International Monetary Fund

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Updated:Sunday 12th October 2014

International Monetary Fund Definition

(Wikipedia) - International Monetary Fund "IMF" redirects here. For other uses, see IMF (disambiguation). International Monetary Fund Abbreviation Formation Type Headquarters Membership Official language Managing Director Main organ Website
Official logo for the IMF
Formally formed 27 December 1945 (68 years ago) (1945-12-27) Began financial operations (de facto formation) 1 March 1947 (67 years ago) (1947-03-01)
International Financial Organization
Washington, D.C., United States
29 countries (founding); 188 countries (to date)
Arabic, Chinese, English, French, Russian, Spanish
Christine Lagarde
Board of Governors

The International Monetary Fund (IMF) is an international organization that was initiated in 1944 at the Bretton Woods Conference and formally created in 1945 by 29 member countries. The IMF''s stated goal was to assist in the reconstruction of the world''s international payment system post–World War II. Countries contribute funds to a pool through a quota system from which countries with payment imbalances temporarily can borrow money and other resources. As of the 14th General Review of Quotas in late 2010 the fund stood at SDR476.8bn, or about US$755.7bn at then-current exchange rates. Through this fund, and other activities such as surveillance of its members'' economies and the demand for self-correcting policies, the IMF works to improve the economies of its member countries.

The IMF is a self-described "organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” The organization''s objectives are stated in the Articles of Agreement and can be summarised as: to promote international economic co-operation, international trade, employment, and exchange-rate stability, including by making financial resources available to member countries to meet balance of payments needs. Its headquarters are in Washington, D.C., United States.

  • 1 Functions
    • 1.1 Surveillance of the global economy
    • 1.2 Conditionality of loans
      • 1.2.1 Structural adjustment
      • 1.2.2 Benefits
  • 2 History
    • 2.1 Since 2000
  • 3 Member countries
    • 3.1 Qualifications
    • 3.2 Benefits
  • 4 Leadership
    • 4.1 Board of Governors
    • 4.2 Executive Board
    • 4.3 Managing Director
  • 5 Voting power
    • 5.1 Effects of the quota system
      • 5.1.1 Developing countries
      • 5.1.2 United States influence
      • 5.1.3 Overcoming borrower/creditor divide
  • 6 Use
    • 6.1 Exceptional Access Framework - Sovereign Debt
  • 7 IMF and globalization
  • 8 Criticisms
    • 8.1 Conditionality of Loans
    • 8.2 Reform
    • 8.3 Support of military dictatorships
    • 8.4 Impact on access to food
    • 8.5 Impact on public health
    • 8.6 Impact on environment
  • 9 Proposed Alternatives
  • 10 In the media
  • 11 See also
  • 12 Notes and references
  • 13 Further reading
  • 14 External links


The IMF works to foster global growth and economic stability. It provides policy advice and financing to members in economic difficulties and also works with developing nations to help them achieve macroeconomic stability and reduce poverty. The rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. Such market imperfections, together with balance of payments financing, provide the justification for official financing, without which many countries could only correct large external payment imbalances through measures with adverse effects on both national and international economic prosperity. The IMF can provide other sources of financing to countries in need that would not be available in the absence of an economic stabilization program supported by the Fund.

Upon initial IMF formation, its two primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritise economic growth, and to provide short-term capital to aid balance of payments. This assistance was meant to prevent the spread of international economic crises. The Fund was also intended to help mend the pieces of the international economy post the Great Depression and World War II.

The IMF''s role was fundamentally altered after the floating exchange rates post 1971. It shifted to examining the economic policies of countries with IMF loan agreements to determine if a shortage of capital was due to economic fluctuations or economic policy. The IMF also researched what types of government policy would ensure economic recovery. The new challenge is to promote and implement policy that reduces the frequency of crises among the emerging market countries, especially the middle-income countries that are open to massive capital outflows. Rather than maintaining a position of oversight of only exchange rates, their function became one of “surveillance” of the overall macroeconomic performance of its member countries. Their role became a lot more active because the IMF now manages economic policy instead of just exchange rates.

In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality, which was established in the 1950s. Low-income countries can borrow on concessional terms, which means there is a period of time with no interest rates, through the Extended Credit Facility (ECF), the Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF). Nonconcessional loans, which include interest rates, are provided mainly through Stand-By Arrangements (SBA), the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), and the Extended Fund Facility. The IMF provides emergency assistance via the newly introduced Rapid Financing Instrument (RFI) to all its members facing urgent balance of payments needs.

Surveillance of the global economy

The IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its 188 member countries. This activity is known as surveillance and facilitates international co-operation. Since the demise of the Bretton Woods system of fixed exchange rates in the early 1970s, surveillance has evolved largely by way of changes in procedures rather than through the adoption of new obligations. The responsibilities of the Fund changed from those of guardian to those of overseer of members’ policies.

The Fund typically analyses the appropriateness of each member country’s economic and financial policies for achieving orderly economic growth, and assesses the consequences of these policies for other countries and for the global economy.

IMF Data Dissemination Systems participants:   IMF member using SDDS   IMF member using GDDS   IMF member, not using any of the DDSystems   non-IMF entity using SDDS   non-IMF entity using GDDS   no interaction with the IMF

In 1995 the International Monetary Fund began work on data dissemination standards with the view of guiding IMF member countries to disseminate their economic and financial data to the public. The International Monetary and Financial Committee (IMFC) endorsed the guidelines for the dissemination standards and they were split into two tiers: The General Data Dissemination System (GDDS) and the Special Data Dissemination Standard (SDDS).

