IMF stands for International Monetary Fund, an international organization with the objective of stabilizing and acting directly in the control of the global economy.
The IMF was created at the conference of Bretton Woods, in 1944, with the aim of rebuilding Europe after World War II.
The Conference also established a monetary system, in which the value of the national currency is defined to help countries maintain their economic stability.
With these actions, planners wanted to avoid the trade barriers and high interest rates that helped cause the Great Depression in 1929.
IMF member countries
There are currently 189 members of the IMF. The seven countries (out of a total of 196 existing) that are not members from the IMF are:
- Cuba;
- East Timor;
- North Korea;
- Liechtenstein;
- Monaco;
- Taiwan;
- Vatican CITY.
The IMF has 10 non-sovereign members: Anguilla, Aruba, Barbados, Cape Verde, Curaçao, Hong Kong, Macau, Montserrat, Netherlands Antilles and São Martinho.
Each member country of the IMF has a quota, that is, an amount that has to be sent to the body in the form of a contribution. This quota is determined based on its economic indicators, such as the GDP (Gross Domestic Product).
The greater your contribution to your IMF, the greater the weight of your vote in decisions.
What are the objectives and functions of the IMF?
The IMF achieves its goal by aiming for three objectives:
- It monitors global conditions and identifies risks among its member countries;
- Advises its members on how to improve their savings;
- It provides assistance and short term loans to avoid financial crisis. The IMF's aim is to prevent these disasters by providing guidance to its members.
The IMF takes care of the functioning of the countries, monitoring exchange rates and the balance of payments, ensuring the monetary stability of each member country.
The main objective of this organization is to prevent imbalances in the financial sector and systems. jeopardize the expansion of trade and commercial transactions between the other countries of the world.
The main functions of the IMF for the global economy
In its work actions, the IMF has some main functions. Among them are:
Disseminate reports and research on global economic conditions
The IMF has the ability to examine and review the economies of all its member countries. As a result, he points out the status of the global economy in a way that no other organization can ascertain.
They also produce numerous analytical reports annually, such as the World Economic Outlook, the Global Financial Stability Report and Fiscal Monitoring. Thus, the IMF can identify which countries threaten global stability.
Advise member countries
Since the 1994 Mexican peso crisis and the 1997 Asian crisis, the IMF has taken a more active role. to help countries avoid financial crises by developing standards that their members must follow.
At the same time, members agree to provide adequate foreign exchange reserves in good economic times. This helps them increase spending to boost their economies during recessions.
The IMF also issues member country reports, which investors use to make informed decisions. This improves the functioning of financial markets.
Member countries have agreed to listen to the IMF's recommendations because they want to improve their economies and remove threats.
Provide technical assistance and short-term loans
The IMF provides loans to help its members resolve their balance of payments problems, stabilize their economies and restore sustainable growth.
Traditionally, most IMF members were from developing countries. Therefore, they had limited access to the international capital market due to their economic difficulties.
An IMF loan indicates that a country's economic policies are on the right track. This reassures investors and acts as a catalyst for attracting funds from other sources.
See also the meaning of:
- Characteristics of globalization;
- GDP Per Capita;
- international trade;
- BRICS;
- Privatization.