IMF General Information

The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C., 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. Formed in 1944 at the Bretton Woods Conference, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments difficulties can borrow money. As of 2010, the fund had about US755.7 billion at then exchange rates.

Introduction The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C., 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 "Formed in 1944 at the Bretton Woods Conference, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments difficulties can borrow money As of 2010, the fund had about US$755.7 billion at then exchange rates Through the fund, and other activities such as statistics-keeping and analysis, surveillance of its members' economies and the demand for particular policies, the IMF works to improve the economies of its member countries The organization's objectives stated in the Articles of Agreement are: to promote international monetary cooperation, international trade, high employment, exchange-rate stability, sustainable economic growth, and making resources available to member countries in financial difficulty Functions According to the IMF itself, it works to foster global growth and economic stability by providing policy, advice and financing to members, by working with developing nations to help them achieve macroeconomic stability and reduce poverty 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 The IMF provides alternate sources of financing Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritise economic growth, and to provide short-term capital to aid balance of payments This assistance was meant to prevent the spread of international economic crises The IMF was also intended to help mend the pieces of the international economy after the Great Depression and World War II As well, to provide capital investments for economic growth and projects such as infrastructure The IMF's role was fundamentally altered by the floating exchange rates post-1971 It shifted to examining the economic policies of countries with IMF loan agreements to determine if 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 The new challenge is to promote and implement policy that reduces the frequency of crises among the emerging market countries, especially the middle-income countries that are vulnerable to massive capital outflows 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 History The IMF was originally laid out as a part of the Bretton Woods system exchange agreement in 1944 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 This breakdown in international monetary co-operation 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 British economist John Maynard Keynes 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 to act as the U.S government had during the New Deal in response to World War II 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 Most of White's plan was incorporated into the final acts adopted at Bretton Woods The IMF formally came into existence on 27 December 1945, when the first 29 countries ratified its Articles of Agreement By the end of 1946 the IMF had grown to 39 members On March 1947, the IMF began its financial operations, and on May France became the first country to borrow from it The IMF was one of the key organisations of the international economic system; its design allowed the system to balance the rebuilding of international capitalism with the maximisation of national economic sovereignty and human welfare, also known as embedded liberalism 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 The Bretton Woods system prevailed until 1971, when the U.S government suspended the convertibility of the US$ (and dollar reserves held by other governments) into gold This is known as the Nixon Shock Since 2000 In May 2010, the IMF participated, in 3:11 proportion, in the first Greek bailout that totalled €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 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 A second bailout package of more than €100 billion was agreed 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 SDR23.8 billion, and which 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 As of January 2012, the largest borrowers from the IMF in order were Greece, Portugal, Ireland, Romania, and Ukraine 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 No insured deposit of €100k or less were to be affected under the terms of a novel bail-in scheme 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" The paper, which was discussed by the board on 20 May, 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, as was a deconstruction by Matina Stevis of the Wall Street Journal 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% 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." 