The International Monetary Fund executive board approved the SDDS and GDDS in 1996 and 1997 respectively, and subsequent amendments were published in a revised Guide to the General Data Dissemination System. The system is aimed primarily at statisticians and aims to improve many aspects of statistical systems in a country. It is also part of the World Bank Millennium Development Goals and Poverty Reduction Strategic Papers.

The primary objective of the GDDS is to encourage IMF member countries to build a framework to improve data quality and increase statistical capacity building. Upon building a framework, a country can evaluate statistical needs, set priorities in improving the timeliness, transparency, reliability and accessibility of financial and economic data. Some countries initially used the GDDS, but later upgraded to SDDS.

Some entities that are not themselves IMF members also contribute statistical data to the systems:

  • Palestinian Authority – GDDS
  • Hong Kong – SDDS
  • Macau – GDDS
  • EU institutions:
    • the European Central Bank for the Eurozone – SDDS
    • Eurostat for the whole EU – SDDS, thus providing data from Cyprus (not using any DDSystem on its own) and Malta (using only GDDS on its own)
Conditionality of loans

IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial resources. The IMF does not require collateral from countries for loans but rather requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform. If the conditions are not met, the funds are withheld. Conditionality is perhaps the most controversial aspect of IMF policies. The concept of conditionality was introduced in an Executive Board decision in 1952 and later incorporated in the Articles of Agreement.

Conditionality is associated with economic theory as well as an enforcement mechanism for repayment. Stemming primarily from the work of Jacques Polak in the Fund''s research department, the theoretical underpinning of conditionality was the "monetary approach to the balance of payments."

Structural adjustment Further information: Structural adjustment

Some of the conditions for structural adjustment can include:

  • Cutting expenditures, also known as austerity.
  • Focusing economic output on direct export and resource extraction,
  • Devaluation of currencies,
  • Trade liberalisation, or lifting import and export restrictions,
  • Increasing the stability of investment (by supplementing foreign direct investment with the opening of domestic stock markets),
  • Balancing budgets and not overspending,
  • Removing price controls and state subsidies,
  • Privatization, or divestiture of all or part of state-owned enterprises,
  • Enhancing the rights of foreign investors vis-a-vis national laws,
  • Improving governance and fighting corruption.

These conditions have also been sometimes labelled as the Washington Consensus.


These loan conditions ensure that the borrowing country will be able to repay the Fund and that the country won''t attempt to solve their balance of payment problems in a way that would negatively impact the international economy. The incentive problem of moral hazard, which is the actions of economic agents maximising their own utility to the detriment of others when they do not bear the full consequences of their actions, is mitigated through conditions rather than providing collateral; countries in need of IMF loans do not generally possess internationally valuable collateral anyway.

Conditionality also reassures the IMF that the funds lent to them will be used for the purposes defined by the Articles of Agreement and provides safeguards that country will be able to rectify its macroeconomic and structural imbalances. In the judgment of the Fund, the adoption by the member of certain corrective measures or policies will allow it to repay the Fund, thereby ensuring that the same resources will be available to support other members.

As of 2004, borrowing countries have had a very good track record for repaying credit extended under the Fund''s regular lending facilities with full interest over the duration of the loan. This indicates that Fund lending does not impose a burden on creditor countries, as lending countries receive market-rate interest on most of their quota subscription, plus any of their own-currency subscriptions that are loaned out by the Fund, plus all of the reserve assets that they provide the Fund.

HistoryIMF "Headquarters 1" in Washington, D.C.

The International Monetary Fund was originally laid out as a part of the Bretton Woods system exchange agreement in 1944. During the earlier Great Depression, countries sharply raised barriers to foreign trade in an attempt to improve their failing economies. This led to the devaluation of national currencies and a decline in world trade.

The tiny Gold Room within the Mount Washington Hotel where the Bretton Woods Conference attendees signed the agreements creating the IMF and World Bank

This breakdown in international monetary co-operation created a need for oversight. The representatives of 45 governments met at the Bretton Woods Conference in the Mount Washington Hotel in the area of Bretton Woods, New Hampshire in the United States, to discuss framework for post-World War II international economic co-operation. The participating countries were concerned with the rebuilding of Europe and the global economic system after the war.

There were two views on the role the IMF should assume as a global economic institution. British economist John Maynard Keynes imagined that the IMF would be a cooperative fund upon which member states could draw to maintain economic activity and employment through periodic crises. This view suggested an IMF that helped governments and to act as the US government had during the New Deal in response to World War II. American delegate Harry Dexter White foresaw an IMF that functioned more like a bank, making sure that borrowing states could repay their debts on time. Most of White''s plan was incorporated into the final acts adopted at Bretton Woods.

The International Monetary Fund formally came into existence on 27 December 1945, when the first 29 countries ratified its Articles of Agreement. By the end of 1946 the Fund had grown to 39 members. On 1 March 1947, the IMF began its financial operations, and on 8 May France became the first country to borrow from it.

Plaque Commemorating the Formation of the IMF in July 1944 at the Bretton Woods Conference

The IMF was one of the key organisations of the international economic system; its design allowed the system to balance the rebuilding of international capitalism with the maximisation of national economic sovereignty and human welfare, also known as embedded liberalism. The IMF''s influence in the global economy steadily increased as it accumulated more members. The increase reflected in particular the attainment of political independence by many African countries and more recently the 1991 dissolution of the Soviet Union because most countries in the Soviet sphere of influence did not join the IMF.

