International Monetary Fund

Board of Governors International Monetary Fund (1999)

According to the IMF itself, it works to foster global growth and economic stability by providing policy advice and financing the members by working with developing countries to help them achieve macroeconomic stability and reduce poverty.^[20] 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 economic consequences.^[21] The IMF provides alternate sources of financing such as the Poverty Reduction and Growth Facility.^[22]

Upon the founding of the IMF, its three primary functions were:

• to oversee the fixed exchange rate arrangements between countries,^[23] thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth,^[24] and
• to provide short-term capital to aid the balance of payments^[23] and prevent the spread of international economic crises.
• to help mend the pieces of the international economy after the Great Depression and World War II^[25] as well as to provide capital investments for economic growth and projects such as infrastructure.

The IMF's role was fundamentally altered by the floating exchange rates after 1971. It shifted to examining the economic policies of countries with IMF loan agreements to determine whether 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.^[23] A particular concern of the IMF was to prevent financial crises, such as those in Mexico in 1982, Brazil in 1987, East Asia in 1997–98, and Russia in 1998, from spreading and threatening the entire global financial and currency system. The challenge was to promote and implement a policy that reduced the frequency of crises among emerging market countries, especially the middle-income countries which are vulnerable to massive capital outflows.^[26] Rather than maintaining a position of oversight of only exchange rates, their function became one of surveillance of the overall macroeconomic performance of member countries. Their role became a lot more active because the IMF now manages economic policy rather than just exchange rates.

In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality,^[23] which was established in the 1950s.^[24] 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). Non-concessional loans, which include interest rates, are provided mainly through the 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 Rapid Financing Instrument (RFI) to members facing urgent balance-of-payments needs.^[27]

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 member countries.^[28] This activity is known as surveillance and facilitates international co-operation.^[29] 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.^[28] The responsibilities changed from those of guardians to those of overseers 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.^[28] For instance, The IMF played a significant role in individual countries, such as Armenia and Belarus, in providing financial support to achieve stabilization financing from 2009 to 2019.^[30] The maximum sustainable debt level of a polity, which is watched closely by the IMF, was defined in 2011 by IMF economists to be 120%.^[31] Indeed, it was at this number that the Greek economy melted down in 2010.^[32]

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 to 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 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 (MDG) and Poverty Reduction Strategic Papers (PRSPs).

The primary objective of the GDDS is to encourage member countries to build a framework to improve data quality and statistical capacity building to evaluate statistical needs, set priorities in improving 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 IMF members also contribute statistical data to the systems:

• Palestinian Authority – GDDS
• Hong Kong – SDDS
• Macau – GDDS^[33]
• Institutions of the European Union:
  • 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)

A 2021 study found that the IMF's surveillance activities have "a substantial impact on sovereign debt with much greater impacts in emerging than high-income economies."^[34]

World Economic Outlook

World Economic Outlook is a survey, published twice a year, by International Monetary Fund staff, which analyzes the global economy in the near and medium term.^[35]

Conditionality of loans

IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial resources.^[23] The IMF does require collateral from countries for loans but also requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform.^[36] If the conditions are not met, the funds are withheld.^[23][37] The concept of conditionality was introduced in a 1952 executive board decision and later incorporated into 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, the theoretical underpinning of conditionality was the "monetary approach to the balance of payments".^[24]

Structural adjustment

Some of the conditions for structural adjustment can include:

• Cutting expenditures or raising revenues, 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 facilities for the domestic market),
• 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 are known as the Washington Consensus.

Benefits

These loan conditions ensure that the borrowing country will be able to repay the IMF and that the country will not attempt to solve their balance-of-payment problems in a way that would negatively impact the international economy.^[38][39] The incentive problem of moral hazard—when economic agents maximise their own utility to the detriment of others because 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.^[39]

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 the country will be able to rectify its macroeconomic and structural imbalances.^[39] In the judgment of the IMF, the adoption by the member of certain corrective measures or policies will allow it to repay the IMF, thereby ensuring that the resources will be available to support other members.^[37]

As of 2004^[update], borrowing countries have had a good track record for repaying credit extended under the IMF's regular lending facilities with full interest over the duration of the loan. This indicates that IMF 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 IMF, plus all of the reserve assets that they provide the IMF.^[21]

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Economic stability

Economic stability

Economic stability is the absence of excessive fluctuations in the macroeconomy. An economy with fairly constant output growth and low and stable inflation would be considered economically stable. An economy with frequent large recessions, a pronounced business cycle, very high or variable inflation, or frequent financial crises would be considered economically unstable.

Developing country

Developing country

A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreement on which countries fit this category. The term low and middle-income country (LMIC) is often used interchangeably but refers only to the economy of the countries. The World Bank classifies the world's economies into four groups, based on gross national income per capita: high, upper-middle, lower-middle, and low income countries. Least developed countries, landlocked developing countries and small island developing states are all sub-groupings of developing countries. Countries on the other end of the spectrum are usually referred to as high-income countries or developed countries.

Fixed exchange rate system

Fixed exchange rate system

A fixed exchange rate, often called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency, a basket of other currencies, or another measure of value, such as gold.

Exchange rate

Exchange rate

In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of the euro.

Balance of payments

Balance of payments

In international economics, the balance of payments of a country is the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world. These financial transactions are made by individuals, firms and government bodies to compare receipts and payments arising out of trade of goods and services.

Financial crisis

Financial crisis

A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in significant changes in the real economy.

Floating exchange rate

Floating exchange rate

In macroeconomics and economic policy, a floating exchange rate is a type of exchange rate regime in which a currency's value is allowed to fluctuate in response to foreign exchange market events. A currency that uses a floating exchange rate is known as a floating currency, in contrast to a fixed currency, the value of which is instead specified in terms of material goods, another currency, or a set of currencies.

Business cycle

Business cycle

Business cycles are intervals of expansion followed by recession in economic activity. A recession is defined as 2 quarters of negative GDP growth. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examining trends in a broad economic indicator such as Real Gross Domestic Production.

Brazil

Brazil

Brazil, officially the Federative Republic of Brazil, is the largest country in South America and in Latin America. At 8.5 million square kilometers (3,300,000 sq mi) and with over 217 million people, Brazil is the world's fifth-largest country by area and the seventh most populous. Its capital is Brasília, and its most populous city is São Paulo. The federation is composed of the union of the 26 states and the Federal District. It is the only country in the Americas to have Portuguese as an official language. It is one of the most multicultural and ethnically diverse nations, due to over a century of mass immigration from around the world, and the most populous Roman Catholic-majority country.

East Asia

East Asia

East Asia is the easternmost region of Asia, which is defined in both geographical and ethno-cultural terms. The modern states of East Asia include China, Japan, Mongolia, North Korea, South Korea, and Taiwan. Hong Kong and Macau, two small coastal quasi-dependent territories located in the south of China, are officially highly autonomous but are under Chinese sovereignty. Japan, Taiwan, South Korea, Mainland China, Hong Kong, and Macau are among the world's largest and most prosperous economies. East Asia borders Siberia and the Russian Far East to the north, Southeast Asia to the south, South Asia to the southwest, and Central Asia to the west. To the east is the Pacific Ocean and to the southeast is Micronesia.

1998 Russian financial crisis

1998 Russian financial crisis

The Russian financial crisis began in Russia on 17 August 1998. It resulted in the Russian government and the Russian Central Bank devaluing the ruble and defaulting on its debt. The crisis had severe impacts on the economies of many neighboring countries.

Conditionality

Conditionality

In political economy and international relations, conditionality is the use of conditions attached to the provision of benefits such as a loan, debt relief or bilateral aid. These conditions are typically imposed by international financial institutions or regional organizations and are intended to improve economic conditions within the recipient country.

20th century

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

IMF "Headquarters 1" in Washington, D.C., designed by Moshe Safdie

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

First page of the Articles of Agreement of the International Monetary Fund, 1 March 1946. Finnish Ministry of Foreign Affairs archives

The IMF was originally laid out as a part of the Bretton Woods system exchange agreement in 1944.^[40] During the Great Depression, countries sharply raised barriers to trade in an attempt to improve their failing economies. This led to the devaluation of national currencies and a decline in world trade.^[41]

This breakdown in international monetary cooperation created a need for oversight. The representatives of 45 governments met at the Bretton Woods Conference in the Mount Washington Hotel in Bretton Woods, New Hampshire, in the United States, to discuss a framework for postwar international economic cooperation and how to rebuild Europe.