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 2014 Ukrainian revolution Member countries 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 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, Curaỗao, Hong Kong, and Macau, as well as Kosovo 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 Former members are Cuba (which left in 1964) and the Republic of China, which was ejected from the UN in 1980 after losing the support of then U.S President Jimmy Carter and was replaced by the People's Republic of China However, "Taiwan Province of China" is still listed in the official IMF indices 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 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 Some members have a very difficult relationship with the IMF and even when they are still members they not allow themselves to be monitored Argentina, for example, refuses to participate in an Article IV Consultation with the IMF 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 When can a country borrow from the IMF? One of the IMF's single biggest functions is lending money to members in need If a country is unable to make payments to other countries without taking "measures destructive of national or international prosperity," such as implementing trade restrictions or devaluing its currency, it may borrow money from the IMF When the IMF lends a country money, it often requires the borrower to follow a program aimed at meeting certain quantifiable economic goals, which are described in a letter of intent from the borrowing government to the IMF's managing director IMF loans are not provided to fund particular projects or activities, they are provided to promote a country's overall economic health The duration, payment terms, and lending conditions vary on a case-by-case basis The IMF charges borrowers a market-related interest rate and also requires service charges and a refundable commitment fee Low-income countries pay as little as 0.5% interest per year The IMF also lends money to countries dealing with sudden losses of financial confidence, such as after natural disasters or wars, in order to prevent the spread of financial crises stemming from those countries There are five main facilities from which the IMF makes loans: IMF Stand-By Arrangements (for short-term lending), the Extended-Fund Facility, the Poverty Reduction and Growth Facility, the Supplemental Reserve Facility, and the Exogenous Shocks Facility Conditionality of loans IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial resources 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 If the conditions are not met, the funds are withheld Conditionality is perhaps the most controversial aspect of IMF policies 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" The process of IMF lending Upon request by a member country, IMF resources are usually made available under a lending “arrangement,” which may, depending on the lending instrument used, specify the economic policies and measures a country has agreed to implement to resolve its balance of payments problem The economic policy program underlying an arrangement is formulated by the country in consultation with the IMF and is in most cases presented to the Fund’s Executive Board in a “Letter of Intent” and is further detailed in the annexed “Memorandum of Understanding” Once an arrangement is approved by the Board, IMF resources are usually released in phased installments as the program is implemented Some arrangements provide very strongly performing countries with one-time up-front access to IMF resources and thus are not subject to explicit policy understandings Similarly, the steps involved for acquiring an IMF loan, are as follows: The country has to be in Trouble! - Firstly, the nation that wants to borrow from the IMF needs to be in a crisis such as a balance of payment crisis(i.e Too much of Import money owed and other External debts) Loan Application - The country, then as a last resort turns to the IMF for financial help The country needs to submit a request to the IMF stating their current scenario, the consequences etc IMF decides - On receiving the country's request, IMF's help is made available under a lending arrangement, which will depend on the kind of lending instrument to be used, stipulate specific economic policies and measures a country has agreed to implement to resolve its problem A economic recovery program is then formulated by the Country in consultation with the IMF and is in most cases presented to the Fund’s Executive Board in a “Letter of Intent.” Fund Release - Once IMF's board approves the nation's request, Steps are taken to release the fund in installments and phases thus ensuring the rightful implementation of the recovery program In rare cases, if the country has a strong credibility, the resources are released directly as a one-time payment Top 10 debtor countries owe 86% of total IMF loans (2015) Data collected from the IMF website suggest that a total of 79 countries owed a staggering 68.82 billion in SDRs (special drawing rights) as on May 31 this year As on May 31, 2015, the value of one SDR in dollar terms stood at 1.390500, valuing the total amount due from the borrowing countries at $84.57 billion Among continents, Africa (40 African countries) owes a combined $8.46 billion It is followed by Central America (11 countries), Asia (nine), Europe (seven) and the European Union (six) Of the total amount owed to IMF as on May 31, the 10 biggest borrowing countries, including Portugal, Greece, Ukraine, Ireland and Pakistan, owed $72.4 billion, or nearly 86% of the total amount lent The biggest outstanding loans from the IMF were issued to European nations, notably Greece and Portugal In the past few years, European countries have been the biggest borrowers of loans from the organisation Most nations turn to the IMF for a loan when they run into dire financial woes Examples Thailand Pressures on Thailand’s currency, the baht, which had been evident already in late 1996, increased dramatically during the first half of 1997 Primary contributors to this built up pressure were an unsustainable current account deficit, significant appreciation of the real effective exchange rate, rising foreign debt (in particular shortterm), a deteriorating fiscal balance, and increasing difficulties in the financial sector Reserve money growth accelerated sharply as the Bank of Thailand provided liquidity support for ailing financial institutions “Most of the policy responses to the pressures in the exchange market focussed on spot and forward intervention, introduction of controls on some capital account transactions and limited measures to halt the weakening of the fiscal situation.” On July 2, 1997, following more and more speculative attacks on its currency, Thailand’s Central Bank decided to float its exchange rate However, the policy changes introduced with the floatation of the baht were inadequate Market confidence failed to return and the baht depreciated by 20 percent against the U.S dollar during On August 20, 1997, the IMF’s Executive Board approved financial support for Thailand of up to SDR 2.9 billion or about $4 billion, equivalent to approximately 505 percent of Thailand’s quota, over a 34 month period (see Table 5) Additional financing in the amount of $2.7 billion was pledged by the World Bank and the Asian Development Bank while Japan and other interested countries pledged another $10.5 billion “The underlying adjustment program was aimed at restoring confidence, bringing about an orderly reduction in the current account deficit, reconstituting foreign exchange reserves and limiting the rise in inflation to the one-off effects of the depreciation.” Growth was expected to slow down dramatically, but still remain positive Key elements of the initial economic reform package included restructuring of the financial sector (focusing on the identification and closure of insolvent financial institutions; included 56 finance companies); fiscal measurers equivalent to about three percent of GDP to correct the public sector deficit to a surplus of one percent of GDP in 1997/1998.and contribute to shrinking the current account deficit; and control the domestic credit, with indicative ranges for interest rates In subsequent months, the baht continued to depreciate as roll-over of short-term debt declined and the crisis in Asia spread Despite the fact that macroeconomic policies were on track and nominal interest rates were raised, market confidence further declined because of delays in the implementation of financial sector reform, political instability and poor communications of the key aspects of the program In light of a larger than expected depreciation in the baht and a sharper than anticipated slowdown in the economy, the bailout program was strengthened at the first quarterly review on December 8, 1997 The indicative range for interest rates was raised and a specific timetable for financial sector restructuring was announced In early February 1998, the baht started to strengthen as improvements in the policy setting revived market confidence At each subsequent quarterly review (March 4, 1998; June 10, 1998; September 11, 1998), the program was again revised Real GDP growth projections were continuously revised downward, reaching a projected decline of 4-5 percent in 1998 as of June 10 and a decline of 6-8 percent as of September 11 From February to May, the baht strengthened markedly (almost 35 percent vs the U.S dollar from the low in January), but the economy fell into a deeper than expected recession In order to stimulate growth (or more appropriately, curb the real GDP contraction), further adjustments were made to allow for an increase in the fiscal deficit target for fiscal-year 1997/98 The fiscal deficit target for 1997/98 was raised from two percent to three percent of GDP Interest rates started to slowly decrease in late March of 1998 Additional measures to strengthen the social safety net were planned and the program for financial sector and corporate restructuring was further specified By the fourth quarter review completed September 11, 1998, foreign exchange market conditions were relatively stable, allowing room for further lowering of interest rates Table: Selected Economic Indicators for Thailand 1996 1997 1998(1) 1999(2) percent change Real GDP Growth 5 Consumer Prices (period avg.) 0.4 -7 to – 8 2.5 to 3.0 percent of GDP; a minus signifies a deficit Central government balance(3) Current account balance 1.4 7.9 2.4 2.0 3.0 11 (billions U.S dollars) External debt 90 93 73 N.A Source: Thai authorities and IMF staff estimates (1) Estimate (2) Program (3) Fiscal year, which runs from October to September 30 Indonesia In July 1997, soon after the floating of the Thai