The Bretton Woods system prevailed until 1971, when the US government suspended the convertibility of the US$ (and dollar reserves held by other governments) into gold. This is known as the Nixon Shock.

Since 2000

In May 2010, the IMF participated, in 3:11 proportion, in the first Greek bailout that totalled €110bn. This bailout was notable for several reasons: the funds were funnelled directly to the (largely European) private bondholders, which endured no haircuts to the chagrin of the Swiss, Brazilian, Indian, Russian, and Argentinian Directors; the Greek authorities (at the time, George Papandreou and Giorgos Papakonstantinou) themselves ruled out a haircut of the private bondholders; the Greek private sector was happy to curtail the 13th and 14th month civil service pay scheme, because the Greek government was otherwise impotent. A second bailout package of more than €100bn was agreed over the course of a few months from October 2011, during which time Papandreou was forced from office. The so-called Troika, of which the IMF is part, are joint managers of this programme, which was approved by the Executive Directors of the IMF on 15 March 2012 for SDR23.8bn, and which saw private bondholders take a haircut of upwards of 50%. In the interval between May 2010 and February 2012 the private banks of Holland, France and Germany managed to reduce their exposure to Greek debt from a total of €122bn to a total of €66bn.

As of January 2012, the largest borrowers from the IMF in order were Greece, Portugal, Ireland, Romania and Ukraine.

On 25 March 2013, a €10bn international bailout of Cyprus was agreed by the Troika, at the cost to the Cypriots of its agreement: to close the country''s second-largest bank; to impose a one-time bank deposit levy on all uninsured deposits there. No insured deposit of €100k or less were to be affected under the terms of a novel bail-in scheme.

The topic of sovereign debt restructuring was taken up by the IMF in April 2013 for the first time since 2005, in a report entitled "SOVEREIGN DEBT RESTRUCTURING—RECENT DEVELOPMENTS AND IMPLICATIONS FOR THE FUND’S LEGAL AND POLICY FRAMEWORK". The paper, which was discussed by the board on 20 May, summarised the recent experiences in Greece, St Kitts and Nevis, Belize and Jamaica. An explanatory interview with Deputy Director Hugh Bredenkamp was published a few days later, as was a deconstruction by Matina Stevis of the Wall Street Journal.

In the October 2013 Financial Monitor publication, the IMF suggested that a capital levy capable of reducing Euro-area government debt ratios to "end-2007 levels" would require a very high tax rate; about 10 percent.

The Fiscal Affairs department of the IMF, headed by Dr. Sanjeev Gupta, produced in January 2014 a report entitled "Fiscal Policy and Income Inequality" which stated that "Some taxes levied on wealth, especially on immovable property, are also an option for economies seeking more progressive taxation.... Property taxes are equitable and efficient, but underutilized in many economies.... There is considerable scope to exploit this tax more fully, both as a revenue source and as a redistributive instrument."

At the end of March 2014, the IMF secured an $18bn bailout fund for the provisional government of the Ukraine in the aftermath of the 2014 Ukrainian revolution.

The topic of the US executive board veto was discussed again by some junior members in April 2014. The countries were fed up with the failure to ratify a four-year old agreement to restructure the lender. Singaporean Finance Minister and IMF steering committee chairman Tharman Shanmugaratnam said it could cause "disruptive change" in the global economy: "We are more likely over time to see a weakening of multilateralism, the emergence of regionalism, bilateralism and other ways of dealing with global problems," and that would make the world a "less safe" place.

Member countries  IMF member states   IMF member states not accepting the obligations of Article VIII, Sections 2, 3, and 4

Since the IMF is affiliated with the UN and falls under its umbrella, the 188 corporate members of the IMF include 187 members of the UN and the Republic of Kosovo. The corporate members appoint ex-officio voting members, who are listed below. All members of the IMF are also International Bank for Reconstruction and Development (IBRD) members and vice versa.

Former members are Cuba (which left in 1964) and the Republic of China, which was ejected from the UN in 1980 after losing the support of then US President Jimmy Carter and was replaced by the People''s Republic of China. However, "Taiwan Province of China" is still listed in the official IMF indices.

Apart from Cuba, the other UN states that do not belong to the IMF are Andorra, Liechtenstein, Monaco, Nauru and North Korea.

The former Czechoslovakia was expelled in 1954 for "failing to provide required data" and was readmitted in 1990, after the Velvet Revolution. Poland withdrew in 1950—allegedly pressured by the Soviet Union—but returned in 1986.


Any country may apply to be a part of the IMF. Post-IMF formation, in the early postwar period, rules for IMF membership were left relatively loose. Members needed to make periodic membership payments towards their quota, to refrain from currency restrictions unless granted IMF permission, to abide by the Code of Conduct in the IMF Articles of Agreement, and to provide national economic information. However, stricter rules were imposed on governments that applied to the IMF for funding.

The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates secured at rates that could be adjusted only to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF''s agreement.

Some members have a very difficult relationship with the IMF and even when they are still members they do not allow themselves to be monitored. Argentina for example refuses to participate in an Article IV Consultation with the IMF.


Member countries of the IMF have access to information on the economic policies of all member countries, the opportunity to influence other members’ economic policies, technical assistance in banking, fiscal affairs, and exchange matters, financial support in times of payment difficulties, and increased opportunities for trade and investment.