There were two views on the role the IMF should assume as a global economic institution. 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.^[42] Most of White's plan was incorporated into the final acts adopted at Bretton Woods. British economist John Maynard Keynes, on the other hand, 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 act as the United States government had during the New Deal to the great recession of the 1930s.^[42]

The IMF formally came into existence on 27 December 1945, when the first 29 countries ratified its Articles of Agreement.^[43] By the end of 1946 the IMF had grown to 39 members.^[44] On 1 March 1947, the IMF began its financial operations,^[45] and on 8 May France became the first country to borrow from it.^[44]

The IMF was one of the key organizations of the international economic system; its design allowed the system to balance the rebuilding of international capitalism with the maximization of national economic sovereignty and human welfare, also known as embedded liberalism.^[24] 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.^[41]

The Bretton Woods exchange rate system prevailed until 1971 when the United States government suspended the convertibility of the US$ (and dollar reserves held by other governments) into gold. This is known as the Nixon Shock.^[41] The changes to the IMF articles of agreement reflecting these changes were ratified in 1976 by the Jamaica Accords. Later in the 1970s, large commercial banks began lending to states because they were awash in cash deposited by oil exporters. The lending of the so-called money center banks led to the IMF changing its role in the 1980s after a world recession provoked a crisis that brought the IMF back into global financial governance.^[46]

21st century

The IMF provided two major lending packages in the early 2000s to Argentina (during the 1998–2002 Argentine great depression) and Uruguay (after the 2002 Uruguay banking crisis).^[47] However, by the mid-2000s, IMF lending was at its lowest share of world GDP since the 1970s.^[48]

In May 2010, the IMF participated, in 3:11 proportion, in the first Greek bailout that totaled €110 billion, to address the great accumulation of public debt, caused by continuing large public sector deficits. As part of the bailout, the Greek government agreed to adopt austerity measures that would reduce the deficit from 11% in 2009 to "well below 3%" in 2014.^[49] The bailout did not include debt restructuring measures such as a haircut, to the chagrin of the Swiss, Brazilian, Indian, Russian, and Argentinian Directors of the IMF, with the Greek authorities themselves (at the time, PM George Papandreou and Finance Minister Giorgos Papakonstantinou) ruling out a haircut.^[50]

A second bailout package of more than €100 billion was agreed upon 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 XDR 23.8 billion^[51] and 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 reduced exposure to Greek debt from €122 billion to €66 billion.^[50][52]

As of January 2012^[update], the largest borrowers from the IMF in order were Greece, Portugal, Ireland, Romania, and Ukraine.^[53]

On 25 March 2013, a €10 billion 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 Bank of Cyprus uninsured deposits.^[54][55] No insured deposit of €100k or less were to be affected under the terms of a novel bail-in scheme.^[56][57]

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".^[58] The paper, which was discussed by the board on 20 May,^[59] 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,^[60] as was a deconstruction by Matina Stevis of The Wall Street Journal.^[61]

In the October 2013, Fiscal 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 of about 10%.^[62]

The Fiscal Affairs department of the IMF, headed at the time by Acting Director Sanjeev Gupta, produced a January 2014 report entitled "Fiscal Policy and Income Inequality" that 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."^[63]

At the end of March 2014, the IMF secured an $18 billion bailout fund for the provisional government of Ukraine in the aftermath of the Revolution of Dignity.^[64][65]

Response and analysis of coronavirus

In late 2019, the IMF estimated global growth in 2020 to reach 3.4%, but due to the coronavirus, in November 2020, it expected the global economy to shrink by 4.4%.^[66][67]

In March 2020, Kristalina Georgieva announced that the IMF stood ready to mobilize $1 trillion as its response to the COVID-19 pandemic.^[68] This was in addition to the $50 billion fund it had announced two weeks earlier,^[69] of which $5 billion had already been requested by Iran.^[70] One day earlier on 11 March, the UK called to pledge £150 million to the IMF catastrophe relief fund.^[71] It came to light on 27 March that "more than 80 poor and middle-income countries" had sought a bailout due to the coronavirus.^[72]

On 13 April 2020, the IMF said that it "would provide immediate debt relief to 25 member countries under its Catastrophe Containment and Relief Trust (CCRT)" programme.^[73]

In November 2020, the Fund warned the economic recovery may be losing momentum as COVID-19 infections rise again and that more economic help would be needed.^[67]

Discover more about History related topics

Bretton Woods Conference

Bretton Woods Conference

The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, United States, to regulate the international monetary and financial order after the conclusion of World War II.

Bretton Woods system

Bretton Woods system

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent states. The Bretton Woods system required countries to guarantee convertibility of their currencies into U.S. dollars to within 1% of fixed parity rates, with the dollar convertible to gold bullion for foreign governments and central banks at US$35 per troy ounce of fine gold. It also envisioned greater cooperation among countries in order to prevent future competitive devaluations, and thus established the International Monetary Fund (IMF) to monitor exchange rates and lend reserve currencies to nations with balance of payments deficits.

Great Depression

Great Depression

The Great Depression (1929–1939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagion began around September and led to the Wall Street stock market crash of October 24. It was the longest, deepest, and most widespread depression of the 20th century.

Devaluation

Devaluation

In macroeconomics and modern monetary policy, a devaluation is an official lowering of the value of a country's currency within a fixed exchange-rate system, in which a monetary authority formally sets a lower exchange rate of the national currency in relation to a foreign reference currency or currency basket. The opposite of devaluation, a change in the exchange rate making the domestic currency more expensive, is called a revaluation. A monetary authority maintains a fixed value of its currency by being ready to buy or sell foreign currency with the domestic currency at a stated rate; a devaluation is an indication that the monetary authority will buy and sell foreign currency at a lower rate.

Bretton Woods, New Hampshire

Bretton Woods, New Hampshire

Bretton Woods is an area within the town of Carroll, New Hampshire, United States, whose principal points of interest are three leisure and recreation facilities. Being virtually surrounded by the White Mountain National Forest, the vista from Bretton Woods toward Mount Washington and the Presidential Range includes no significant artificial structures other than the Mount Washington Cog Railway and the Mount Washington Hotel.

Harry Dexter White

Harry Dexter White

Harry Dexter White was a senior U.S. Treasury department official. Working closely with the Secretary of the Treasury Henry Morgenthau Jr., he helped set American financial policy toward the Allies of World War II. He was later accused of espionage by passing information to the Soviet Union.

John Maynard Keynes

John Maynard Keynes

John Maynard Keynes, 1st Baron Keynes was an English economist and philosopher whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in mathematics, he built on and greatly refined earlier work on the causes of business cycles. One of the most influential economists of the 20th century, he produced writings that are the basis for the school of thought known as Keynesian economics, and its various offshoots. His ideas, reformulated as New Keynesianism, are fundamental to mainstream macroeconomics.

Embedded liberalism

Embedded liberalism

Embedded liberalism is a term in international political economy for the global economic system and the associated international political orientation as they existed from the end of World War II to the 1970s. The system was set up to support a combination of free trade with the freedom for states to enhance their provision of welfare and to regulate their economies to reduce unemployment. The term was first used by the American political scientist John Ruggie in 1982.

Dissolution of the Soviet Union

Dissolution of the Soviet Union

The dissolution of the Soviet Union was the process of internal disintegration within the Soviet Union (USSR) which resulted in the end of the country's and its federal government's existence as a sovereign state, thereby resulting in its constituent republics gaining full independence on 26 December 1991. It brought an end to General Secretary Mikhail Gorbachev's effort to reform the Soviet political and economic system in an attempt to stop a period of political stalemate and economic backslide. The Soviet Union had experienced internal stagnation and ethnic separatism. Although highly centralized until its final years, the country was made up of 15 top-level republics that served as homelands for different ethnicities. By late 1991, amid a catastrophic political crisis, with several republics already departing the Union and the waning of centralized power, the leaders of three of its founding members declared that the Soviet Union no longer existed. Eight more republics joined their declaration shortly thereafter. Gorbachev resigned in December 1991 and what was left of the Soviet parliament voted to end itself.

Jamaica Accords

Jamaica Accords

The Jamaica Accords were a set of international agreements that ratified the end of the Bretton Woods monetary system. They took the form of recommendations to change the "articles of agreement" that the International Monetary Fund (IMF) was founded upon. The agreement was concluded after meetings 7–8 January 1976 at Kingston, Jamaica by a committee of the board of governors of the IMF.

1998–2002 Argentine great depression

1998–2002 Argentine great depression

The Argentine Great Depression was an economic depression in Argentina, which began in the third quarter of 1998 and lasted until the second quarter of 2002. It followed the fifteen years stagnation and a brief period of free-market reforms.

2002 Uruguay banking crisis

2002 Uruguay banking crisis

The 2002 Uruguay banking crisis was a major banking crisis that hit Uruguay in July 2002. In this, a massive run on banks by depositors caused the government to freeze banking operations. The crisis was caused by a considerable contraction in Uruguay's economy and by over-dependence on Argentina, which experienced a strong phase of an economic meltdown itself in late 2001. In total, approximately 1/3 of the country's deposits were withdrawn and five financial institutions were left insolvent.

  IMF member states

  IMF member states not accepting the obligations of Article VIII, Sections 2, 3, and 4^[74]

Not all member countries of the IMF are sovereign states, and therefore not all "member countries" of the IMF are members of the United Nations.^[75] Amidst "member countries" of the IMF that are not member states of the UN are non-sovereign areas with special jurisdictions that are officially under the sovereignty of full UN member states, such as Aruba, Curaçao, Hong Kong, and Macao, as well as Kosovo.^[76][77] 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.^[78]

Former members are Cuba (which left in 1964),^[79] and Taiwan, which was ejected from the IMF^[80] in 1980 after losing the support of the then United States President Jimmy Carter and was replaced by the People's Republic of China.^[81] However, "Taiwan Province of China" is still listed in the official IMF indices.^[82]

Apart from Cuba, the other UN states that do not belong to the IMF are Liechtenstein, Monaco and North Korea. However, Andorra became the 190th member on 16 October 2020.^[83][84]

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.^[85]

Qualifications

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.^[24]

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.^[86]

Benefits

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.^[87]

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Aruba

Aruba

Aruba, officially the Country of Aruba, is a constituent country of the Kingdom of the Netherlands physically located in the mid-south of the Caribbean Sea, about 29 kilometres (18 mi) north of the Venezuela peninsula of Paraguaná and 80 kilometres (50 mi) northwest of Curaçao. It measures 32 kilometres (20 mi) long from its northwestern to its southeastern end and 10 kilometres (6 mi) across at its widest point. Together with Bonaire and Curaçao, Aruba forms a group referred to as the ABC islands. Collectively, these and the other three Dutch substantial islands in the Caribbean are often called the Dutch Caribbean, of which Aruba has about one-third of the population. In 1986, it became a constituent country within the Kingdom of the Netherlands, and acquired the formal name the Country of Aruba.