baht, pressure on the Indonesian rupiah intensified While the key macroeconomic indicators in Indonesia were stronger than in Thailand (the current account deficit had been modest, export growth had been reasonably well maintained, and the fiscal balance had remained in surplus), Indonesia’s short-term private sector external debt had been rising rapidly Increased evidence of weakness in the financial sector raised doubts about the government’s ability to defend the currency peg On July 11, 1997, Indonesia widened the exchange rate intervention band On August 14, 1997, the rupiah was floated The exchange rate depreciated sharply and despite a temporary small recovery, the rupiah fell further against the U.S dollar By early October, the cumulative depreciation of over 30 percent since early July became the largest in the region On November 5, 1997, the IMF’s Executive Board approved a three-year stand-by arrangement with Indonesia totaling $10 billion, equivalent to approximately 490 percent of the country’s quota Key objectives of the IMF program included restoring market confidence; bringing about an orderly adjustment in the current account; limiting the unavoidable decline in output growth; and containing the inflationary impact of exchange rate depreciation After an initial brief strengthening of the rupiah, the exchange rate fell again during December 1997 and January 1998 Poor implementation of proposed structural changes signaled a lack of commitment to the program Coupled with political uncertainty due to the President’s health problems and the upcoming presidential election, capital outflows increased and reserves declined sharply A revised strengthened program was announced on January 15, 1998 in an attempt to stop and reverse the decline in the rupiah, but market reaction was skeptical Despite the revised rescue program by the IMF, implementation of the structural reforms continued to lag again and the macroeconomic program quickly ran off track The economic downturn deepened and inflation accelerated sharply Indonesia’s economy was on the verge of a vicious circle of currency depreciation and hyperinflation The first review of the IMF programs was completed on May 4, 1998, after the new government headed by re-elected President Soeharto was formed, and resulted in several modifications to the original program “In order to stabilize the exchange rate, reduce inflation and limit the decline in output (and eventually restore growth), the revised program included: tight monetary policy with drastically higher interest rates and strict control over the central bank’s net domestic assets; expanded farreaching structural reforms, including privatization and dismantling of monopolies and prices controls, to improve efficiency, transparency and governance in the corporate sector; adjusted fiscal framework that took into account the less favorable outlook for growth; and a revised plan for the restructuring of the banking system.”Unfortunately, the program was once again steered off course, this time by civil unrest which culminated with the resignation of President Soeharto on May 21, 1998 “While food prices sky-rocketed, production, exports and domestic supply channels were disrupted and banking activities came to a virtual standstill.” The rupiah hit an all time low against the U.S dollar in mid June 1998, with a cumulative depreciation of approximately 85 percent since June 1997 On June 4, 1998, a critical agreement with private creditors was reached which covered the restructuring of interbank debt falling due before the end of March 1999 The government also established a framework for the voluntary restructuring of corporate debt involving a government exchange guarantee scheme By the time of the IMF’s second program review in July 1998, output for fiscal year 1998/99 was expected to decline by 10-15 percent and inflation was projected to average 60 percent On August 25, 1998, the IMF’s Executive Board replaced the previously agreed upon stand-by agreement with an extended arrangement with access to the same capital amounts of the original agreement Additionally, the World Bank and Asian Development Bank pledged $2 billion and bilateral sources close to $1 billion of additional financing sources Since then, macroeconomic policies have been generally speaking on track and policies regarding financial and corporate sector restructuring have been further strengthened The last major hurdle seems to have been overcome on September 23, 1998, with an agreement on the rescheduling or refinancing of Indonesia’s principal payments on official debt and export credit for the period from August 6, 1998 to March 31, 2000, totaling $4.1 billion In recent months, the rupiah has appreciated significantly, allowing interest rates to be lowered Inflation has decreased to reach 80 percent at year-end Some of the key economic indicators for Indonesia are summarized in the table below: Table: Selected Economic Indicators for Indonesia(1) 1996/97 1997/98 1998/99 1999/00 (2) (2) percent change Real GDP Growth Consumer Prices (period avg.) - -2.0 to 1.0 16.0 12 65 17 percent of GDP; a minus signifies a deficit Central government balance 0.9 4.5 5.7 Current account balance 