Leadership Board of Governors

The Board of Governors consists of one governor and one alternate governor for each member country. Each member country appoints its two governors. The Board normally meets once a year and is responsible for electing or appointing executive directors to the Executive Board. While the Board of Governors is officially responsible for approving quota increases, Special Drawing Right allocations, the admittance of new members, compulsory withdrawal of members, and amendments to the Articles of Agreement and By-Laws, in practice it has delegated most of its powers to the IMF''s Executive Board.

The Board of Governors is advised by the International Monetary and Financial Committee and the Development Committee. The International Monetary and Financial Committee has 24 members and monitors developments in global liquidity and the transfer of resources to developing countries. The Development Committee has 25 members and advises on critical development issues and on financial resources required to promote economic development in developing countries. They also advise on trade and global environmental issues.

Executive Board

24 Executive Directors make up Executive Board. The Executive Directors represent all 188 member-countries in a geographically-based roster. Countries with large economies have their own Executive Director, but most countries are grouped in constituencies representing four or more countries.

Following the 2008 Amendment on Voice and Participation which came into effect in March 2011, eight countries each appoint an Executive Director: the United States, Japan, Germany, France, the United Kingdom, China, the Russian Federation, and Saudi Arabia. The remaining 16 Directors represent constituencies consisting of 4 to 22 countries. The Executive Director representing the largest constituency of 22 countries accounts for 1.55% of the vote. This Board usually meets several times each week. The Board membership and constituency is scheduled for periodic review every eight years.

List of Executive Directors of the IMF, as of April 2014

Country Region Director
US US Meg Lundsager
Japan Japan Daikichi Momma
Germany Germany Hubert Temmeyer
France France Herve Jodon de Villeroche
UK UK Steve Field
Netherlands Eastern Europe Menno Snel
Spain Spain & Central America Jose Rojas
Italy Mediterreanean Europe Andrea Montanino
Indonesia Southeast Asia Wimboh Santoso
China China Tao Zhang
South Korea Far East Jong-Won Yoon
Canada North Atlantic & Caribbean Thomas Hockin
Denmark Northern Europe Audun Groenn
unknown Africa 1 Momodou Bamba Saho
unknown North Africa & Middle East A. Shakour Shaalan
Austria Central Europe Johann Prader
India Indian subcontinent Rakesh Mohan
Saudi Arabia Saudi Arabia Fahad Ibrahim A. Alshathri
Switzerland Switz, Poland & Near East Daniel Heller
Brazil Northern South America Paulo Nogueira Batista, Jr.
Russia Russia Aleksei V. Mozhin
Iran Iran & the Stans Jafar Mojarrad
Argentina Southern South America Alvaro Andres Rojas Olmedo
unknown Africa 2 Kossi Assimaidou
Managing Director

The IMF is led by a managing director, who is head of the staff and serves as Chairman of the Executive Board. The managing director is assisted by a First Deputy managing director and three other Deputy Managing Directors. Historically the IMF''s managing director has been European and the president of the World Bank has been from the United States. However, this standard is increasingly being questioned and competition for these two posts may soon open up to include other qualified candidates from any part of the world.

In 2011 the world''s largest developing countries, the BRIC nations, issued a statement declaring that the tradition of appointing a European as managing director undermined the legitimacy of the IMF and called for the appointment to be merit-based.

Dates Name Nationality Background
6 May 1946 – 5 May 1951 Camille Gutt  Belgium Politician, Minister of Finance
3 August 1951 – 3 October 1956 Ivar Rooth  Sweden Law, Central Banker
21 November 1956 – 5 May 1963 Per Jacobsson  Sweden Law, Economics, League of Nations, BIS
1 September 1963 – 31 August 1973 Pierre-Paul Schweitzer  France Law, Central Banker, Civil Servant
1 September 1973 – 18 June 1978 Johan Witteveen  Netherlands Economics, Professor, Politician, Minister of Finance
18 June 1978 – 15 January 1987 Jacques de Larosière  France Civil Servant
16 January 1987 – 14 February 2000 Michel Camdessus  France Economics, Central Banker
1 May 2000 – 4 March 2004 Horst Köhler  Germany Economics, EBRD
7 June 2004 – 31 October 2007 Rodrigo Rato  Spain Law, MBA, Politician, Minister of the Economy
1 November 2007 – 18 May 2011 Dominique Strauss-Kahn  France Economics, Law, Politician, Minister of the Economy and Finance
5 July 2011 – Christine Lagarde  France Law, Politician, Minister of Finance
On 28 June 2011, Christine Lagarde was named managing director of the IMF, replacing Dominique Strauss-Kahn.

Previous managing director Dominique Strauss-Kahn was arrested in connection with charges of sexually assaulting a New York hotel room attendant. Strauss-Kahn subsequently resigned his position on 18 May. On 28 June 2011 Christine Lagarde was confirmed as managing director of the IMF for a five-year term starting on 5 July 2011. In 2012, Lagarde was paid a salary of US$467,940, and this is automatically increased every year according to inflation. In addition to that, the director receives an allowance of US$83,760, and additional expenses for entertainment. This income is tax-free.

Voting power

Voting power in the IMF is based on a quota system. Each member has a number of basic votes (each member''s number of basic votes equals 5.502% of the total votes), plus one additional vote for each Special Drawing Right (SDR) of 100,000 of a member country''s quota. The Special Drawing Right is the unit of account of the IMF and represents a claim to currency. It is based on a basket of key international currencies. The basic votes generate a slight bias in favour of small countries, but the additional votes determined by SDR outweigh this bias.

