International Monetary Fund

Background and evolution

The IMF was designed to avoid the competitive devaluations, trade wars and financial collapses of the 1930s. Under the original Bretton Woods system, currencies were pegged to the US dollar, which was convertible into gold at 35 dollars an ounce, and the IMF supervised these fixed exchange rates and lent to countries in temporary difficulty.

When the United States ended dollar convertibility into gold in 1971, the fixed-rate system broke down, and by 1973 major currencies floated. The IMF's role changed to surveillance of economic policies, crisis lending and advice. It became central during the debt crises of the 1980s in Latin America and Africa, the Asian financial crisis of 1997–98, the global financial crisis of 2008 and the European debt crisis.

Key features and provisions

• Surveillance: annual Article IV consultations review each member's economic policies; multilateral surveillance tracks global risks.
• Lending: arrangements such as Stand-By Arrangements, the Extended Fund Facility, the Rapid Financing Instrument and concessional loans for low-income countries through the Poverty Reduction and Growth Trust.
• Conditionality: loans usually come with policy conditions, such as fiscal adjustment or structural reforms.
• Quotas: each member's quota determines its contribution, voting power and access to finance; quotas are reviewed periodically.
• SDRs: an international reserve asset allocated to members; a large general allocation of about 650 billion dollars was made in 2021 to help countries during the pandemic.
• Capacity development: technical help on tax policy, central banking, statistics and public finance.