3.3 1.2 1.5 to 2.0 (billions U.S dollars) External debt 112 137 148 N.A Source: Indonesian authorities and IMF staff estimates (1) Fiscal year, which runs from April to March 31 (2) Program Korea Through the beginning of the crisis in Thailand and Indonesia, Korea appeared relatively unaffected Its exchange rate remained generally stable through October 1997 However, high amounts of short-term debt and only moderate levels of international reserves made the economy very vulnerable to a shift in market sentiment Concerns about the soundness of financial institutions and chaebol had increased significantly after several large corporate bankruptcies earlier in the year Korean banks started to experience difficulties in rolling over their short-term foreign liabilities As a response, the Bank of Korea shifted foreign reserves to the banks’ offshore branches and the government announced a guarantee of foreign borrowing by Korean banks As external financing conditions deteriorated in late October, the won fell sharply while exchange reserves declined rapidly Monetary policy was initially tightened, but concerns about the effect of high interest rates on the highly leveraged corporate sector lead to a loosing of monetary policy again By December 1997, the won had depreciated by over 20 percent against the U.S dollar As a response to Korea’s financial crisis, the IMF approved on December 4, 1997 a three-year stand-by arrangement totaling $21 billion, equivalent to approximately 1,940 percent of the country’s quota The World Bank and Asian Development Bank and other interested countries pledged another $14 billion and $22 billion, respectively Similar to the programs announced in Thailand and Indonesia, however, positive impacts of the announced program were short-lived and the won continued to fall Adding to the existing uncertainty, the leading candidates for the December 18 presidential election all hesitated in publicly endorsing the program With the won in a free fall and a sever credit crunch, a temporary agreement was reached on December 24, 1997 with private bank creditor to maintain exposure and discussions on voluntary rescheduling of short-term debt were initiated During the first two weeks of January 1988, roll-over rates increased, the current account had moved into surplus and general signs of stabilization emerged However, due to the large depreciation in the exchange rate, inflation increased above projections and economic activity decreased more than expected On January 28, 1998, Korea reached an agreement with private bank creditor on a voluntary rescheduling of short-term debt covering a total of $22 billion During the next few months, the IMF rescue program remained on track and market confidence increased as the new government stated its commitment to the bailout program Economic growth projections were further revised downward, yet by July, Korea had made substantial progress in overcoming its external crisis By the end of August, output was projected to decline by percent in 1998, but inflation had decreased significantly and was expected to average 8.5 percent during the year Fiscal deficit targets were raised to four percent of GDP to stimulate growth through additional expenditures, especially social programs and the won remained broadly stable and appreciated against the U.S dollar Table 4: Selected Economic Indicators for Korea 1996 1997 1998(1) 1999(2) - - Percent change Real GDP Growth Consumer Prices (period avg.) 5 7.0 1.0 6 5 Percent of GDP; a minus signifies a deficit Central government balance Current account balance 4.7 5.0 5.1 1.8 - 13 6 (billions U.S dollars) External debt 157 154 147 Source: Korean authorities and IMF staff estimates N.A (1) Estimate (2) Program Surveillance activity When a country joins the IMF, it agrees to subject its economic and financial policies to the scrutiny of the international community It also makes a commitment to pursue policies that are conducive to orderly economic growth and reasonable price stability, to avoid manipulating exchange rates for unfair competitive advantage, and to provide the IMF with data about its economy The IMF's regular monitoring of economies and associated provision of policy advice is intended to identify weaknesses that are causing or could lead to financial or economic instability This process is known as surveillance Country surveillance Country surveillance is an ongoing process that culminates in regular (usually annual) comprehensive consultations with individual member countries, with discussions in between as needed The consultations are known as "Article IV consultations" because they are required by Article IV of the IMF's Articles of Agreement During an Article IV consultation, an IMF team of economists visits a country to assess economic and financial developments and discuss the country's economic and financial policies with government and central bank officials IMF staff missions also often meet with parliamentarians and representatives of business, labor unions, and civil society The team reports its findings to IMF management and then presents them for discussion to the Executive Board, which represents all of the IMF's member countries A summary of the