The table below shows quota and voting shares for IMF members (Attention: Amendment on Voice and Participation, and of subsequent reforms of quotas and governance which were agreed in 2010 but are not yet in effect.)
Rank IMF Member country Quota: millions of SDRs Quota: percentage of the total Governor Alternate Number of votes Percentage out of total votes
1  United States 42,122.4 17.69 Jacob J. Lew Janet Yellen 421,961 16.75
2  Japan 15,628.5 6.56 Taro Aso Haruhiko Kuroda 157,022 6.23
3  Germany 14,565.5 6.12 Jens Weidmann Wolfgang Schäuble 146,392 5.81
4  France 10,738.5 4.51 Michel Sapin Christian Noyer 108,122 4.29
5  United Kingdom 10,738.5 4.51 George Osborne Mark Carney 108,122 4.29
6  China 9,525.9 4.00 Zhou Xiaochuan Gang Yi 95,996 3.81
7  Italy 7,882.3 3.31 Pier Carlo Padoan Ignazio Visco 79,560 3.16
8  Saudi Arabia 6,985.5 2.93 Ibrahim A. Al-Assaf Fahad Almubarak 70,592 2.80
9  Canada 6,369.2 2.67 Joe Oliver Stephen Poloz 64,429 2.56
10  Russia 5,945.4 2.50 Anton Siluanov Elvira S. Nabiullina 60,191 2.39
11  India 5,821.5 2.44 Arun Jaitley Raghuram Rajan 58,952 2.34
12  Netherlands 5,162.4 2.17 Klaas Knot Hans Vijlbrief 52,361 2.08
13  Belgium 4,605.2 1.93 Luc Coene Marc Monbaliu 46,789 1.86
14  Brazil 4,250.5 1.79 Guido Mantega Alexandre Antonio Tombini 43,242 1.72
15  Spain 4,023.4 1.69 Luis de Guindos Luis M. Linde 40,971 1.63
16  Mexico 3,625.7 1.52 Luis Videgaray Agustín Carstens 36,994 1.47
17  Switzerland 3,458.5 1.45 Thomas Jordan Eveline Widmer-Schlumpf 35,322 1.40
18  South Korea 3,366.4 1.41 Choi Kyoung-hwan Juyeol Lee 34,401 1.37
19  Australia 3,236.4 1.36 Joe Hockey Martin Parkinson 33,101 1.31
20  Venezuela 2,659.1 1.12 Nelson José Merentes Diaz Julio Cesar Viloria Sulbaran 27,328 1.08
21  Sweden 2,395.5 1.01 Stefan Ingves Mikael Lundholm 24,692 0.98
22  Argentina 2,117.1 0.89 Axel Kicillof Juan Carlos Fabrega 21,908 0.87
23  Austria 2,113.9 0.89 Ewald Nowotny Andreas Ittner 21,876 0.87
24  Indonesia 2,079.3 0.87 Agus D.W. Martowardojo Mahendra Siregar 21,530 0.85
25  Denmark 1,891.4 0.79 Lars Rohde Sophus Garfiel 19,651 0.78
26  Norway 1,883.7 0.79 Øystein Olsen Svein Gjedrem 19,574 0.78
27  South Africa 1,868.5 0.78 Pravin J. Gordhan Gill Marcus 19,422 0.77
28  Malaysia 1,773.9 0.74 Najib Razak Zeti Akhtar Aziz 18,476 0.73
29  Nigeria 1,753.2 0.74 Ngozi Okonjo-Iweala Sarah Alade 18,269 0.73
30  Poland 1,688.4 0.71 Mateusz Szczurek Jacek Dominik 17,621 0.70
The rest of 158 countries 47,844.9 20.11 respective respective 594,895 23.59
Effects of the quota system

The IMF''s quota system was created to raise funds for loans. Each IMF member country is assigned a quota, or contribution, that reflects the country''s relative size in the global economy. Each member''s quota also determines its relative voting power. Thus, financial contributions from member governments are linked to voting power in the organisation.

This system follows the logic of a shareholder-controlled organisation: wealthy countries have more say in the making and revision of rules. Since decision making at the IMF reflects each member''s relative economic position in the world, wealthier countries that provide more money to the fund have more influence in the IMF than poorer members that contribute less; nonetheless, the IMF focuses on redistribution.

Developing countries

Quotas are normally reviewed every five years and can be increased when deemed necessary by the Board of Governors. Currently, reforming the representation of developing countries within the IMF has been suggested. These countries'' economies represent a large portion of the global economic system but this is not reflected in the IMF''s decision making process through the nature of the quota system. Joseph Stiglitz argues "There is a need to provide more effective voice and representation for developing countries, which now represent a much larger portion of world economic activity since 1944, when the IMF was created." In 2008, a number of quota reforms were passed including shifting 6% of quota shares to dynamic emerging markets and developing countries.

United States influence

A second criticism is that the United States'' transition to neoliberalism and global capitalism also led to a change in the identity and functions of international institutions like the IMF. Because of the high involvement and voting power of the United States, the global economic ideology could effectively be transformed to match the US''s. This is consistent with the IMF''s function change during the 1970s after the Nixon Shock ended the Bretton Woods system. Another criticism is that allies of the United States are able to receive bigger loans with fewer conditions.

