What role does the IMF play in the world economy? What are the main costs and benefits of IMF adjustment policies? The International Monetary Fund (IMF) aims to promote international monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable growth, along with reducing poverty around the world. The IMF was created in 1945, where it is governed by and accountable to the 187 countries that make up its near-global membership. (IMF at a glance) The founders of IMF aimed to build a framework for economic cooperation that would avoid a repetition of the disastrous economic policies that had contributed to the Great Depression of the 1930s and the global conflict that followed. (What we do) Following the recent global crisis, the Fund has been clarifying and updating its mandate to cover the full range of macroeconomic and financial sector issues that bear on global stability. (IMF at a glance) In many ways the IMF’s main role is to provide the global public good of financial stability, which is the same purpose today as it was when the organization was established. More specifically, the IMF continues to: * Provide a forum for cooperation on international monetary problems * Facilitate the growth of international trade, thus promoting job creation, economic growth, and poverty reduction * Promote exchange rate stability and an open system of international payments * Lend countries foreign exchange when needed, on a temporary basis and under adequate safeguards, to help them address balance of payments problems The IMF has three main tools at its disposal to carry out its mandate: surveillance, technical assistance and training, and lending. These functions are underpinned by the IMF’s research and statistics. Surveillance
To maintain stability and prevent crises in the international monetary system, the IMF reviews country policies, as well as national, regional, and global economic and financial developments through a formal system known as surveillance. Under the surveillance framework, the IMF provides advice to its 187 member countries, encouraging policies that foster economic stability, reduce vulnerability to economic and financial crises, and raise living standards. It provides regular assessment of global prospects in its World Economic Outlook, financial markets in its Global Financial Stability Report, and public finance developments in its Fiscal Monitor, and publishes a series of regional economic outlooks. The Fund’s Executive Board has been considering a range of options to enhance multilateral, financial, and bilateral surveillance, and better integrate the three.
Technical assistance and training
IMF offers technical assistance and training to help member countries strengthen their capacity to design and implement effective policies. Technical assistance is offered in several areas, including fiscal policy, monetary and exchange rate policies, banking and financial system supervision and regulation, and statistics. The IMF provides technical assistance and training mainly in four areas: *
Monetary and financial policies (monetary policy instruments, banking system supervision and restructuring, foreign management and operations, clearing settlement systems for payments, and structural development of central banks) *
Fiscal policy and management (tax and customs policies and administration, budget formulation, expenditure management, design of social safety nets, and management of domestic and foreign debt) *
Compilation, management, dissemination, and improvement of statistical data *
Economic and financial legislation.
In the event that member countries experience difficulties financing their balance of payments, the IMF is also a fund that can be tapped to facilitate recovery. A policy program supported by financing is designed by the national authorities in close cooperation with the IMF....
Please join StudyMode to read the full document