls flgure
lncludes a sharp lncrease ln concesslonal lendlng (LhaL's Lo say subsldlzed lendlng aL raLes below
Lhose belng charged by Lhe markeL) Lo Lhe world's pooresL naLlons
O reater |end|ng f|ex|b|||ty 1he lMl has overhauled lLs lendlng framework Lo make lL beLLer
sulLed Lo counLrles' lndlvldual needs lL ls also worklng wlLh oLher reglonal lnsLlLuLlons Lo creaLe
a broader flnanclal safeLy neL whlch could help prevenL new crlses
O 9rov|d|ng ana|ys|s and adv|ce 1he lMl's monlLorlng forecasLs and pollcy advlce lnformed by a
global perspecLlve and by experlence from prevlous crlses have been ln hlgh demand and have
been used by Lhe C20
O raw|ng |essons from the cr|s|s 1he lMl ls conLrlbuLlng Lo Lhe ongolng efforL Lo draw lessons
from Lhe crlsls for pollcy regulaLlon and reform of Lhe global flnanclal archlLecLure
O |stor|c reform of governance1he lMl's member counLrles also agreed Lo a slgnlflcanL lncrease
ln Lhe volce of dynamlc emerglng and developlng economles ln Lhe declslon maklng of Lhe
lnsLlLuLlon whlle preservlng Lhe volce of Lhe lowlncome members