Overcoming borrower/creditor divide

The IMF''s membership is divided along income lines: certain countries provide the financial resources while others use these resources. Both developed country "creditors" and developing country "borrowers" are members of the IMF. The developed countries provide the financial resources but rarely enter into IMF loan agreements; they are the creditors. Conversely, the developing countries use the lending services but contribute little to the pool of money available to lend because their quotas are smaller; they are the borrowers. Thus, tension is created around governance issues because these two groups, creditors and borrowers, have fundamentally different interests in terms of the conditions of these loans.

The criticism is that the system of voting power distribution through a quota system institutionalises borrower subordination and creditor dominance. The resulting division of the Fund''s membership into borrowers and non-borrowers has increased the controversy around conditionality because the borrowing members are interested in making loan access easier while the creditor members want to maintain reassurance that the loans will be repaid.


A recent source reveals that the average overall use of IMF credit per decade increased, in real terms, by 21% between the 1970s and 1980s, and increased again by just over 22% percent from the 1980s to the 1991–2005 period. Another study has suggested that since 1950 the continent of Africa alone has received $300 billion from the IMF, the World Bank and affiliate institutions

A study done by Bumba Mukherjee found that developing democratic countries benefit more from IMF programs than developing autocratic countries because policy-making, and the process of deciding where loaned money is used, is more transparent within a democracy. One study done by Randall Stone found that although earlier studies found little impact of IMF programs on balance of payments, more recent studies using more sophisticated methods and larger samples "usually found IMF programs improved the balance of payments."

Exceptional Access Framework - Sovereign Debt

The Exceptional Access Framework was created in 2003 when John B. Taylor was Under Secretary of the U.S. Treasury for International Affairs. The new Framework became fully operational in February 2003 and it was applied in the subsequent decisions on Argentina and Brazil. Its purpose was to place some sensible rules and limits on the way the IMF makes loans to support governments with debt problem—especially in emerging markets—and thereby move away from the bailout mentality that came out of the 1990s. Such a reform was essential for ending the terrible crisis atmosphere that then existed in emerging markets. The reform was closely related to, and put in place nearly simultaneously with, the actions of several emerging market countries to place collective action clauses in their bond contracts.

In 2010, the framework was abandoned so the IMF could make loans to Greece in an unsustainable and political situation.

The topic of sovereign debt restructuring was taken up by IMF staff in April 2013 for the first time since 2005, in a report entitled "SOVEREIGN DEBT RESTRUCTURING—RECENT DEVELOPMENTS AND IMPLICATIONS FOR THE FUND’S LEGAL AND POLICY FRAMEWORK". The paper, which was discussed by the board on 20 May, summarised the recent experiences in Greece, St Kitts and Nevis, Belize and Jamaica. An explanatory interview with Deputy Director Hugh Bredenkamp was published a few days later, as was a deconstruction by Matina Stevis of the Wall Street Journal.

The staff was directed to formulate an updated policy, which was accomplished on 22 May 2014 with a report entitled "THE FUND’S LENDING FRAMEWORK AND SOVEREIGN DEBT—PRELIMINARY CONSIDERATIONS", and taken up by the Executive Board on 13 June. The staff proposed that "in circumstances where a (Sovereign) member has lost market access and debt is considered sustainable... the IMF would be able to provide Exceptional Access on the basis of a debt operation that involves an extension of maturities," which was labelled a "reprofiling operation". These reprofiling operations would "generally be less costly to the debtor and creditors—and thus to the system overall—relative to either an upfront debt reduction operation or a bail-out that is followed by debt reduction... (and) would be envisaged only when both (a) a member has lost market access and (b) debt is assessed to be sustainable, but not with high probability... Creditors will only agree if they understand that such an amendment is necessary to avoid a worse outcome: namely, a default and/or an operation involving debt reduction... Collective action clauses, which now exist in most—but not all—bonds, would be relied upon to address collective action problems."

IMF and globalization

Globalization encompasses three institutions: global financial markets and transnational companies, national governments linked to each other in economic and military alliances led by the US, and rising "global governments" such as World Trade Organization (WTO), IMF, and World Bank. Charles Derber argues in his book People Before Profit, "These interacting institutions create a new global power system where sovereignty is globalized, taking power and constitutional authority away from nations and giving it to global markets and international bodies." Titus Alexander argues that this system institutionalises global inequality between western countries and the Majority World in a form of global apartheid, in which the IMF is a key pillar.

The establishment of globalised economic institutions has been both a symptom of and a stimulus for globalization. The development of the World Bank, the IMF regional development banks such as the European Bank for Reconstruction and Development (EBRD), and, more recently, multilateral trade institutions such as the WTO indicates the trend away from the dominance of the state as the exclusive unit of analysis in international affairs. Globalization has thus been transformative in terms of a reconceptualising of state sovereignty.

Following US President Bill Clinton''s administration''s aggressive financial deregulation campaign in the 1990s, globalisation leaders overturned long-standing restrictions by governments that limited foreign ownership of their banks, deregulated currency exchange, and eliminated restrictions on how quickly money could be withdrawn by foreign investors.


Overseas Development Institute (ODI) research undertaken in 1980 pointed to five main criticisms of the IMF which support the analysis that it is a pillar of what activist Titus Alexander calls global apartheid. Firstly, developed countries were seen to have a more dominant role and control over less developed countries (LDCs) primarily due to the Western bias towards a capitalist form of the world economy with professional staff being Western trained and believing in the efficacy of market-oriented policies.

