GLOBAL FINANCIAL INSTITUTION – INTERNATIONAL MONETARY FUND (IMF)

Broadly speaking, the International Monetary Fund (IMF) is an organization which consists of 188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Besides, the IMF provides policy advice and financing to its members in economic difficulties and also works with developing nations to help them achieve macroeconomic stability. Helping a nation that can benefit from globalization while avoiding potential downsides such as massive movements of capital and abrupt shifts in comparative advantage, including labor, trade and tax policies are the important tasks for the IMF. Hence, the IMF supports its membership by providing:

1. Policy advice to governments and central banks based on analysis of economic trends and cross-country experiences.

2. Research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets.

3. Loans to help countries overcome economic difficulties and fight poverty, mostly in developing countries.

4. Technical assistance and training to help countries improve the management of their economies.

Furthermore, one of the main goals of the IMF as a global financial institution is to ensure the stability of the international monetary and financial system by working together to help resolve crises with its member countries to promote growth and alleviate poverty. As the institution has three main tasks at its disposal to carry out its mandate which are surveillance, lending, technical assistance and training, these functions are underpinned by its research and statistics.

Within the realm of surveillance, for example, the IMF promotes economic stability and global growth by encouraging countries to adopt sound economic and financial policies. In order to do this, the institution regularly monitors global, regional, and national economic developments. As it also seeks to assess the impact of the policies of individual countries on other economies, the process of monitoring and discussing countries’ economic and financial policies is known as bilateral surveillance.

On a regular basis (usually, once every year), the IMF conducts in depth appraisals of each member country’s economic situation by discussing with the country’s authorities and the policies that are most conducive to a stable and prosperous economy; drawing on experience across its membership. At this stage, the member countries may agree to publish the IMF’s assessment of their economies along with the vast majority of countries opting to do so.

Meanwhile, when it comes to addressing how the IMF performs its mandate as a global financing provider, the institution essentially renders its member countries the breathing room that they need to correct their balance of payments problems. A policy program supported by financing, technically speaking, is designed by the national authorities in close cooperation with the IMF. Although continued financial support is conditional on the effective implementation of this program, however, the IMF lending instruments were improved further to provide flexible crisis prevention tools to a broad range of its members with sound fundamentals, policies, and institutional policy frameworks. Whatever it is, the IMF in the most recent years has not only doubled its lending access limits, but also has boosted its financing support to the world’s poorer countries, with the loans provided at a concessional interest rate.