The International Monetary Fund

Purpose

The International Monetary Fund is an organization that works to create an efficient international financial system. It does this by creating terms that each member nation must fulfil. Some of such terms are as follows:

• Each member state must agree on the principle of currency convertibility. This way, a nation can own another’s currency and sell it back at this “par value”.
• Each member state must contribute a certain amount of money to the operating costs of the IMF, an amount that is decided by the Fund according to a nation’s amount of trade, income and reserve holdings. A part of this contribution is in gold; the other part is in the nation’s own currency.
• Each member state is entitled to borrow funds from the gold portion of their contribution in times of unfavourable balance-of-payments situations

As well as making sure the international monetary system runs smoothly, the IMF offers technical assistance and training to governments and banks of member countries in their areas of expertise.

Currently

Since the founding of the International Monetary Fund after World War II, world economy has undergone major changes. The rise in international trade has increased the importance of the IMF. Stated in its 2005 annual report, the IMF is considering reorganization to better assist the fiscal world. In 2002, the IMF announced that it believes Africa’s conditions are improving enough that it might be able to grow out of poverty, with assistance. With help from the IMF, Africa might be able to develop enough to become a thriving continent.

The International Monetary Fund’s work helps economies around the world emerge, expand, and sustain fiscal power. Countries like the United States benefit from the IMF’s international trade assistance, while nations like those in Africa profit from balance-of-payments aid. Financial figures have climbed since the founding of the IMF, and will continue as long as it carries on its journey towards complete monetary cooperation.

1 “Balance-of-payments” refers to the money a country pays out versus the money that it takes in through transactions. Problems occur when the balance-of-payments is negative.