Secondly, the Fund worked on the incorrect assumption that all payments disequilibria were caused domestically. The Group of 24 (G-24), on behalf of LDC members, and the United Nations Conference on Trade and Development (UNCTAD) complained that the Fund did not distinguish sufficiently between disequilibria with predominantly external as opposed to internal causes. This criticism was voiced in the aftermath of the 1973 oil crisis. Then LDCs found themselves with payments deficits due to adverse changes in their terms of trade, with the Fund prescribing stabilisation programmes similar to those suggested for deficits caused by government over-spending. Faced with long-term, externally generated disequilibria, the Group of 24 argued that LDCs should be allowed more time to adjust their economies and that the policies needed to achieve such adjustment are different from demand-management programmes devised primarily with internally generated disequilibria in mind.

The third criticism was that the effects of Fund policies were anti-developmental. The deflationary effects of IMF programmes quickly led to losses of output and employment in economies where incomes were low and unemployment was high. Moreover, it was sometimes claimed that the burden of the deflationary effects was borne disproportionately by the poor.

Fourthly is the accusation that harsh policy conditions were self-defeating where a vicious circle developed when members refused loans due to harsh conditionality, making their economy worse and eventually taking loans as a drastic medicine.

Lastly is the point that the Fund''s policies lack a clear economic rationale. Its policy foundations were theoretical and unclear due to differing opinions and departmental rivalries whilst dealing with countries with widely varying economic circumstances.

ODI conclusions were that the Fund''s very nature of promoting market-oriented economic approach attracted unavoidable criticism, as LDC governments were likely to object when in a tight corner. Yet, on the other hand, the Fund could provide a ''scapegoat service'' where governments could take loans as a last resort, whilst blaming international bankers for any economic downfall. The ODI conceded that the fund was to some extent insensitive to political aspirations of LDCs, while its policy conditions were inflexible.

Argentina, which had been considered by the IMF to be a model country in its compliance to policy proposals by the Bretton Woods institutions, experienced a catastrophic economic crisis in 2001, which some believe to have been caused by IMF-induced budget restrictions—which undercut the government''s ability to sustain national infrastructure even in crucial areas such as health, education, and security—and privatisation of strategically vital national resources. Others attribute the crisis to Argentina''s misdesigned fiscal federalism, which caused subnational spending to increase rapidly. The crisis added to widespread hatred of this institution in Argentina and other South American countries, with many blaming the IMF for the region''s economic problems. The current—as of early 2006—trend toward moderate left-wing governments in the region and a growing concern with the development of a regional economic policy largely independent of big business pressures has been ascribed to this crisis.

In an interview, the former Romanian Prime Minister Călin Popescu-Tăriceanu claimed that "Since 2005, IMF is constantly making mistakes when it appreciates the country''s economic performances." Former Tanzanian President Julius Nyerere famously questioned, "Who elected the IMF to be the ministry of finance for every country in the world?" and therefore described it as the International Ministry of Finance. He also claimed that many of debt-ridden African states were losing their sovereignty to the IMF and the World Bank by agreeing to their support measures.

Conditionality of Loans

The IMF has been criticised for being ''out of touch'' with local economic conditions, cultures, and environments in the countries they are requiring policy reform. The economic advice the IMF gives might not always take into consideration the difference between what spending means on paper and how it is felt by citizens.

For example, some people believe that Jeffrey Sachs'' work shows that "the Fund''s usual prescription is ''budgetary belt tightening to countries who are much too poor to own belts''". It has been said that the IMF''s role as a generalist institution specialising in macroeconomic issues needs reform. Conditionality has also been criticised because a country can pledge collateral of "acceptable assets" to obtain waivers on certain conditions. However, that assumes that all countries have the capability and choice to provide acceptable collateral.

One view is that conditionality undermines domestic political institutions. The recipient governments are sacrificing policy autonomy in exchange for funds, which can lead to public resentment of the local leadership for accepting and enforcing the IMF conditions. Political instability can result from more leadership turnover as political leaders are replaced in electoral backlashes. IMF conditions are often criticised for their bias against economic growth and reduce government services, thus increasing unemployment.

Another criticism is that IMF programs are only designed to address poor governance, excessive government spending, excessive government intervention in markets, and too much state ownership. This assumes that this narrow range of issues represents the only possible problems; everything is standardised and differing contexts are ignored. A country may also be compelled to accept conditions it would not normally accept had they not been in a financial crisis in need of assistance.

On top of that, regardless of what methodologies and data sets used, it comes to same conclusion of exacerbating income inequality. With Gini coefficient, it became clear that countries with IMF programs face increased income inequality.

It is claimed that conditionalities retard social stability and hence inhibit the stated goals of the IMF, while Structural Adjustment Programs lead to an increase in poverty in recipient countries. The IMF sometimes advocates “austerity programmes,” cutting public spending and increasing taxes even when the economy is weak, to bring budgets closer to a balance, thus reducing budget deficits. Countries are often advised to lower their corporate tax rate. In Globalization and Its Discontents, Joseph E. Stiglitz, former chief economist and senior vice-president at the World Bank, criticises these policies. He argues that by converting to a more monetarist approach, the purpose of the fund is no longer valid, as it was designed to provide funds for countries to carry out Keynesian reflations, and that the IMF "was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community."