How we do it
The IMF's main goal is to ensure the stability oI the international monetary and Iinancial system.
It helps resolve crises, and works with its member countries to promote growth and alleviate
poverty. It has three main tools at its disposal to carry out its mandate: surveillance, technical
assistance and training, and lending. These Iunctions are underpinned by the IMF's research and
statistics.
O Surveillance
The IMF promotes economic stability and global growth by encouraging countries to adopt
sound economic and Iinancial policies. To do this, it regularly monitors global, regional, and
national economic developments. It also seeks to assess the impact oI the policies oI individual
countries on other economies.
This process oI monitoring and discussing countries` economic and Iinancial policies is known
as bilateral surveillance. On a regular basisusually once each yearthe IMF conducts in depth
appraisals oI each member country's economic situation. It discusses with the country's
authorities the policies that are most conducive to a stable and prosperous economy. Consistent
with the decision on bilateral surveillance adopted in June 2007, the main Iocus oI the
discussions is whether there are risks to the economy`s domestic and external stability that would
argue Ior adjustments in economic or Iinancial policies.
Member countries may agree to publish the IMF's assessment oI their economies, with the vast
majority oI countries opting to do so.
The IMF also has the option to bring together, on an as-needed basis, groups oI systemically
relevant economies to address issues oI broad importance to the global economy. These meetings
are called multilateral consultations. A consultation on how to reduce global imbalances took
place in 2006-07.
The IMF's work on individual countries inIorms its work on regional economies and the global
economy. These views, along with timely analysis oI important economic and Iinancial issues,
are published twice a year in the World Economic Outlook, various Regional Economic Outlook
reports, and the Global Financial Stability Report.
The IMF works with the World Bank to promote resilient Iinancial systems around the world
through the joint Financial Sector Assessment Program (FSAP). Supported by experts Irom a
range oI national agencies and standard-setting bodies, IMF and World Bank staII assess the
stability oI a country`s Iinancial system by identiIying its strengths and vulnerabilities, determine
how key sources oI risks are being managed, ascertain the sector's developmental needs, and help
prioritize policy responses.
For more inIormation on how the IMF monitors economies, go to Surveillance in the Our Work
section.
O Technical assistance and training
IMF oIIers technical assistance and training to help member countries strengthen their capacity
to design and implement eIIective policies. Technical assistance is oIIered in several areas,
including Iiscal policy, monetary and exchange rate policies, banking and Iinancial system
supervision and regulation, and statistics.
The IMF provides technical assistance and training mainly in Iour areas:
O Monetary and Iinancial policies (monetary policy instruments, banking system
supervision and restructuring, Ioreign management and operations, clearing settlement
systems Ior payments, and structural development oI central banks)
O Fiscal policy and management (tax and customs policies and administration, budget
Iormulation, expenditure management, design oI social saIety nets, and management oI
domestic and Ioreign debt)
O Compilation, management, dissemination, and improvement oI statistical data
O Economic and Iinancial legislation.
For more on technical assistance, go to Technical Assistance in the Our Work section or read an
Issues BrieI on the subject.
O Lending
In the event that member countries experience diIIiculties Iinancing their balance oI payments,
the IMF is also a Iund that can be tapped to Iacilitate recovery. A policy program supported by
Iinancing is designed by the national authorities in close cooperation with the IMF. Continued
Iinancial support is conditional on the eIIective implementation oI this program.
The IMF also provides low-income countries with loans at a concessional interest rate through