Curaçao

Curaçao

Curaçao, officially the Country of Curaçao, is a Lesser Antilles island country in the southern Caribbean Sea and the Dutch Caribbean region, about 65 km (40 mi) north of the Venezuela coast. It is a constituent country of the Kingdom of the Netherlands. Together with Aruba and Bonaire, it forms the ABC islands. Collectively, Curaçao, Aruba, and other Dutch islands in the Caribbean are often called the Dutch Caribbean. It is the largest of the ABC islands in both area and population as well as the largest of the Dutch Caribbean.

Hong Kong

Hong Kong

Hong Kong, officially the Hong Kong Special Administrative Region of the People's Republic of China, is a city and special administrative region of China on the eastern Pearl River Delta in South China. With 7.5 million residents of various nationalities in a 1,104-square-kilometre (426 sq mi) territory, Hong Kong is one of the most densely populated places in the world. Hong Kong is also a major global financial centre and one of the most developed cities in the world.

Macau

Macau

Macau or Macao, officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a population of about 680,000 and an area of 32.9 km2 (12.7 sq mi), it is the most densely populated region in the world.

Kosovo

Kosovo

Kosovo, officially the Republic of Kosovo, is a partially recognised state in Southeast Europe. It lies at the centre of the Balkans. Kosovo unilaterally declared its independence from Serbia on 17 February 2008, and has since gained diplomatic recognition as a sovereign state by 101 member states of the United Nations. It is bordered by Serbia to the north and east, North Macedonia to the southeast, Albania to the southwest, and Montenegro to the west. Most of central Kosovo is dominated by the vast plains and fields of Metohija and Kosovo field. The Accursed Mountains and Šar Mountains rise in the southwest and southeast, respectively. Its capital and largest city is Pristina.

International Bank for Reconstruction and Development

International Bank for Reconstruction and Development

The International Bank for Reconstruction and Development (IBRD) is an international financial institution, established in 1944 and headquartered in Washington, D.C., United States, that is the lending arm of World Bank Group. The IBRD offers loans to middle-income developing countries. The IBRD is the first of five member institutions that compose the World Bank Group. The initial mission of the IBRD in 1944, was to finance the reconstruction of European nations devastated by World War II. The IBRD and its concessional lending arm, the International Development Association (IDA), are collectively known as the World Bank as they share the same leadership and staff.

Cuba

Cuba

Cuba, officially the Republic of Cuba, is an island country comprising the island of Cuba, as well as Isla de la Juventud and several minor archipelagos. Cuba is located where the northern Caribbean Sea, Gulf of Mexico, and Atlantic Ocean meet. Cuba is located east of the Yucatán Peninsula (Mexico), south of both the American state of Florida and the Bahamas, west of Hispaniola, and north of both Jamaica and the Cayman Islands. Havana is the largest city and capital; other major cities include Santiago de Cuba and Camagüey. The official area of the Republic of Cuba is 109,884 km2 (42,426 sq mi) but a total of 350,730 km2 (135,420 sq mi) including the exclusive economic zone. Cuba is the second-most populous country in the Caribbean after Haiti, with over 11 million inhabitants.

Jimmy Carter

Jimmy Carter

James Earl Carter Jr. is an American retired politician who served as the 39th president of the United States from 1977 to 1981. A member of the Democratic Party, he served as the 76th governor of Georgia from 1971 to 1975 and as a Georgia state senator from 1963 to 1967.

China

China

China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and borders fourteen countries by land, the most of any country in the world, tied with Russia. With an area of approximately 9.6 million square kilometres (3,700,000 sq mi), it is the world's third largest country by total land area. The country consists of 22 provinces, five autonomous regions, four municipalities, and two special administrative regions. The national capital is Beijing, and the most populous city and largest financial center is Shanghai.

Liechtenstein

Liechtenstein

Liechtenstein, officially the Principality of Liechtenstein, is a German-speaking microstate located in the Alps between Austria and Switzerland. It is the sixth smallest nation worldwide. Liechtenstein is a semi-constitutional monarchy headed by the prince of Liechtenstein.

Andorra

Andorra

Andorra, officially the Principality of Andorra, is a sovereign landlocked microstate on the Iberian Peninsula, in the eastern Pyrenees, bordered by France to the north and Spain to the south. Believed to have been created by Charlemagne, Andorra was ruled by the count of Urgell until 988, when it was transferred to the Roman Catholic Diocese of Urgell. The present principality was formed by a charter in 1278. It is headed by two co-princes: the bishop of Urgell in Catalonia, Spain and the president of France. Its capital and largest city is Andorra la Vella.

Czechoslovakia

Czechoslovakia

Czechoslovakia was a landlocked state in Central Europe, created in 1918, when it declared its independence from Austria-Hungary. In 1938, after the Munich Agreement, the Sudetenland became part of Germany, while the country lost further territories to Hungary and Poland. Between 1939 and 1945, the state ceased to exist, as Slovakia proclaimed its independence and the remaining territories in the east became part of Hungary, while in the remainder of the Czech Lands, the German Protectorate of Bohemia and Moravia was proclaimed. In 1939, after the outbreak of World War II, former Czechoslovak President Edvard Beneš formed a government-in-exile and sought recognition from the Allies.

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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 an executive director 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.^[88]

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.^[89] The Development Committee has 25 members and advises on critical development issues and on financial resources required to promote economic development in developing countries.

The Board of Governors reports directly to the managing director of the IMF, Kristalina Georgieva.^[89]

Executive Board

24 Executive Directors make up the executive board. The executive directors represent all 189 member countries in a geographically based roster.^[90] Countries with large economies have their own executive director, but most countries are grouped in constituencies representing four or more countries.^[88]

Following the 2008 Amendment on Voice and Participation which came into effect in March 2011,^[91] seven countries each appoint an executive director: the United States, Japan, China, Germany, France, the United Kingdom, and Saudi Arabia.^[90] The remaining 17 Directors represent constituencies consisting of 2 to 23 countries. This Board usually meets several times each week.^[92] The Board membership and constituency is scheduled for periodic review every eight years.^[93]

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 the most powerful position at the IMF.^[94] Historically, the IMF's managing director has been a European citizen and the president of the World Bank has been an American citizen. 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.^[95][96] In August 2019, the International Monetary Fund has removed the age limit which is 65 or over for its managing director position.^[97]

In 2011, the world's largest developing countries, the BRIC states, 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.^[95][98]

List of Managing Directors

Term	Dates	Name	Citizenship	Background
1	6 May 1946 – 5 May 1951	Camille Gutt	Belgium	Politician, Economist, Lawyer, Economics Minister, Finance Minister
2	3 August 1951 – 3 October 1956	Ivar Rooth	Sweden	Economist, Lawyer, Central Banker
3	21 November 1956 – 5 May 1963	Per Jacobsson	Sweden	Economist, Lawyer, Academic, League of Nations, BIS
4	1 September 1963 – 31 August 1973	Pierre-Paul Schweitzer	France	Lawyer, Businessman, Civil Servant, Central Banker
5	1 September 1973 – 18 June 1978	Johan Witteveen	Netherlands	Politician, Economist, Academic, Finance Minister, Deputy Prime Minister, CPB
6	18 June 1978 – 15 January 1987	Jacques de Larosière	France	Businessman, Civil Servant, Central Banker
7	16 January 1987 – 14 February 2000	Michel Camdessus	France	Economist, Civil Servant, Central Banker
8	1 May 2000 – 4 March 2004	Horst Köhler	Germany	Politician, Economist, Civil Servant, EBRD, President
9	7 June 2004 – 31 October 2007	Rodrigo Rato	Spain	Politician, Businessman, Economics Minister, Finance Minister, Deputy Prime Minister
10	1 November 2007 – 18 May 2011	Dominique Strauss-Kahn	France	Politician, Economist, Lawyer, Businessman, Economics Minister, Finance Minister
11	5 July 2011 – 12 September 2019	Christine Lagarde	France	Politician, Lawyer, Finance Minister
12	1 October 2019 – present	Kristalina Georgieva	Bulgaria	Politician, Economist

On 28 June 2011, Christine Lagarde was named managing director of the IMF, replacing Dominique Strauss-Kahn.

Former managing director Dominique Strauss-Kahn was arrested in connection with charges of sexually assaulting a New York hotel room attendant and resigned on 18 May. The charges were later dropped.^[99] On 28 June 2011 Christine Lagarde was confirmed as managing director of the IMF for a five-year term starting on 5 July 2011.^[100][101] She was re-elected by consensus for a second five-year term, starting 5 July 2016, being the only candidate nominated for the post of managing director.^[102]

First Deputy Managing Director

The managing director is assisted by a First Deputy managing director (FDMD) who, by convention, has always been a citizen of the United States.^[103] Together, the managing director and their First Deputy lead the senior management of the IMF. Like the managing director, the First Deputy traditionally serves a five-year term.