International politics play an important role in making decision in IMF. The power each member has is often proportional to the country''s size of economy and contribution to IMF finance. During this process, the member with powerful say can pressure the Fund to do in interest of its own. It is inevitable fact that United States, the initial founding member of IMF, is getting preferential treatment from the Fund. Unlike what they do to other developing countries, United States might bail out with big loans and not complying with IMF conditions. Seeing in the level of domestic politics, often politicians in developing countries use the conditionality gain leverage over the opposing side of the population to change policy.


The IMF is only one of many international organisations and it is a generalist institution for macroeconomic issues only; its core areas of concern in developing countries are very narrow. One proposed reform is a movement towards close partnership with other specialist agencies to better productivity. The IMF has little to no communication with other international organisations such as UN specialist agencies like UNICEF, the Food and Agriculture Organization (FAO), and the United Nations Development Program (UNDP).

Jeffrey Sachs argues in The End of Poverty that "international institutions like the International Monetary Fund (IMF) and the World Bank have the brightest economists and the lead in advising poor countries on how to break out of poverty, but the problem is development economics". Development economics needs the reform, not the IMF. He also notes that IMF loan conditions need to be partnered with other reforms such as trade reform in developed nations, debt cancellation, and increased financial assistance for investments in basic infrastructure to be effective. IMF loan conditions cannot stand alone and produce change; they need to be partnered with other reforms or other conditions as applicable.

Reforms to give more powers to emerging economies were agreed by the G20 in 2010, however as of April 2014 the U.S. Congress has not agreed to these reforms, making eventual agreement uncertain.

Support of military dictatorships

The role of the Bretton Woods institutions has been controversial since the late Cold War period, due to claims that the IMF policy makers supported military dictatorships friendly to American and European corporations and other anti-communist regimes. Critics also claim that the IMF is generally apathetic or hostile to their views of human rights, and labour rights. The controversy has helped spark the Anti-globalization movement.

Arguments in favour of the IMF say that economic stability is a precursor to democracy; however, critics highlight various examples in which democratised countries fell after receiving IMF loans.

Impact on access to food

A number of civil society organisations have criticised the IMF''s policies for their impact on people''s access to food, particularly in developing countries. In October 2008, former US president Bill Clinton presented a speech to the United Nations World Food Day, which criticised the World Bank and IMF for their policies on food and agriculture:

We need the World Bank, the IMF, all the big foundations, and all the governments to admit that, for 30 years, we all blew it, including me when I was president. We were wrong to believe that food was like some other product in international trade, and we all have to go back to a more responsible and sustainable form of agriculture.

—Former U.S. president Bill Clinton, Speech at United Nations World Food Day, October 16, 2008Impact on public health

In 2009 a study by analysts from Cambridge and Yale universities published on the open-access Public Library of Science concluded that strict conditions on the international loans by the IMF resulted in thousands of deaths in Eastern Europe by tuberculosis as public health care had to be weakened. In the 21 countries to which the IMF had given loans, tuberculosis deaths rose by 16.6%.

In 2009, a book by Rick Rowden titled The Deadly Ideas of Neoliberalism: How the IMF has Undermined Public Health and the Fight Against AIDS, claimed that the IMF’s monetarist approach towards prioritising price stability (low inflation) and fiscal restraint (low budget deficits) was unnecessarily restrictive and has prevented developing countries from being able to scale up long-term public investment as a percent of GDP in the underlying public health infrastructure. The book claimed the consequences have been chronically underfunded public health systems, leading to dilapidated health infrastructure, inadequate numbers of health personnel, and demoralising working conditions that have fuelled the “push factors” driving the brain drain of nurses migrating from poor countries to rich ones, all of which has undermined public health systems and the fight against HIV/AIDS in developing countries.

Impact on environment

IMf policies have been repeatedly criticised for making it difficult for indebted countries to avoid ecosystem-damaging projects that generate cash flow, in particular oil, coal, and forest-destroying lumber and agriculture projects. Ecuador for example had to defy IMF advice repeatedly to pursue the protection of its rain forests, though paradoxically this need was cited in IMF argument to support that country. The IMF acknowledged this paradox in a March 2010 staff position report which proposed the IMF Green Fund, a mechanism to issue special drawing rights directly to pay for climate harm prevention and potentially other ecological protection as pursued generally by other environmental finance.

While the response to these moves was generally positive possibly because ecological protection and energy and infrastructure transformation are more politically neutral than pressures to change social policy. Some experts voiced concern that the IMF was not representative, and that the IMF proposals to generate only US$200 billion a year by 2020 with the SDRs as seed funds, did not go far enough to undo the general incentive to pursue destructive projects inherent in the world commodity trading and banking systems—criticisms often levelled at the World Trade Organization and large global banking institutions.

In the context of the May 2010 European banking crisis, some observers also noted that Spain and California, two troubled economies within Europe and the United States respectively, and also Germany, the primary and politically most fragile supporter of a euro currency bailout would benefit from IMF recognition of their leadership in green technology, and directly from Green Fund–generated demand for their exports, which might also improve their credit standing with international bankers.

Proposed Alternatives

In March 2011 the Ministers of Economy and Finance of the African Union proposed to establish an African Monetary Fund.

At the 6th BRICS summit in July 2014 the BRICS nations (Brazil, Russia, India, China, and South Africa) announced the signing of a Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$100 billion. The Agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures.

In the media

Life and Debt, a documentary film, deals with the IMF''s policies'' influence on Jamaica and its economy from a critical point of view. Debtocracy, a 2011 independent Greek documentary film, also criticises the IMF and its tactics for providing financial help to indebted nations.

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