the Poverty Reduction and Growth Facility (PRGF) and the Exogenous Shocks Facility (ESF).
For more on diIIerent types oI IMF lending, go to Lending in the Our Work section.
O Research and data
Supporting all three oI these activities is the IMF's economic and Iinancial research and statistics.
In recent years, the IMF has applied both its surveillance and technical assistance work to the
development oI standards and codes oI good practice in its areas oI responsibility, and to the
strengthening oI Iinancial sectors. These are part oI the IMF's continuing eIIorts to strengthen the
international Iinancial system and improve its ability to prevent and resolve crises.
Collaborating with others
Working with the World Bank
The IMF and the World Bank are diIIerent, but complement each other's work. Whereas the
IMF's Iocus is chieIly on macroeconomic and Iinancial sector issues, the World Bank is
concerned mainly with longer-term development and poverty reduction. Its loans Iinance
inIrastructure projects, the reIorm oI particular sectors oI the economy, and broader structural
reIorms. Countries must join the IMF to be eligible Ior World Bank membership.
Given the World Bank's Iocus on antipoverty issues, the IMF collaborates closely with the Bank
in the area oI poverty reduction and helping countries draw up poverty reduction strategies.
Other areas oI collaboration include assessments oI member countries' Iinancial sectors,
development oI standards and codes, and improvement oI the quality, availability, and coverage
oI data on external debt.
An external review committee on World Bank and IMF collaboration was Iormed in March 2006
to assess the working relationship between the two sister agencies, known collectively as the
Bretton Woods institutions. In its February 2007 report, the six-member Malan committee
oIIered recommendations Ior closer collaboration between the two institutions. This led to the
institutions` adoption oI a Joint Management Action Plan, under which, IMF and World Bank
country teams discuss their country-level work programs, the division oI labor, and the work
needed Irom each insititution in the coming year. Also the Bank and Fund have improved their
inIormation sharing at the country level, including technical assistance reports.
Cooperating with other international organizations
The IMF is a member oI the Switzerland-based Financial Stability Board, which brings together
government oIIicials responsible Ior Iinancial stability in the major international Iinancial
centers, international regulatory and supervisory bodies, committees oI central bank experts, and
international Iinancial institutions. It also works with standard-setting bodies such as the Basel
Committee on Banking Supervision and the International Association oI Insurance Supervisors.
The IMF collaborates with the World Trade Organization (WTO) both Iormally and inIormally.
The IMF has observer status at WTO meetings and IMF staII contribute to the work oI the WTO
Working Group on Trade, Debt, and Finance. And the IMF is involved in the WTO-led
Integrated Framework Ior Trade-Related Technical Assistance to Least Developed Countries,
whose other members are the International Trade Commission, UNCTAD, UNDP, and the
World Bank.
The IMF has a Special Representative to the United Nations, located at the UN Headquarters in
New York. The Special Representative Iacilitates the liaison between the IMF and the UN
system. The general arrangements Ior collaboration and consultations between the IMF and the
UN include areas oI mutual interest, such as cooperation between the statistical services oI the
two organizations, and reciprocal attendance and participation at events.
Engaging with think tanks, civil society, and the media
The IMF also engages on a regular basis with the academic community, civil society
organizations (CSOs), and the media.
IMF staII at all levels Irequently meet with members oI the academic community to exchange
ideas and receive new input. The IMF also has an active outreach program involving CSOs.
IMF management and senior staII communicate with the media on a daily basis. Additionally, a
biweekly press brieIing is held at the IMF headquarters, during which a spokesperson takes live
questions Irom journalists.