List of First Deputy Managing Directors

No.	Dates	Name	Citizenship	Background
1	9 February 1949 – 24 January 1952	Andrew Overby	United States	Banker, Senior U.S. Treasury Official
2	16 March 1953 – 31 October 1962	Merle Cochran	United States	U.S. Foreign Service Officer
3	1 November 1962 – 28 February 1974	Frank Southard	United States	Economist, Civil Servant
4	1 March 1974 – 31 May 1984	William Dale	United States	Civil Servant
5	1 June 1984 – 31 August 1994	Richard Erb	United States	Economist, White House Official
6	1 September 1994 – 31 August 2001	Stanley Fischer	Israel  United States	Economist, Central Banker, Banker
7	1 September 2001 – 31 August 2006	Anne Kreuger	United States	Economist
8	17 July 2006 – 11 November 2011	John Lipsky	United States	Economist
9	1 September 2011 – 28 February 2020	David Lipton	United States	Economist, Senior U.S. Treasury Official
10	20 March 2020 – 20 January 2022	Geoffrey Okamoto	United States	Senior U.S. Treasury Official, Bank Consultant
11	21 January 2022 – present	Gita Gopinath	United States	Professor at Harvard University's Economics department Chief Economist of IMF

Chief Economist

The chief economist leads the research division of the IMF and is a "senior official" of the IMF.^[104]

List of Chief Economists

Term	Dates	Name	Citizenship
1	1946–1958	Edward Bernstein[105]	United States
2	1958–1980	Jacques Polak	Netherlands
3	1980–1987	William Hood[106][107]	Canada
4	1987–1991	Jacob Frenkel[108]	Israel
5	August 1991 – 29 June 2001	Michael Mussa[109]	United States
6	August 2001 – September 2003	Kenneth Rogoff[110]	United States
7	September 2003 – January 2007	Raghuram Rajan[111]	India
8	March 2007 – 31 August 2008	Simon Johnson[112]	United Kingdom  United States
9	1 September 2008 – 8 September 2015	Olivier Blanchard[113]	France
10	8 September 2015 – 31 December 2018	Maurice Obstfeld[114]	United States
11	1 January 2019 – 21 January 2022	Gita Gopinath[115]	United States
12	24 January 2022 – present	Pierre-Olivier Gourinchas[116]	France

Discover more about Leadership related topics

Developing country

Developing country

A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreement on which countries fit this category. The term low and middle-income country (LMIC) is often used interchangeably but refers only to the economy of the countries. The World Bank classifies the world's economies into four groups, based on gross national income per capita: high, upper-middle, lower-middle, and low income countries. Least developed countries, landlocked developing countries and small island developing states are all sub-groupings of developing countries. Countries on the other end of the spectrum are usually referred to as high-income countries or developed countries.

Benelux

Benelux

The Benelux Union, also known as simply Benelux, is a politico-economic union and formal international intergovernmental cooperation of three neighboring states in western Europe: Belgium, the Netherlands, and Luxembourg. The name is a portmanteau formed from joining the first few letters of each country's name and was first used to name the customs agreement that initiated the union. It is now used more generally to refer to the geographic, economic, and cultural grouping of the three countries.

Eastern Europe

Eastern Europe

Eastern Europe is a subregion of the European continent. As a largely ambiguous term, it has a wide range of geopolitical, geographical, ethnic, cultural, and socio-economic connotations. The vast majority of the region is covered by Russia, which spans roughly 40% of the continent's landmass while accounting for approximately 15% of its total population.

Central America

Central America

Central America is a subregion of the Americas. Its boundaries are defined as bordering Mexico to the north, Colombia to the south, the Caribbean Sea to the east, and the Pacific Ocean to the west. Central America usually consists of seven countries: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. Within Central America is the Mesoamerican biodiversity hotspot, which extends from northern Guatemala to central Panama. Due to the presence of several active geologic faults and the Central America Volcanic Arc, there is a high amount of seismic activity in the region, such as volcanic eruptions and earthquakes which has resulted in death, injury, and property damage.

Far East

Far East

In European terminology, the Far East is the geographical region that includes East and Southeast Asia as well as, to a lesser extent, North Asia, particularly the Russian Far East. South Asia is sometimes also included for economic and cultural reasons.

Atlantic Ocean

Atlantic Ocean

The Atlantic Ocean is the second-largest of the world's five oceans, with an area of about 106,460,000 km2 (41,100,000 sq mi). It covers approximately 20% of Earth's surface and about 29% of its water surface area. It is known to separate the "Old World" of Africa, Europe, and Asia from the "New World" of the Americas in the European perception of the World.

Caribbean

Caribbean

The Caribbean is a subregion of the Americas that consists of the Caribbean Sea and its islands, the nearby coastal areas on the mainland may also be included. The region is southeast of the Gulf of Mexico and the North American mainland, east of Central America, and north of South America.

Central Europe

Central Europe

Central Europe is an area of Europe between Western Europe and Eastern Europe, based on a common geography, historical, social and cultural identity. The concept of "Central Europe" appeared in the 19th century.

Caribbean South America

Caribbean South America

Caribbean South America is a subregion of South America consisting of the countries that border the Caribbean Sea: Colombia and Venezuela.

Alexandre Tombini

Alexandre Tombini

Alexandre Antônio Tombini is a Brazilian economist. He was President of the Central Bank of Brazil until June 13, 2016, when he was replaced by Ilan Goldfajn. Since September 2019 he is Chief Representative for the Americas, based in Mexico City, of the Bank for International Settlements (BIS).

Indian subcontinent

Indian subcontinent

The Indian subcontinent is a physiographical region in Southern Asia, situated on the Indian Plate, projecting southwards into the Indian Ocean from the Himalayas. Geopolitically, it includes the countries of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. The terms "Indian subcontinent" and "South Asia" are often used interchangeably to denote the region, although the geopolitical term of South Asia frequently includes Afghanistan, which may otherwise be classified as Central Asian.

Africa

Africa

Africa is the world's second-largest and second-most populous continent, after Asia in both cases. At about 30.3 million km2 including adjacent islands, it covers 20% of Earth's land area and 6% of its total surface area. With 1.4 billion people as of 2021, it accounts for about 18% of the world's human population. Africa's population is the youngest amongst all the continents; the median age in 2012 was 19.7, when the worldwide median age was 30.4. Despite a wide range of natural resources, Africa is the least wealthy continent per capita and second-least wealthy by total wealth, behind Oceania. Scholars have attributed this to different factors including geography, climate, tribalism, colonialism, the Cold War, neocolonialism, lack of democracy, and corruption. Despite this low concentration of wealth, recent economic expansion and the large and young population make Africa an important economic market in the broader global context.

Voting power in the IMF is based on a quota system. Each member has a number of basic votes, equal to 5.502% of the total votes,^[117] plus one additional vote for each special drawing right (SDR) of 100,000 of a member country's quota.^[118] The SDR is the unit of account of the IMF and represents a potential 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.^[118] Changes in the voting shares require approval by a super-majority of 85% of voting power.^[11]

Quota and voting shares for the largest IMF members^[2]

Rank	IMF Member country	Quota		Governor	Alternate	No. of votes	% of total votes
		millions of XDR	% of the total
1	United States	82,994.2	17.43	Andy Baukol	Vacant	831,401	16.50
2	Japan	30,820.5	6.47	Shunichi Suzuki	Haruhiko Kuroda	309,664	6.14
3	China	30,482.9	6.40	Gang Yi	Yulu Chen	306,288	6.08
4	Germany	26,634.4	5.59	Joachim Nagel	Christian Lindner	267,803	5.31
5	France	20,155.1	4.23	Bruno Le Maire	François Villeroy de Galhau	203,010	4.03
6	United Kingdom	20,155.1	4.23	Jeremy Hunt MP	Andrew Bailey	203,010	4.03
7	Italy	15,070.0	3.16	Daniele Franco	Ignazio Visco	152,159	3.02
8	India	13,114.4	2.75	Nirmala Sitharaman	Shaktikanta Das	132,603	2.63
9	Russia	12,903.7	2.71	Anton Siluanov	Elvira S. Nabiullina	130,496	2.59
10	Brazil	11,042.0	2.32	Paulo Guedes	Roberto Campos Neto	111,879	2.22
11	Canada	11,023.9	2.31	Chrystia Freeland	Tiff Macklem	111,698	2.22
12	Saudi Arabia	9,992.6	2.10	Mohammed Al-Jadaan	Fahad A. Almubarak	101,385	2.01
13	Spain	9,535.5	2.00	Nadia Calviño	Pablo Hernández de Cos	96,814	1.92
14	Mexico	8,912.7	1.87	Rogelio Eduardo Ramirez de la O	Victoria Rodríguez Ceja	90,586	1.80
15	Netherlands	8,736.5	1.83	Klaas Knot	Christiaan Rebergen	88,824	1.76
16	South Korea	8,582.7	1.80	Choo Kyung-ho	Rhee Chang-yong	87,286	1.73
17	Australia	6,572.4	1.38	Jim Chalmers, M.P.	Steven Kennedy	67,183	1.33
18	Belgium	6,410.7	1.35	Pierre Wunsch [nl]	Vincent Van Peteghem	65,566	1.30
19	Switzerland	5,771.1	1.21	Thomas Jordan	Ueli Maurer	59,170	1.17
20	Turkey	4,658.6	0.98	Nureddin Nebati	Şahap Kavcıoğlu	48,045	0.95
21	Indonesia	4,648.4	0.98	Perry Warjiyo	Sri Mulyani Indrawati	47,943	0.95
22	Sweden	4,430.0	0.93	Stefan Ingves	Elin Eliasson	45,759	0.91
23	Poland	4,095.4	0.86	Mateusz Morawiecki	Marta Kightley	42,413	0.84
24	Austria	3,932.0	0.83	Robert Holzmann	Gottfried Haber	40,779	0.81
25	Singapore	3,891.9	0.82	Tharman Shanmugaratnam	Ravi Menon	40,378	0.80

