News about the International Monetary Fund (IMF) usually monopolize the headlines of the main media of the planet. For what reason? What exactly is this organism and why is it so important? Today at Vivus we will try to answer these and other questions.
The International Monetary Fund was born in July 1944 at an international conference held in Bretton Woods, New Hampshire (United States) in which 44 governments participated. Against the backdrop of the Great Depression of the 1930s, the IMF’s initial objective was to improve the functioning of the world economy .
What is the objective of the International Monetary Fund?
At present, this institution is made up of 184 countries , almost the entire world, and has its headquarters in Washington. According to its Constitutive Agreement, its main activity is focused on macroeconomic policy and the financial sector . These are its purposes :
- Encourage the expansion and growth of world trade.
- Contribute to the stability of exchange rates.
- Avoid competitive currency devaluations.
- Correct in an orderly manner the balance of payments problems of a country.
And to achieve this, their actions focus on the following points:
- Monitoring of the evolution and development of economic and financial policy measures (do you remember the “men in black” who visited our country?).
- Advises member countries politically.
- Give loans to members who need it.
- Technical assistance to governments and central banks.
Who is at the head of the IMF?
The highest authority of the IMF is the Board of Governors , in which all member countries are represented. Normally, it meets once a year. The representative of each country is usually the Minister of Finance or the governor of the central bank of the country.
By delegation of the Board of Governors, the daily management work of the International Monetary Fund corresponds to the Executive Board and the personnel hired. These report to the Managing Director and the three Managing Deputy Managers.
At present, the current Managing Director of the IMF is Christine Lagarde . This French economist and politician was born in Paris in 1956 and is the first woman to lead this organization. His mandate began on July 5, 2011 and in recent years has been involved in some scandals.
IMF support programs
The International Monetary Fund’s support programs became very popular after the economic crisis of 2008. When a country is experiencing serious financial problems or believes it is about to enter recession, it can go to the Fund to request financing.
The objective of these is that the country can return to a solid economic position. In return, the IMF establishes a series of economic adjustment measures that the country is obliged to comply with. For example, reduction of public spending in a certain amount, containment of the deficit …