Organization & Finances
O Management
The current management team

Managing Director, Christine Lagarde, a French national, joined the IMF as Managing Director
in July 2011. BeIore coming to the IMF, she was France's Minister Ior Economy, Finance and
Industry.

David Lipton, oI the United States, joined the IMF as Special Advisor to the Managing Director
in July 2011. On September 1, 2011 he became First Deputy Managing Director. Prior to joining
the Fund, Lipton served as Special Assistant to the President and as Senior Director Ior
International Economic AIIairs at the U.S. National Economic Council and U.S. National
Security Council at the White House.

Naoyuki Shinohara, a Japanese national, joined the IMF as Deputy Managing Director in March
2010. Previously, he was Japan's Vice-Minister oI Finance Ior International AIIairs.

Nemat ShaIik, Irom Egypt, became Deputy Managing Director oI the IMF in April, 2011.
Previously she had worked at the U.K. Department Ior International Development (DFID), the
World Bank, and the International Finance Corp.

Min Zhu, Irom China, joined the IMF as Special Advisor to the Managing Director in May 2010.
On July 26, 2011 he became Deputy Managing Director. BeIore coming to the IMF, Min Zhu
was a Deputy Governor oI the People`s Bank oI China and previously worked at the World
Bank.
O Special Drawing Rights
The Special Drawing Right (SDR) is an international reserve asset, created by the IMF in
1969 to supplement the existing oIIicial reserves oI member countries.The SDR is neither
a currency, nor a claim on the IMF. Rather, it is a potential claim on the Ireely usable
currencies oI IMF members. Holders oI SDRs can obtain these currencies in exchange Ior
their SDRs in two ways: Iirst, through the arrangement oI voluntary exchanges between
members; and second, by the IMF designating members with strong external positions to
purchase SDRs Irom members with weak external positions. In addition to its role as a
supplementary reserve asset, the SDR serves as the unit oI account oI the IMF and some
other international organizations.In addition to its role as a supplementary reserve asset,
the SDR serves as the unit oI account oI the IMF and some other international
organizations.
O Gold
The IMF holds a relatively large amount oI gold among its assets, not only Ior reasons oI
Iinancial soundness, but also to meet unIoreseen contingencies. The IMF holds 103.4 million
ounces (3,217 metric tons) oI gold, worth about $83 billion as oI end-August 2009, making it the
third-largest oIIicial holder oI gold in the world.
O Income model reform
The IMF's Board oI Governors has endorsed new measures to end the IMF's over-reliance on
lending income (IMF photo)
The business model that the IMF has Iollowed since it was established relies primarily on
income Irom its lending operations to Iinance its work. Lending generates income because the
IMF charges member countries that draw on its Iinancial resources a higher interest rate than it
pays to its member country creditors (this lending margin will be one percentage point during
2008-09). However, this model had become unsustainable in recent years because oI a sharp
drop-oII in lending activity.
A Committee oI Eminent Persons, set up in January 2007 and chaired by Andrew Crockett
(Iormer general manager oI the Bank oI International Settlements), recommended that the IMF
adopt a package oI income-generating measures, including strictly limited sales oI gold
(amounting to about one-eighth oI the Fund's total gold holdings), to establish an endowment.
In 2008, the IMF's Board oI Governors endorsed a new package oI measures to end the IMF's
over-reliance on lending income. The package included most oI the measures that had been
proposed by the Crockett Committee.

