In a way, the IMF has been successful since it was established back in July, 1944. From its genesis, it has consistently worked to foster optimal global monetary cooperation for the general good of member states. The aim has been to secure the financial stability of world nations and facilitate a mutually benefiting international trade among these nations. This in return could boost both poverty reduction measures and promote high employment. With criticism to the institution considered, the International Monetary Fund has helped instigate a sustainable economic growth in most member states, apart from the third world countries which continue to trade in complete dependence of the international market.
The International Monetary Fund (IMF) was a Bretton-Woods brainchild as an international organization that regulated economic policies in member countries that impact on both the exchange rates in the global market and the balance of payments. In playing this role, the International Monetary Fund was charged with the responsibility of stabilizing international exchange rates in a way that could facilitate development in the world economy. Besides that, the IMF became a facility that offered highly leveraged loans to third world countries to aid them in establishing economic independence.
From the original 44 member states, the monetary fund has grown in membership to subscribe 186 nations to date. Kosovo was the last state to gain membership. Most of the nations under the United Nations Charter have registered with the IMF except a few like countries Taiwan which was expelled from the monetary fund in 1980 and Cuba which left in 1967. Other UN member states that are not participants in the fund include North Korea, Nauru, Andorra, Tuvalu, Monaco and Liechtenstein. Each of these participating member states has a position in the Board of Governors although the Executive Board includes only 24 member states as representatives of the other nations.
The International Monetary Fund emerged as the resolution of the 1944 United Nations Monetary and Financial Conference in Mount Washington Hotel. Delegates from 44 governments had converged in the Bretton Woods area, New Hampshire, US. These governments agreed on a mutual framework for economic cooperation on the international level. But it wasn’t until 27th December 1945 that the IMF got formal statutory establishment, when 29 countries met and signed the IMF Articles of Agreement. Theses statutory decrees gave the International Monetary Fund purposes, goals and operation guidelines, most of which remain the same up to today, just as they were formulated back in 1943.
It was created by 45 member states in July 1944 so as to initiate leverage mechanisms immediately in a bid to reconstruct the international payment system. The first step was to contribute a pool from the member state economies so as to create a fund that can lend those countries with balances of payment on a temporary basis. With its headquarters in Washington, D.C., it is currently under the stewardship of Managing Director Dominique Strauss-Kahn, with 186 nations being the member states. This steady increase in membership, due to improved political independence in most states of the world, has helped the monetary fund to gain more influence on the global economy.
Of key interest today as concerns the International Monetary Fund has been adapting to the expanded membership rota and the volatile changes of the world economy. In 2008 for instance, the IMF was faced with an acute lack of revenue. The Executive Board thus agreed to liquidate some gold bars in the monetary fund’s reserves. Further, on 27th April 27, the same year, the fund’s Managing Director, Dominique Strauss-Kahn, supported a board proposal to initiate a transformation in the fund’s policy framework as a measure towards raising a projected US$400 million, the prevailing budget deficit. The measures included a drastic cut of expenditure to the tune of US$100 million before 2011 and to dismiss 380 of the staff members on early retirement and retrenchment.
[ad#downcont]The 2009 summit of the Great Twenty nations came to the fund’s rescue this year though. The G-20 London summit resolved to allocate the International Monetary Fund additional financial and commitment resources in this budget year. This was a means of facilitating the prospective economic needs of member states especially now that the global crisis is at its fiercest in years. The nations pledged tenfold supplemental funds for the IMF, reaching up to US$500 billion, and then to allocate all member states a further US$250 billion with Special Drawing Rights.