In December 2015, the United States Congress adopted a legislation authorising the 2010 Quota and Governance Reforms. As a result,

• all 190 members' quotas will increase from a total of about XDR 238.5 billion to about XDR 477 billion, while the quota shares and voting power of the IMF's poorest member countries will be protected.
• more than 6 percent of quota shares will shift to dynamic emerging market and developing countries and also from over-represented to under-represented members.
• four emerging market countries (Brazil, China, India, and Russia) will be among the ten largest members of the IMF. Other top 10 members are the United States, Japan, Germany, France, the United Kingdom and Italy.^[119]

Effects of the quota system

The IMF's quota system was created to raise funds for loans.^[24] 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 organization.^[118]

This system follows the logic of a shareholder-controlled organization: wealthy countries have more say in the making and revision of rules.^[24] Since decision making at the IMF reflects each member's relative economic position in the world, wealthier countries that provide more money to the IMF have more influence than poorer members that contribute less; nonetheless, the IMF focuses on redistribution.^[118]

Inflexibility of voting power

Quotas are normally reviewed every five years and can be increased when deemed necessary by the Board of Governors. IMF voting shares are relatively inflexible: countries that grow economically have tended to become under-represented as their voting power lags behind.^[11] Currently, reforming the representation of developing countries within the IMF has been suggested.^[118] 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."^[120] In 2008, a number of quota reforms were passed including shifting 6% of quota shares to dynamic emerging markets and developing countries.^[121]

Overcoming borrower/creditor divide

The IMF's membership is divided along income lines: certain countries provide 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.^[118]

The criticism is that the system of voting power distribution through a quota system institutionalizes borrower subordination and creditor dominance. The resulting division of the IMF's membership into borrowers and non-borrowers has increased the controversy around conditionality because the borrowers are interested in increasing loan access while creditors want to maintain reassurance that the loans will be repaid.^[122]

Discover more about Voting power related topics

Andy Baukol

Andy Baukol

Andrew P. Baukol is an American financial policy advisor who served as the acting United States secretary of the treasury for the first week of the Biden administration. Baukol served in an interim capacity until Biden's nominee, Janet Yellen, was confirmed by the United States Senate. He then became Treasury's acting Under Secretary for International Affairs.

Japan

Japan

Japan is an island country in East Asia. It is situated in the northwest Pacific Ocean and is bordered on the west by the Sea of Japan, extending from the Sea of Okhotsk in the north toward the East China Sea, Philippine Sea, and Taiwan in the south. Japan is a part of the Ring of Fire, and spans an archipelago of 14,125 islands covering 377,975 square kilometers (145,937 sq mi); the five main islands are Hokkaido, Honshu, Shikoku, Kyushu, and Okinawa. Tokyo is the nation's capital and largest city, followed by Yokohama, Osaka, Nagoya, Sapporo, Fukuoka, Kobe, and Kyoto.

Haruhiko Kuroda

Haruhiko Kuroda

Haruhiko Kuroda is a Japanese banker and a former Ministry of Finance government official. He serves as the 31st and current Governor of the Bank of Japan (BOJ). He was formerly the President of the Asian Development Bank from 1 February 2005 to 18 March 2013.

China

China

China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and borders fourteen countries by land, the most of any country in the world, tied with Russia. With an area of approximately 9.6 million square kilometres (3,700,000 sq mi), it is the world's third largest country by total land area. The country consists of 22 provinces, five autonomous regions, four municipalities, and two special administrative regions. The national capital is Beijing, and the most populous city and largest financial center is Shanghai.

Chen Yulu

Chen Yulu

Chen Yulu is a Chinese economist, educator, author, and politician who has been president of Nankai University since August 2022. He was vice governor of People's Bank of China from October 2015 to August 2022. He has previously held appointments in the Renmin University of China as the president.

Germany

Germany

Germany, officially the Federal Republic of Germany, is a country in Central Europe. It is the second-most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated between the Baltic and North seas to the north, and the Alps to the south; it covers an area of 357,022 square kilometres (137,847 sq mi), with a population of around 84 million within its 16 constituent states. Germany borders Denmark to the north, Poland and the Czech Republic to the east, Austria and Switzerland to the south, and France, Luxembourg, Belgium, and the Netherlands to the west. The nation's capital and most populous city is Berlin and its main financial centre is Frankfurt; the largest urban area is the Ruhr.

Christian Lindner

Christian Lindner

Christian Wolfgang Lindner is a German politician of the Free Democratic Party (FDP) serving as the Federal Minister of Finance since 8 December 2021. He has been the party leader of the liberal FDP since 2013 and a Member of the Bundestag (MdB) for North Rhine-Westphalia since 2017, previously holding a seat from 2009 until 2012.

France

France

France, officially the French Republic, is a country located primarily in Western Europe. It also includes overseas regions and territories in the Americas and the Atlantic, Pacific and Indian Oceans, giving it one of the largest discontiguous exclusive economic zones in the world. Its metropolitan area extends from the Rhine to the Atlantic Ocean and from the Mediterranean Sea to the English Channel and the North Sea; overseas territories include French Guiana in South America, Saint Pierre and Miquelon in the North Atlantic, the French West Indies, and many islands in Oceania and the Indian Ocean. Its eighteen integral regions span a combined area of 643,801 km2 (248,573 sq mi) and had a total population of over 68 million as of January 2023. France is a unitary semi-presidential republic with its capital in Paris, the country's largest city and main cultural and commercial centre; other major urban areas include Marseille, Lyon, Toulouse, Lille, Bordeaux, and Nice.

Bruno Le Maire

Bruno Le Maire

Bruno Le Maire is a French politician and former diplomat who has served as Minister of the Economy and Finance since 2017 under President Emmanuel Macron. A former member of The Republicans (LR), which he left in 2017 to join La République En Marche! (LREM), he was Secretary of State for European Affairs from 2008 to 2009 and Minister of Food, Agriculture and Fishing from 2009 to 2012 under President Nicolas Sarkozy. Le Maire is also a noted writer, with his book Des hommes d'Etat winning the 2008 Edgar Faure Prize.

François Villeroy de Galhau

François Villeroy de Galhau

François Villeroy de Galhau is a French civil servant and banker serving as Governor of the Bank of France and ex officio President of the French Prudential Supervision and Resolution Authority since 2015.

Jeremy Hunt

Jeremy Hunt

Jeremy Richard Streynsham Hunt is a British politician who has served as Chancellor of the Exchequer since 14 October 2022. He previously served in the Cabinet as Secretary of State for Culture, Olympics, Media and Sport from 2010 to 2012, Secretary of State for Health and Social Care from 2012 to 2018 and Foreign Secretary from 2018 to 2019. A member of the Conservative Party, he has been Member of Parliament (MP) for South West Surrey since 2005.

Andrew Bailey (banker)

Andrew Bailey (banker)

Andrew John Bailey is a British central banker who has been Governor of the Bank of England since 16 March 2020.

A recent source revealed 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% 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.^[123]

A study 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.^[123] 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".^[40]

Exceptional Access Framework – sovereign debt

The Exceptional Access Framework was created in 2003 when John B. Taylor was Under Secretary of the US 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.^[124] 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 of the 1990s. Such a reform was essential for ending the 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.^[125][126]

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".^[58] The paper, which was discussed by the board on 20 May,^[59] 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,^[60] as was a deconstruction by Matina Stevis of The Wall Street Journal.^[61]

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.^[127] 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 labeled 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."^[127]

Discover more about Use related topics

Democracy

Democracy

Democracy is a form of government in which the people have the authority to deliberate and decide legislation, or to choose governing officials to do so. Who is considered part of "the people" and how authority is shared among or delegated by the people has changed over time and at different rates in different countries. Features of democracy often include freedom of assembly, association, property rights, freedom of religion and speech, inclusiveness and equality, citizenship, consent of the governed, voting rights, freedom from unwarranted governmental deprivation of the right to life and liberty, and minority rights.

Autocracy

Autocracy

Autocracy is a system of government in which absolute power over a state is concentrated in the hands of one person, whose decisions are subject neither to external legal restraints nor to regularized mechanisms of popular control.

Randall Stone

Randall Stone

Randall Warren Stone is an American political scientist and a professor at the University of Rochester, notable for his studies on international political economy, international relations, and Russian and European politics.

John B. Taylor

John B. Taylor

John Brian Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University, and the George P. Shultz Senior Fellow in Economics at Stanford University's Hoover Institution.