IMF Lending
A core responsibility oI the IMF is to provide loans to member countries experiencing actual or
potential balance oI payments problems. This Iinancial assistance enables countries to rebuild
their international reserves, stabilize their currencies, continue paying Ior imports, and restore
conditions Ior strong economic growth, while undertaking policies to correct underlying
problems. Unlike development banks, the IMF does not lend Ior speciIic projects.
When can a country borrow from the IMF?
A member country may request IMF Iinancial assistance iI it has a balance oI payments need
(actual or potential)that is, iI it cannot Iind suIIicient Iinancing on aIIordable terms to meet its
net international payments while maintaining adequate reserve buIIers going Iorward. An IMF
loan provides a cushion that eases the adjustment policies and reIorms that a country must make
to correct its balance oI payments problem and restore conditions Ior strong economic growth.
be cbanging nature of IMF lending
The volume oI loans provided by the IMF has Iluctuated signiIicantly over time. The oil shock oI
the 1970s and the debt crisis oI the 1980s were both Iollowed by sharp increases in IMF lending.
In the 1990s, the transition process in Central and Eastern Europe and the crises in emerging
market economies led to Iurther surges oI demand Ior IMF resources. Deep crises in Latin
America kept demand Ior IMF resources high in the early 2000s. IMF lending rose again starting
in late 2008, as a period oI abundant capital Ilows and low pricing oI risk gave way to global
deleveraging in the wake oI the Iinancial crisis in advanced economies.
be process of IMF lending
Upon request by a member country, an IMF loan is usually provided under an 'arrangement,
which may, when appropriate, stipulate speciIic policies and measures a country has agreed to
implement to resolve its balance oI payments problem. The economic program underlying an
arrangement is Iormulated by the country in consultation with the IMF and is presented to the
Fund`s Executive Board in a 'Letter oI Intent. Once an arrangement is approved by the Board,
the loan is usually released in phased installments as the program is implemented. Some
arrangements provide countries with a one-time up-Iront access to IMF Iinancial resources.
IMF Support for Low-Income Countries
The IMF has upgraded its support Ior low-income countries, reIlecting the changing nature oI
economic conditions in these countries and their increased vulnerabilities due to the eIIects oI the
global economic crisis. It has overhauled its lending instruments, especially to address more
directly countries' needs Ior short-term and emergency support. It will also more than double the
resources available to low-income countries to up to $17 billion through 2014. Zero interest will
be charged on all concessional lending through 2011 and concessionality will be reviewed every
two years thereaIter.
O Signs of success
The IMF`s support Ior low-income countries needed an upgrade as economic conditions
improved in these countries, and as they became more open and integrated into the global
economy.
Many have made great strides toward macroeconomic stability. In the 1990s, the vast majority oI
low-income countries Iaced long-standing economic problems that required radical, long-term
policy changes oIten accompanied by debt relieI or cancellation. Now, however, many oI these
economies are becoming more open and integrated into the global economy. Many low-income
countries (LICs) are joining international capital markets, entering markets Ior goods and
services, attracting Ioreign investment, nurturing their own private Iinancial sectors, and
beneIiting Irom money sent home by citizens working abroad.
But with this greater international openness and integration comes greater vulnerability and
exposure to the ups and downs oI the global economy. This was highlighted by the impact that
sudden jumps in world Iood and Iuel prices had on LICs in 2007 and 2008. Spillover Irom the
global Iinancial crisis soon Iollowed. It was apparent that the new generation oI more stable but
more vulnerable low-income countries needed a new generation oI IMF loan Iacilities to support
them.
O Cbanges in lending instruments
To make its Iinancial support more Ilexible and tailored to the diversity oI low-income countries,
the IMF has established a new Poverty Reduction and Growth Trust, which has three new
lending windows, all under highly concessional terms. The new windows, which became
eIIective in January2010, are the Iollowing:
The Extended Credit Facility (ECF) replaces the Poverty Reduction and Growth Facility
(PRGF). The ECF
O 9rovldes susLalned engagemenL over Lhe medlum Lo long Lerm ln case of medlumLerm balance
of paymenLs needs
O ffers more flexlblllLy Lhan before on program exLenslons Lhe Llmlng of sLrucLural reforms and
formal poverLy reducLlon sLraLegy documenL requlremenLs
The Standby Credit Facility (SCF), which supersedes the Exogenous Shocks Facility`s High
Access Component, is similar to the Stand-By Arrangement Ior middle-income countries.
The SCF
O 9rovldes flexlble supporL Lo lowlncome counLrles wlLh shorLLerm flnanclng and ad[usLmenL
needs caused by domesLlc or exLernal shocks or pollcy sllppages
O 1argeLs counLrles LhaL do noL face proLracLed balance of paymenLs problems buL may need help
from Llme Lo Llme
O an also be used on a precauLlonary basls Lo provlde lnsurance
The Rapid Credit Facility (RCF), which
O 9rovldes rapld flnanclal supporL ln a slngle upfronL payouL for lowlncome counLrles faclng
urgenL flnanclng needs and offers successlve drawlngs for counLrles ln posLconfllcL or oLher
fraglle slLuaLlons
O 9rovldes flexlble asslsLance wlLhouL programbased condlLlonallLy when use of Lhe oLher Lwo
faclllLles ls elLher noL necessary (llmlLed naLure of need) or noL posslble (lnsLlLuLlonal or capaclLy
consLralnLs)
All these Iacilities allow Ior signiIicantly higher access to Iinancing and oIIer more concessional
terms than previously. Low-income countries will receive exceptional Iorgiveness through end-
2011 on all interest payments due to the IMF under its concessional lending instruments.
ThereaIter, concessionality will be reviewed every two years.
For policy advice and signaling to donors, countries can request non-Iinancial assistance under
the existing Policy Support Instrument (PSI), which
O SupporLs lowlncome counLrles LhaL have secured macroeconomlc sLablllLy and Lhus do noL
need lMl flnanclal asslsLance
O an provlde acceleraLed access Lo Lhe new Sl ln case of subsequenL flnanclal needs
Increased IMF Iinancial support Ior low-income countries has come at a time when these
countries needed to respond to the global crisis. Changes in the design oI the agreed policy
packagescalled programsthat accompany IMF loans allowed Ior countercyclical Iiscal
policies, including increased Iiscal spending. Additional changes to program design include:
O SLrengLhenlng Lhe focus on supporLlng poverLy allevlaLlon and growLh
O 9roLecLlng publlc spendlng on soclal and oLher prlorlLy areas even as economlc downswlngs cuL
revenues
O locuslng loan condlLlons on crlLlcal areas such as LransparenL managemenL of publlc resources









