The International Monetary Fund (IMF) was created in 1945 and is governed by and accountable to its 188 member countries. It strives to ensure the international monetary system's stability. The IMF functions in three main areas: overseeing the economies of member countries, lending to countries with balance of payments issues and offering technical assistance to its member countries.
Countries must agree to pursue economic policies that coincide with the IMF's objectives. By monitoring the macroeconomic and financial policies of its member countries, the IMF sees stability risks and advises on possible adjustments. This activity is known as surveillance.
How IMF Provides Financial Assistance
To provide financial assistance to member countries with balance of payments problems, the IMF lends money to nurture those nations' economies. This assistance can replenish international reserves, stabilize currencies and strengthen conditions for economic growth. The IMF expects the countries to pay back the loans, and the countries must embark on structural adjustment policies monitored by the IMF.
By using capacity management, the IMF assists its member countries in designing economic policies that manage their financial situations more efficiently. Through technical assistance and training, it aims to strengthen human and institutional capacity. This is very important for countries with previous policy failures, weak institutions or scarce resources.
Even though the IMF is doing great work to ensure global stability, it has its critics. Some say the IMF is only deepening the gap between wealthy and poor nations. By making countries pay back loans, critics say financial concerns are put ahead of social ones.
(For more, see "An Introduction to the International Monetary Fund.")