Collective action clause

Collective action clause

A collective action clause (CAC) allows a supermajority of bondholders to agree to a debt restructuring that is legally binding on all holders of the bond, including those who vote against the restructuring. Bondholders generally opposed such clauses in the 1980s and 1990s, fearing that it gave debtors too much power. However, following Argentina's December 2001 default on its debts in which its bonds lost 70% of their value, CACs have become much more common, as they are now seen as potentially warding off more drastic action, but enabling easier coordination of bondholders.

The Wall Street Journal

The Wall Street Journal

The Wall Street Journal is an American business-focused international daily newspaper based in New York City with international editions published in Chinese and Japanese. The Journal and its Asian editions are published six days a week by Dow Jones & Company, a division of News Corp. The newspaper is published in broadsheet format and online. The Journal has been printed continuously since its inception on July 8, 1889. The Journal is regarded as a newspaper of record, particularly in terms of business and financial news. The newspaper has won 38 Pulitzer Prizes, the most recent in 2019.

According to a 2002 study by Randall W. Stone, the academic literature on the IMF shows "no consensus on the long-term effects of IMF programs on growth".^[128]

Some research has found that IMF loans can reduce the chance of a future banking crisis,^[129] while other studies have found that they can increase the risk of political crises.^[130] IMF programs can reduce the effects of a currency crisis.^[131]

Some research has found that IMF programs are less effective in countries which possess a developed-country patron (be it by foreign aid, membership of postcolonial institutions or UN voting patterns), seemingly due to this patron allowing countries to flaunt IMF program rules as these rules are not consistently enforced.^[132] Some research has found that IMF loans reduce economic growth due to creating an economic moral hazard, reducing public investment, reducing incentives to create a robust domestic policies and reducing private investor confidence.^[133] Other research has indicated that IMF loans can have a positive impact on economic growth and that their effects are highly nuanced.^[134]

Anarchist protest against the IMF and corporate bailout

Overseas Development Institute (ODI) research undertaken in 1980 included criticisms of the IMF which support the analysis that it is a pillar of what activist Titus Alexander calls global apartheid.^[135]

• Developed countries were seen to have a more dominant role and control over less developed countries (LDCs).
• 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 IMF 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 payment deficits due to adverse changes in their terms of trade, with the Fund prescribing stabilization programmes similar to those suggested for deficits caused by government over-spending. Faced with long-term, externally generated disequilibria, the G-24 argued for more time for LDCs to adjust their economies.
• Some IMF policies may be anti-developmental; the report said that deflationary effects of IMF programmes quickly led to losses of output and employment in economies where incomes were low and unemployment was high. Moreover, the burden of the deflation is disproportionately borne by the poor.
• The IMF's initial policies were based in theory and influenced by differing opinions and departmental rivalries. Critics suggest that its intentions to implement these policies in countries with widely varying economic circumstances were misinformed and lacked economic rationale.

ODI conclusions were that the IMF's very nature of promoting market-oriented approaches attracted unavoidable criticism. On the other hand, the IMF could serve as a scapegoat while allowing governments to blame international bankers. The ODI conceded that the IMF was insensitive to political aspirations of LDCs while its policy conditions were inflexible.^[136]

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,^[137] 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.^[138] Others attribute the crisis to Argentina's misdesigned fiscal federalism, which caused subnational spending to increase rapidly.^[139] 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 2006, a senior ActionAid policy analyst Akanksha Marphatia stated that IMF policies in Africa undermine any possibility of meeting the Millennium Development Goals (MDGs) due to imposed restrictions that prevent spending on important sectors, such as education and health.^[140]

In an interview (2008-05-19), 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".^[141] Former Tanzanian President Julius Nyerere, who claimed that debt-ridden African states were ceding sovereignty to the IMF and the World Bank, famously asked, "Who elected the IMF to be the ministry of finance for every country in the world?"^[142][143]

Former chief economist of IMF and former Reserve Bank of India (RBI) Governor Raghuram Rajan who predicted the financial crisis of 2007–08 criticised the IMF for remaining a sideline player to the developed world. He criticised the IMF for praising the monetary policies of the US, which he believed were wreaking havoc in emerging markets.^[144] He had been critical of "ultra-loose money policies" of some unnamed countries.^[145][146]

Countries such as Zambia have not received proper aid with long-lasting effects, leading to concern from economists. Since 2005, Zambia (as well as 29 other African countries) did receive debt write-offs, which helped with the country's medical and education funds. However, Zambia returned to a debt of over half its GDP in less than a decade. American economist William Easterly, sceptical of the IMF's methods, had initially warned that "debt relief would simply encourage more reckless borrowing by crooked governments unless it was accompanied by reforms to speed up economic growth and improve governance", according to The Economist.^[147]

Conditionality

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.^[23] 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.^[148] Countries charge that with excessive conditionality, they do not "own" the programmes and the links are broken between a recipient country's people, its government, and the goals being pursued by the IMF.^[149]

Jeffrey Sachs argues that the IMF's "usual prescription is 'budgetary belt tightening to countries who are much too poor to own belts'".^[148] Sachs wrote 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—if one assumes that all countries are able to provide "acceptable collateral".^[39]

One view is that conditionality undermines domestic political institutions.^[150] 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.^[23] IMF conditions are often criticised for reducing government services, thus increasing unemployment.^[24]

Another criticism is that IMF policies are only designed to address poor governance, excessive government spending, excessive government intervention in markets, and too much state ownership.^[148] This assumes that this narrow range of issues represents the only possible problems; everything is standardised and differing contexts are ignored.^[148] 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.^[37]

On top of that, regardless of what methodologies and data sets used, it comes to same the conclusion of exacerbating income inequality. With Gini coefficient, it became clear that countries with IMF policies face increased income inequality.^[151]

It is claimed that conditionalities retard social stability and hence inhibit the stated goals of the IMF, while Structural Adjustment Programmes lead to an increase in poverty in recipient countries.^[152] 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.^[153] 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."^[154]

Stiglitz concludes, "Modern high-tech warfare is designed to remove physical contact: dropping bombs from 50,000 feet ensures that one does not 'feel' what one does. Modern economic management is similar: from one's luxury hotel, one can callously impose policies about which one would think twice if one knew the people whose lives one was destroying."^[153]

The researchers Eric Toussaint and Damien Millet argue that the IMF's policies amount to a new form of colonisation that does not need a military presence:

Following the exigencies of the governments of the richest companies, the IMF, permitted countries in crisis to borrow in order to avoid default on their repayments. Caught in the debt's downward spiral, developing countries soon had no other recourse than to take on new debt in order to repay the old debt. Before providing them with new loans, at higher interest rates, future leaders asked the IMF, to intervene with the guarantee of ulterior reimbursement, asking for a signed agreement with the said countries. The IMF thus agreed to restart the flow of the 'finance pump' on condition that the concerned countries first use this money to reimburse banks and other private lenders, while restructuring their economy at the IMF's discretion: these were the famous conditionalities, detailed in the Structural Adjustment Programmes. The IMF and its ultra-liberal experts took control of the borrowing countries' economic policies. A new form of colonisation was thus instituted. It was not even necessary to establish an administrative or military presence; the debt alone maintained this new form of submission.^[155]

International politics play an important role in IMF decision making. The clout of member states is roughly proportional to its contribution to IMF finances. The United States has the greatest number of votes and therefore wields the most influence. Domestic politics often come into play, with politicians in developing countries using conditionality to gain leverage over the opposition to influence policy.^[156][157]

Reform

Function and policies

The IMF is only one of many international organisations, and it is a generalist institution that deals only with macroeconomic issues; its core areas of concern in developing countries are very narrow. One proposed reform is a movement towards close partnership with other specialist agencies such as UNICEF, the Food and Agriculture Organization (FAO), and the United Nations Development Program (UNDP).^[148]

Jeffrey Sachs argues in The End of Poverty that the 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".^[148] Development economics needs the reform, not the IMF. He also notes that IMF loan conditions should be paired with other reforms—e.g., trade reform in developed nations, debt cancellation, and increased financial assistance for investments in basic infrastructure.^[148] IMF loan conditions cannot stand alone and produce change; they need to be partnered with other reforms or other conditions as applicable.^[11]

US influence and voting reform

The scholarly consensus is that IMF decision-making is not simply technocratic, but also guided by political and economic concerns.^[158] The United States is the IMF's most powerful member, and its influence reaches even into decision-making concerning individual loan agreements.^[159] The United States has historically been openly opposed to losing what Treasury Secretary Jacob Lew described in 2015 as its "leadership role" at the IMF, and the United States' "ability to shape international norms and practices".^[160]

Emerging markets were not well-represented for most of the IMF's history: Despite being the most populous country, China's vote share was the sixth largest; Brazil's vote share was smaller than Belgium's.^[161] Reforms to give more powers to emerging economies were agreed by the G20 in 2010. The reforms could not pass, however, until they were ratified by the US Congress,^{[162][163][164]} since 85% of the Fund's voting power was required for the reforms to take effect,^[165] and the Americans held more than 16% of voting power at the time.^[2] After repeated criticism,^[166][167] the United States finally ratified the voting reforms at the end of 2015.^[168] The OECD countries maintained their overwhelming majority of voting share, and the United States in particular retained its share at over 16%.^[169]

The criticism of the American-and-European dominated IMF has led to what some consider 'disenfranchising the world' from the governance of the IMF. Raúl Prebisch, the founding secretary-general of the UN Conference on Trade and Development (UNCTAD), wrote that one of "the conspicuous deficiencies of the general economic theory, from the point of view of the periphery, is its false sense of universality."^[170]

Support of dictatorships

The role of the Bretton Woods institutions has been controversial since the late Cold War, because of claims that the IMF policy makers supported military dictatorships friendly to American and European corporations, but also other anti-communist and Communist regimes (such as Mobutu's Zaire and Ceaușescu's Romania, respectively). Critics also claim that the IMF is generally apathetic or hostile to human rights, and labour rights. The controversy has helped spark the anti-globalization movement.