Tackling Current Challenges
O Reinforcing multilateralism
The crisis highlighted the tremendous beneIits Irom international cooperation. Without the
cooperation spearheaded by the Group oI Twenty industrialized and emerging market economies
(G-20) the crisis could have been much worse. At their 2009 Pittsburgh Summit G-20 countries
pledged to adopt policies that would ensure a lasting recovery and a brighter economic Iuture,
launching the "Framework Ior Strong, Sustainable, and Balanced Growth."
The backbone oI this Iramework is a multilateral process, where G-20 countries together set out
objectives and the policies needed to get there. And, most importantly, they undertake to check
on their progress toward meeting those shared objectivesdone through the G-20 Mutual
Assessment Process or MAP. At the request oI the G-20, the IMF provides the technical analysis
needed to evaluate how members` policies Iit togetherand whether, collectively, they can
achieve the G-20`s goals.
The IMF`s Executive Board has also been considering a range oI options to enhance multilateral,
bilateral, and Iinancial surveillance, and to better integrate the three. It has launched 'spillover
reports Ior the Iive most systemic economiesChina, the Euro Area, Japan, United Kingdom,
and the United Statesto assess the impact oI policies by one country or area on the rest oI the
world.
O Rethinking macroeconomic principles
The severity oI the crisisimmense hardship and suIIering around the worldand the desire to
avoid a repeat also raised some proIound questions about the pre-crisis consensus on
macroeconomic policies. In this context, the IMF is encouraging a wholesale re-examination oI
macroeconomic policy principles in the wake oI the global economic crisis.
In March 2011, the IMF hosted a high proIile conIerence to take stock oI these policy questions
and promote a discussion about the Iuture oI macroeconomic policy. The agenda Iocused on six
key areas: monetary policy; Iiscal policy; Iinancial intermediation and regulation; capital account
management; growth strategies; and the international monetary system (discussed Iurther below).
A key goal oI the conIerence was to promote a broad-based and ongoing dialogue that extends
beyond the corridors oI the IMF. To this end, the conIerence was webcast and the conIerence co-
hosts opened an online discussion with posts on the IMF blog, iMFdirect.
O Stepping up crisis lending
As part oI its eIIorts to support countries during the global economic crisis, the IMF is beeIing up
its lending capacity. It has approved a major overhaul oI how it lends money by oIIering higher
amounts and tailoring loan terms to countries` varying strengths and circumstances. More
recently, Iurther reIorms have been approved that strengthen the IMF`s capacity to prevent
crises. In particular:
O Doubling oI lending access limits Ior member countries and streamlining procedures to
reduce perceived stigma attached to borrowing Irom the Fund
O Doubling oI lending access limits Ior member countries and streamlining procedures to
reduce perceived stigma attached to borrowing Irom the Fund
The IMF has committed more than $280 billion to countries hit by the crisisincluding Greece,
Ireland, Portugal, Romania, and Ukraineand has extended credit to Mexico, Poland, and
Colombia under a new Ilexible credit line. The IMF is also stepping up its lending to low-income
countries to help prevent the crisis undermining recent economic gains and keep poverty
reduction eIIorts on track.
O Strengthening the international monetary system
The current International Monetary Systemthe set oI internationally agreed rules, conventions,
and supporting institutions that Iacilitate international trade and cross-border investment, and the
Ilow oI capital among countrieshas certainly delivered a lot. But it has a number oI well-
known weaknesses, including the lack oI an automatic and orderly mechanism Ior resolving the
buildup oI real and Iinancial imbalances; volatile capital Ilows and exchange rates that can have
deleterious economic eIIects; and related to the above, the rapid, unabated accumulation oI
international reserves, concentrated on a narrow supply.
Addressing these problems is crucial to achieving the global public good oI economic and
Iinancial stability, by ensuring an orderly rebalancing oI demand growth, which is essential Ior a
sustained and strong global recovery, and reducing systemic risk. The IMF`s recent review oI its
mandate and resultant reIormsto surveillance and its lending toolkitgo some way towards
addressing these concerns but Iurther reIorms are being pursued.
O Supporting low-income countries
The IMF has upgraded its support Ior low-income countries, reIlecting the changing nature oI
economic conditions in these countries and their increased vulnerabilities due to the eIIects oI the
global economic crisis. It has overhauled its lending instruments, especially to address more
directly countries' needs Ior short-term and emergency support. The IMF support package
includes:
O Mobilizing additional resources, including Irom sales oI an agreed amount oI IMF gold,
to boost the IMF`s concessional lending capacity to up to $17 billion through 2014,
including up to $8 billion in the Iirst two years. This exceeds the call by the Group oI
Twenty Ior $6 billion in new lending over two to three years.
O Providing interest relieI, with zero payments on outstanding IMF concessional loans
through end-2011 to help low-income countries cope with the crisis.
O Establishing a new set oI Iinancial instruments,





















