What is the Arab Monetary Fund
The Arab Monetary Fund was launched in 1976 by the Arab League to balance payments and promote beneficial trade between the League’s member nations. Membership has grown to 22 nations spread across the Middle East and North Africa and the fund’s central offices are in Abu Dhabi.
BREAKING DOWN Arab Monetary Fund
The Arab Monetary Fund (AMF) was established as a sub-organization of the Arab League in 1976 and became active the following year. The management structure consists of a board of governors, board of executive directors and a director general. Each member nation appoints a governor and deputy governor to five-year terms. The board of governors enjoys all management power over the fund, including the appointment of the board of executive directors and the director general. The governors also assign a portfolio of responsibilities to the directors, including the inclusion of new members and suspension of other members, distribution of funds to member nations, management of audits and financial reporting.
The fund’s original mandate focused on balance of payments among member nations. Initial funding of the AMF was possible thanks to the escalation of oil prices in the mid-1970s. The AMF first went about pursuing its mandate by providing low-interest loans to developing Arab states. From that starting point, the AMF has engaged in projects targeting the following objectives, among others:
Similar regional funds have been discussed in Asia and Africa, but have yet to be activated. The AMF often works in close collaboration with the International Monetary Fund (IMF).
The Arab Monetary Fund at Work
A recent project demonstrates how the AMF pursues the goals listed above. A 2015 agreement between the AMF and the World Bank Group (WBG) announced a partnership aimed at strengthening the retail financial sector in the Arab World. In doing so, the organizations felt that they could improve financial markets and trade across the Arab community. The AMF and WBG collaborated on on-the-ground initiatives in three areas. First, they directed financing toward the improvement of electronic payment infrastructure and credit reporting systems. Next, they cultivated the start-up sector by providing banks with the know-how to underwrite bond issues and start-up financing and launch small and medium enterprise (SME) stock markets. Finally, the AMF and World Bank provided financing for the expansion of mobile and microfinancing networks in member nations.