An example of IMF's support for a dictatorship was its ongoing support for Mobutu's rule in Zaire, although its own envoy, Erwin Blumenthal, provided a sobering report about the entrenched corruption and embezzlement and the inability of the country to pay back any loans.^[171]

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.^[172]

A 2017 study found no evidence of IMF lending programs undermining democracy in borrowing countries.^[173] To the contrary, it found "evidence for modest but definitively positive conditional differences in the democracy scores of participating and non-participating countries."^[173]

On 28 June 2021, the IMF approved a US$1 billion loan to the Ugandan government despite protests from Ugandans in Washington, London and South Africa.^[174][175]

Impact on access to food

A number of civil society organisations^[176] have criticised the IMF's policies for their impact on access to food, particularly in developing countries. In October 2008, former United States president Bill Clinton delivered a speech to the United Nations on World Food Day, criticising 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, 2008^[177]

The FPIF remarked that there is a recurring pattern: "the destabilization of peasant producers by a one-two punch of IMF-World Bank structural adjustment programs that gutted government investment in the countryside followed by the massive influx of subsidized U.S. and European Union agricultural imports after the WTO's Agreement on Agriculture pried open markets."^[178]

Impact on public health

A 2009 study concluded that the strict conditions 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%.^[179] A 2017 systematic review on studies conducted on the impact that Structural adjustment programs have on child and maternal health found that these programs have a detrimental effect on maternal and child health among other adverse effects.^[180]

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 scaling up long-term investment in public health infrastructure. The book claimed the consequences have been chronically underfunded public health systems, leading to demoralising working conditions that have fuelled a "brain drain" of medical personnel, all of which has undermined public health and the fight against HIV/AIDS in developing countries.^[181]

In 2016, the IMF's research department published a report titled "Neoliberalism: Oversold?" which, while praising some aspects of the "neoliberal agenda", claims that the organisation has been "overselling" fiscal austerity policies and financial deregulation, which they claim has exacerbated both financial crises and economic inequality around the world.^{[182][183][184]}

Impact on environment

IMF policies have been repeatedly criticised for making it difficult for indebted countries to say no to environmentally harmful projects that nevertheless generate revenues such as oil, coal, and forest-destroying lumber and agriculture projects. Ecuador, for example, had to defy IMF advice repeatedly to pursue the protection of its rainforests, though paradoxically this need was cited in the IMF argument to provide support to Ecuador. The IMF acknowledged this paradox in the 2010 report that 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.^[185]

While the response to these moves was generally positive^[186] 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 European debt crisis, some observers noted that Spain and California, two troubled economies within respectively the European Union and the United States, 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 could also improve their credit ratings.

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Overseas Development Institute

Overseas Development Institute

ODI is a global affairs think tank, founded in 1960. Its mission is "to inspire people to act on injustice and inequality through collaborative research and ideas that matter for people and the planet." It does this through "research, convening and influencing, to lead new thinking and future agendas to deliver transformational change." Its Chair is Suma Chakrabarti.

Global apartheid

Global apartheid

Global apartheid is a term used to describe how Global North countries are engaged in a project of "racialization, segregation, political intervention, mobility controls, capitalist plunder, and labor exploitation" affecting people from the Global South. Proponents of the concept argue that a close examination of the global system reveals it to be a kind of apartheid writ large with striking resemblance to the system of racial segregation in South Africa from 1948 to 1994, but based on borders and national sovereignty.

Developing country

Developing country

A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreement on which countries fit this category. The term low and middle-income country (LMIC) is often used interchangeably but refers only to the economy of the countries. The World Bank classifies the world's economies into four groups, based on gross national income per capita: high, upper-middle, lower-middle, and low income countries. Least developed countries, landlocked developing countries and small island developing states are all sub-groupings of developing countries. Countries on the other end of the spectrum are usually referred to as high-income countries or developed countries.

Group of 24

Group of 24

The Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development, or The Group of 24 (G-24) was established in 1971 as a chapter of the Group of 77 in order to help coordinate the positions of developing countries on international monetary and development finance issues, as well as and to ensure that their interests are adequately represented in negotiations on international monetary matters. Though originally named after the number of founding Member States, it now has 28 Members. Although the G-24 officially has 28 member countries, any member of the G-77 can join discussions.

1973 oil crisis

1973 oil crisis

The 1973 oil crisis or first oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries (OAPEC), led by King Faisal of Saudi Arabia, proclaimed an oil embargo. The embargo was targeted at nations that had supported Israel during the Yom Kippur War. The initial nations targeted were Canada, Japan, the Netherlands, the United Kingdom and the United States, though the embargo also later extended to Portugal, Rhodesia and South Africa. By the end of the embargo in March 1974, the price of oil had risen nearly 300%, from US$3 per barrel ($19/m3) to nearly $12 per barrel ($75/m3) globally; US prices were significantly higher. The embargo caused an oil crisis, or "shock", with many short- and long-term effects on global politics and the global economy. It was later called the "first oil shock", followed by the 1979 oil crisis, termed the "second oil shock".

Bretton Woods system

Bretton Woods system

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent states. The Bretton Woods system required countries to guarantee convertibility of their currencies into U.S. dollars to within 1% of fixed parity rates, with the dollar convertible to gold bullion for foreign governments and central banks at US$35 per troy ounce of fine gold. It also envisioned greater cooperation among countries in order to prevent future competitive devaluations, and thus established the International Monetary Fund (IMF) to monitor exchange rates and lend reserve currencies to nations with balance of payments deficits.

Fiscal federalism

Fiscal federalism

As a subfield of public economics, fiscal federalism is concerned with "understanding which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government". In other words, it is the study of how competencies and fiscal instruments are allocated across different (vertical) layers of the administration. An important part of its subject matter is the system of transfer payments or grants by which a central government shares its revenues with lower levels of government.

ActionAid

ActionAid

ActionAid is an international non-governmental organization whose stated primary aim is to work against poverty and injustice worldwide.

Millennium Development Goals

Millennium Development Goals

The Millennium Development Goals (MDGs) were eight international development goals for the year 2015 that had been established following the Millennium Summit of the United Nations in 2000, following the adoption of the United Nations Millennium Declaration. These were based on the OECD DAC International Development Goals agreed by Development Ministers in the "Shaping the 21st Century Strategy". The Sustainable Development Goals (SDGs) succeeded the MDGs in 2016.

Călin Popescu-Tăriceanu

Călin Popescu-Tăriceanu

Călin Constantin Anton Popescu-Tăriceanu is a Romanian politician who was Prime Minister of Romania from 29 December 2004 to 22 December 2008. He was also president of the National Liberal Party (PNL) and the vice-president of the European Liberal Democrat and Reform Party (ELDR), two positions he assumed in 2004.

Julius Nyerere

Julius Nyerere

Julius Kambarage Nyerere was a Tanzanian anti-colonial activist, politician, and political theorist. He governed Tanganyika as prime minister from 1961 to 1962 and then as president from 1962 to 1964, after which he led its successor state, Tanzania, as president from 1964 to 1985. He was a founding member and chair of the Tanganyika African National Union (TANU) party, and of its successor Chama Cha Mapinduzi, from 1954 to 1990. Ideologically an African nationalist and African socialist, he promoted a political philosophy known as Ujamaa.

Raghuram Rajan

Raghuram Rajan

Raghuram Govind Rajan is an Indian economist and the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago's Booth School of Business. Between 2003 and 2006 he was Chief Economist and director of research at the International Monetary Fund. From September 2013 through September 2016 he was the 23rd Governor of the Reserve Bank of India. In 2015, during his tenure at the RBI, he became the Vice-Chairman of the Bank for International Settlements.

Globalization encompasses three institutions: global financial markets and transnational companies, national governments linked to each other in economic and military alliances led by the United States, and rising "global governments" such as World Trade Organization (WTO), IMF, and World Bank.^[187] 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".^[187] 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.^[188]

The establishment of globalised economic institutions has been both a symptom of and a stimulus for globalisation. The development of the World Bank, the IMF, regional development banks such as the European Bank for Reconstruction and Development (EBRD), and multilateral trade institutions such as the WTO signals a move away from the dominance of the state as the primary actor analysed in international affairs. Globalization has thus been transformative in terms of limiting of state sovereignty over the economy.^[189]

Impact on gender equality

The IMF says they support women's empowerment and tries to promote their rights in countries with a significant gender gap.^[190]

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Globalization

Globalization

Globalization, or globalisation, is the process of interaction and integration among people, companies, and governments worldwide. The term globalization first appeared in the early 20th century, developed its current meaning some time in the second half of the 20th century, and came into popular use in the 1990s to describe the unprecedented international connectivity of the post-Cold War world. Its origins can be traced back to 18th and 19th centuries due to advances in transportation and communications technology. This increase in global interactions has caused a growth in international trade and the exchange of ideas, beliefs, and culture. Globalization is primarily an economic process of interaction and integration that is associated with social and cultural aspects. However, disputes and international diplomacy are also large parts of the history of globalization, and of modern globalization.