IMF and India ReIations


ndia is among one of the developing economies that effectively employed the various Fund programmes to fortify its
fiscal structure. Through productive engagement with the MF, ndia formulated a consistent approach to expand
domestic and global assistance for economic reforms. Whenever ndia underwent balance of payments crises, it
sought the help of MF and in turn the internationally recognized reserve willingly helped ndia to overcome the
difficulties.

Recently, ndia purchased MF gold to lend money to developing countries. This proves that the fiscal reforms set in
motion by the previous finance ministers have finally started gaining momentum, transforming ndia from fiscal
borrower to major lender.

The speed at which the gold was purchased by ndia on September 18, 2009 astonished the market observers, who
later considered it as a smart move towards shoring its bullion funds and steadily trying to stake on the US dollar.
Some analysts predict that ndia is purchasing gold to move forward for higher voting share in the MF. ndia is also
seeking for a considerable say in global fiscal affairs and greater account in the MF.

The Reserve Bank of ndia forfeited USD 1,045/ ounce of yellow metal paying the amount in hard exchange and not
in the MF's internal division of account.

The history of ndia's engagement with MF illustrates that with premeditated planning it is possible to alleviate a
macroeconomic calamity and sustain the rights of reform package without negotiating on democratic organizations or
international policy autonomy.


IMF 2010-11 prediction of Indian Economy


The nternational Monetary Fund (MF) predicted 8% expansion during 2010-11. However, the growth will be affected
by high inflation and increasing monetary deficit in the concerned fiscal year.

ndia's long term economic prospects will continue to remain sturdy in 2010-11 followed by lower growth rate at 7.7%
for the FY 2011-12. Other than high inflation and rising financial deficit, the major areas of concern are rise in asset
cost and the prospects of an unanticipated slowdown in the influx of foreign investment in ndia caused due by the
chaos in worldwide financial markets.



Launched on May 1, 2006, the Joint ndia-MF Training Programme (TP) is a cooperative
venture of the nternational Monetary Fund (MF) and the Reserve Bank of ndia (RB).The
Joint ndia-MF Training Programme was formally inaugurated on January 24, 2007 by Mr.
John Lipsky, First Deputy Managing Director of MF and Dr. Rakesh Mohan, Deputy Governor
of RB The TP is located in Pune, ndia

The purpose of the TP is to provide policy-oriented training in economics and related
operational fields to selected ndian officials, as well as to officials of certain other countries in
South Asia and East Africa to be designated jointly by the RB and the MF.

The TP courses will cover, among other subjects, macroeconomic management and policies,
financial Programming, monetary policy, bank supervision, financial sector issues, public
finance, exchange rate policy and foreign exchange operations and statistics. The Programme
will also include seminars on topical issues for high-level officials.

The TP Centre is located at the National nstitute of Bank Management (NBM) campus at
Kondhwe Khurd, Pune, ndia.
The TP benefits from a substantial financial contribution from the Government of Australia.


O India joined the IMF on December 27, 1945, as one of the IMF's original members.
O For India's Governor, quota, and voting power in the IMF,
see www.imf.org/external/np/sec/memdir/members.htm
O For India's Executive Director in the IMF and constituency,
see www.imf.org/external/np/sec/memdir/eds.htm
O India accepted the obligations of Article VIII Article VIII of the IMF Articles of
Agreement on current account convertibility on August 20, 1994.
O India subscribes to the IMF's Special Data Dissemination Standard. Countries
belonging to this group make a commitment to observe the standard and to
provide information about their data and data dissemination practices.
Financial Assistance
While India has not been a frequent user of IMF resources, IMF credit has been
instrumental in helping India respond to emerging balance of payments problems on
two occasions. In 1981-82, India borrowed SDR 3.9 billion under an Extended Fund
Facility, the largest arrangement in IMF history at the time. In 1991-93, India borrowed
a total of SDR 2.2 billion under two stand by arrangements, and in 1991 it borrowed
SDR 1.4 billion under the Compensatory Financing Facility. Further information on
India's financial position in the Fund, see http://www.imf.org/external/
np/tre/tad/exfin2.cfm?memberKey1=430
Technical Assistance
In recent years, the Fund has provided India with technical assistance in a number of
areas, including the development of the government securities market, foreign
exchange market reform, public expenditure management, tax and customs
administration, and strengthening statistical systems in connection with the Special
Data Dissemination Standards. Since 1981 the IMF Institute has provided training to
Indian officials in national accounts, tax administration, balance of payments
compilation, monetary policy, and other areas.