International Monetary Fund Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

The International Monetary Fund (IMF) is an international organization that is dedicated to stabilizing international exchange rates and encouraging development: its official mission statement is “to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.” As part of this mission, it offers loans to less-developed countries, often with stipulations aimed at ensuring the loans effectively encourage development.

The IMF was proposed in July 1944 at the Bretton Woods Conference. There were originally forty-five member nationstates, with goals to stabilize exchange rates and rebuild the world’s international payment system. Countries would contribute to a pool that could be borrowed from, on a temporary basis, by countries with payment imbalances. The IMF was formally established on December 27, 1945, when twenty-nine countries signed its Articles of Agreement. The IMF began its financial operations on March 1, 1947.

The IMF’s early years focused on stabilizing the economic system; it retains influence through its work to improve the economies of its member countries. However, some of its policies have been controversial. It has been criticized for protecting the interests of the major economic powers, especially the United States; for requiring borrower nations to sell off assets to multinational corporations and implement austerity programs, which often increased taxes while reducing government spending (often leading to further decline in the standard of living of the borrower nation’s citizens); and for providing loans to dictatorships while often ignoring the needs of democratic regimes. With the World Bank, the IMF has been a major target of the ant globalization movement.

As of 2010, 186 countries are members of the IMF. Any country may apply for membership to the IMF. If the Board of Governors adopts the membership resolution proposed by the IMF’s Executive Board, the applicant state must take the legal steps required under its own law to join the organization. Member states can withdraw from the IMF, although that is rare.

Member states are represented on a twenty-four-member Executive Board (five executive directors are appointed by the five members with the largest quotas, and nineteen executive directors are elected by the remaining members) that oversees the day-to-day operations of the IMF. All members appoint a governor to the IMF’s Board of Governors. Major decisions require an 85 percent supermajority. The United States, with 16.77 percent of the votes, has always been the only country able to block a supermajority on its own.

The Executive Board selects the managing director, who is appointed for a renewable five-year term. The managing director reports to the board, serves as its chair and the chief of the IMF’s staff, is responsible for ordinary business subject to the direction of the board, and is assisted by a first deputy managing director and two other deputy managing directors. Historically, the IMF’s managing director has been European. The first deputy managing director of the IMF has traditionally been an American. The managing director as of January 2010 was Dominique Strauss-Kahn, a French academic and politician, who succeeded Rodrigo de Rato, who retired on October 31, 2007.

In July 2009, a report proposing reforms in the governance of the IMF was released. Based on that report and others, a reform plan was being drafted in 2010.

The IMF is headquartered in Washington, D.C., with additional offices in New York; Paris; Tokyo; Warsaw; Dares Salaam, Tanzania; Libreville, Gabon; Bamako, Mali; and Beirut.

Bibliography:

Budhoo, Davidson. Enough Is Enough: Dear Mr. Camdessus . . . Open Letter to the Managing Director of the International Monetary Fund. New York: New Horizons, 1990.
Buira, Ariel, ed. Reforming the Governance of the IMF and World Bank. London: Anthem, 2005.
Dreher, Axel. “The Influence of Elections on IMF Programme Interruptions.” Journal of Development Studies 39, no. 6 (2003): 101–120.
“The Influence of IMF Programs on the Re-election of Debtor Governments.” Economics & Politics 16, no. 1 (2004): 53–75.
“A Public Choice Perspective of IMF and World Bank Lending and Conditionality.” Public Choice 119, no. 3/4 (2004): 445–464.
Rapkin, David P., and Jonathan R. Strand. “Developing Country Representation and Governance of the International Monetary Fund.” World Development 33, no. 12 (2005): 1993–2011.
Vreeland, James Raymond. The International Monetary Fund: Politics of Conditional Lending. New York: Routledge, 2007.
Williamson, John. The Lending Policies of the International Monetary Fund. Policy Analyses in International Economics 1.Washington, D.C.: Institute for International Economics, 1982.

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