World Trade Organization

World Trade Organization

The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and enforce the rules that govern international trade. It officially commenced operations on 1 January 1995, pursuant to the 1994 Marrakesh Agreement, thus replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948. The WTO is the world's largest international economic organization, with 164 member states representing over 98% of global trade and global GDP.

World Bank

World Bank

The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), two of five international organizations owned by the World Bank Group. It was established along with the International Monetary Fund at the 1944 Bretton Woods Conference. After a slow start, its first loan was to France in 1947. In the 1970s, it focused on loans to developing world countries, shifting away from that mission in the 1980s. For the last 30 years, it has included NGOs and environmental groups in its loan portfolio. Its loan strategy is influenced by the United Nations' Sustainable Development Goals, as well as environmental and social safeguards.

Charles Derber

Charles Derber

Charles Derber is an American Professor of Sociology at Boston College. Derber's work focuses on the crises of capitalism, globalization, corporate power, American militarism, the culture of hegemony, the climate crisis, and the new peace and global justice movements. Derber is persuaded that the overwhelming economic and cultural power of global corporations, increasingly melded with the political and military hegemonic power of the American government and the crises of global capitalism and global climate change, are together an integrated crisis that is now the pre-eminent social issue of the 21st century, and that a new vision and political movement is needed. Derber’s research is oriented toward 1) the systemic analysis of the intertwined crises we face and 2) analysis of the transformative potential of social movements arising to create a more democratic and egalitarian order.

Global apartheid

Global apartheid

Global apartheid is a term used to describe how Global North countries are engaged in a project of "racialization, segregation, political intervention, mobility controls, capitalist plunder, and labor exploitation" affecting people from the Global South. Proponents of the concept argue that a close examination of the global system reveals it to be a kind of apartheid writ large with striking resemblance to the system of racial segregation in South Africa from 1948 to 1994, but based on borders and national sovereignty.

European Bank for Reconstruction and Development

European Bank for Reconstruction and Development

The European Bank for Reconstruction and Development (EBRD) is an international financial institution founded in 1991. As a multilateral developmental investment bank, the EBRD uses investment as a tool to build market economies. Initially focused on the countries of the former Eastern Bloc it expanded to support development in more than 30 countries from Central Europe to Central Asia. Similar to other multilateral development banks, the EBRD has members from all over the world, with the biggest single shareholder being the United States, but only lends regionally in its countries of operations. Headquartered in London, the EBRD is owned by 71 countries and two European Union institutions, the newest shareholder being Algeria since October 2021. Despite its public sector shareholders, it invests in private enterprises, together with commercial partners.

Managing Director Lagarde (2011-2019) was convicted of giving preferential treatment to businessman-turned-politician Bernard Tapie as he pursued a legal challenge against the French government. At the time, Lagarde was the French economic minister.^[191] Within hours of her conviction, in which she escaped any punishment, the fund's 24-member executive board put to rest any speculation that she might have to resign, praising her "outstanding leadership" and the "wide respect" she commands around the world.^[192]

Former IMF Managing Director Rodrigo Rato was arrested in 2015 for alleged fraud, embezzlement and money laundering.^[193][194] In 2017, the Audiencia Nacional found Rato guilty of embezzlement and sentenced him to 41⁄2 years' imprisonment.^[195] In 2018, the sentence was confirmed by the Supreme Court of Spain.^[196]

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Bernard Tapie

Bernard Tapie

Bernard Roger Tapie was a French businessman, politician and occasional actor, singer, and TV host. He was Minister of City Affairs in the government of Pierre Bérégovoy.

Rodrigo Rato

Rodrigo Rato

Rodrigo de Rato y Figaredo is a Spanish politician who served in the Council of Ministers from 1996 to 2004. He also served as the ninth managing director of the International Monetary Fund (IMF) from 2004 to 2007 and the president of Bankia from 2010 to 2012.

Fraud

Fraud

In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law or criminal law, or it may cause no loss of money, property, or legal right but still be an element of another civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits, for example by obtaining a passport, travel document, or driver's license, or mortgage fraud, where the perpetrator may attempt to qualify for a mortgage by way of false statements.

Embezzlement

Embezzlement

Embezzlement is a crime that consists of withholding assets for the purpose of conversion of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type of financial fraud. For example, a lawyer might embezzle funds from the trust accounts of their clients; a financial advisor might embezzle the funds of investors; and a husband or a wife might embezzle funds from a bank account jointly held with the spouse.

Money laundering

Money laundering

Money laundering is the process of illegally concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions with varying definitions. It is usually a key operation of organized crime.

Audiencia Nacional

Audiencia Nacional

The Audiencia Nacional is a centralised court in Spain with jurisdiction over all of the Spanish territory. It is specialised in a certain scope of delinquency, having original jurisdiction over major crimes such as those committed against the Crown and its members, terrorism, forgery of currency, credit and debit cards and checks, some trade crimes committed in more than one region and over drug trafficking, food frauds and medical frauds committed in a nationwide level as well as over international crimes which come under the competence of Spanish courts.. It has also appellate jurisdiction over the cases of the Criminal Chamber of the National Court.

Supreme Court of Spain

Supreme Court of Spain

The Supreme Court is the highest court in the Kingdom of Spain. Originally established pursuant to Title V of the Constitution of 1812 to replace —in all matters that affected justice— the System of Councils, and currently regulated by Title VI of the Constitution of 1978, it has original jurisdiction over cases against high-ranking officials of the Kingdom and over cases regarding illegalization of political parties. It also has ultimate appellate jurisdiction over all cases. The Court has the power of judicial review, except for the judicial revision on constitutional matters, reserved to the Constitutional Court.

In March 2011, the Ministers of Economy and Finance of the African Union proposed to establish an African Monetary Fund.^[197]

At the 6th BRICS summit in July 2014 the BRICS nations (Brazil, Russia, India, China, and South Africa) announced the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$100 billion, a framework to provide liquidity through currency swaps in response to actual or potential short-term balance-of-payments pressures.^[198]

In 2014, the China-led Asian Infrastructure Investment Bank was established.^[160]

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African Union

African Union

The African Union (AU) is a continental union consisting of 55 member states located on the continent of Africa. The AU was announced in the Sirte Declaration in Sirte, Libya, on 9 September 1999, calling for the establishment of the African Union. The bloc was founded on 26 May 2001 in Addis Ababa, Ethiopia, and launched on 9 July 2002 in Durban, South Africa. The intention of the AU was to replace the Organisation of African Unity (OAU), established on 25 May 1963 in Addis Ababa by 32 signatory governments; the OAU was disbanded on 9 July 2002. The most important decisions of the AU are made by the Assembly of the African Union, a semi-annual meeting of the heads of state and government of its member states.

African Monetary Fund

African Monetary Fund

The Africa Monetary Fund is a planned African Union financial institution, though in time its responsibilities will be transferred to the African Central Bank. This institution is one of the three financial institutions of the future African Union. It will be based in Yaoundé, Cameroon.

6th BRICS summit

6th BRICS summit

The 6th BRICS summit was the sixth annual diplomatic meeting of the BRICS, a grouping of major emerging economies that includes Brazil, Russia, India, China and South Africa. It was hosted by Brazil, as the first host country of the current five-year summit cycle; the host city was Fortaleza. Though Brazil had previously hosted a four-member BRIC summit in April 2010, 2014 marked its first full BRICS summit; the 2010 summit in Brasília did not officially include South Africa, who were only invited as guests as a prelude to their gaining full membership in December 2010. Argentine President Cristina Kirchner was a special guest of the summit, and the BRICS leaders met with their UNASUR counterparts shortly after. The 6th BRICS summit resulted in the official inauguration of the New Development Bank, a multilateral development bank intended as an alternative to the World Bank and International Monetary Fund.

BRICS

BRICS

BRICS is an acronym for five leading emerging economies: Brazil, Russia, India, China, and South Africa. The first four were initially grouped as "BRIC" in 2001 by Goldman Sachs economist Jim O'Neill, who coined the term to describe fast-growing economies that would collectively dominate the global economy by 2050; South Africa was added in 2010.

Currency swap

Currency swap

In finance, a currency swap is an interest rate derivative (IRD). In particular it is a linear IRD, and one of the most liquid benchmark products spanning multiple currencies simultaneously. It has pricing associations with interest rate swaps (IRSs), foreign exchange (FX) rates, and FX swaps (FXSs).

Asian Infrastructure Investment Bank

Asian Infrastructure Investment Bank

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that aims to improve economic and social outcomes in Asia. It is the world's second largest multi-lateral development institution. The bank currently has 106 members, including 14 prospective members from around the world. The breakdown of the 106 members by continents are as follows: 42 in Asia, 26 in Europe, 21 in Africa, 8 in Oceania, 8 in South America, and 1 in North America. The bank started operation after the agreement entered into force on 25 December 2015, after ratifications were received from 10 member states holding a total number of 50% of the initial subscriptions of the Authorized Capital Stock.

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. Portuguese musician José Mário Branco's 1982 album FMI is inspired by the IMF's intervention in Portugal through monitored stabilisation programs in 1977–78. In the 2015 film, Our Brand Is Crisis, the IMF is mentioned as a point of political contention, where the Bolivian population fears its electoral interference.^[199]