Board's views is subsequently transmitted to the country's government In this way, the views of the global community and the lessons of international experience are brought to bear on national policies Summaries of most discussions are released in Press Releases and are posted on the IMF's web site, as are most of the country reports prepared by the staff Regional surveillance Regional surveillance involves examination by the IMF of policies pursued under currency unions—including the euro area, the West African Economic and Monetary Union, the Central African Economic and Monetary Community, and the Eastern Caribbean Currency Union Regional economic outlook reports are also prepared to discuss economic developments and key policy issues in Asia Pacific, Europe, Middle East and Central Asia, Sub-Saharan Africa, and the Western Hemisphere Global surveillance Global surveillance entails reviews by the IMF's Executive Board of global economic trends and developments The main reviews are based on the World Economic Outlook reports, the Global Financial Stability Report, which covers developments, prospects, and policy issues in international financial markets, and the Fiscal Monitor, which analyzes the latest developments in public finance All three reports are published twice a year, with updates being provided on a quarterly basis In addition, the Executive Board holds more frequent informal discussions on world economic and market developments The IMF’s main goal is to ensure the stability of the international monetary and financial system It helps resolve crises, and works with its member countries to promote growth and alleviate poverty It has three main tools at its disposal to carry out its mandate: surveillance, technical assistance and training, and lending These functions are underpinned by the IMF’s research and statistics The IMF promotes economic stability and global growth by encouraging countries to adopt sound economic and financial policies To this, it regularly monitors global, regional, and national economic developments It also seeks to assess the impact of the policies of individual countries on other economies This process of monitoring and discussing countries’ economic and financial policies is known as bilateral surveillance On a regular basis—usually once each year—the IMF conducts in depth appraisals of each member country’s economic situation It discusses with the country’s authorities the policies that are most conducive to a stable and prosperous economy, drawing on experience across its membership Member countries may agree to publish the IMF’s assessment of their economies, with the vast majority of countries opting to so The IMF also carries out extensive analysis of global and regional economic trends, known as multilateral surveillance Its key outputs are three semiannual publications, the World Economic Outlook, the Global Financial Stability Report, and the Fiscal Monitor The IMF also publishes a series of regional economic outlooks The IMF recently agreed on a series of actions to enhance multilateral, financial, and bilateral surveillance, including to better integrate the three; improve our understanding of spillovers and the assessment of emerging and potential risks; and strengthen IMF policy advice Why is IMF surveillance important? Surveillance is essential to identify risks that policies may need to address to sustain growth Moreover, in today's globalized economy, where the policies of one country typically affect many other countries, international cooperation is essential The IMF’ surviellance work Surveillance in its present form was established by Article IV of the IMF’s Articles of Agreement, as revised in the late 1970s following the collapse of the Bretton Woods system of fixed exchange rates Under Article IV, member countries undertake to collaborate with the IMF and with one another to promote stability There are two main aspects: Bilateral surveillance, or the appraisal of and advice on the policies of each member country IMF economists continually monitor members’ economies They visit member countries—usually annually—to exchange views with the government and the central bank and consider whether there are risks to domestic and global stability that argue for adjustments in economic or financial policies Discussions mainly focus on exchange rate, monetary, fiscal, and financial policies, as well as macro-critical structural reforms During their missions, IMF staff also typically meets with other stakeholders, such as parliamentarians and representatives of business, labor unions, and civil society, to help evaluate the country’s economic policies and outlook Upon return to headquarters, the staff presents a report to the IMF’s Executive Board for discussion The Board’s views are subsequently transmitted to the country’s authorities, concluding a process known as an Article IV consultation In recent years, surveillance has become more transparent Almost all member countries now agree to publish a Press Release summarizing the views of the Board, as well as the Staff Report and accompanying analysis Many countries also publish a statement by staff at the end of an IMF mission Multilateral surveillance, or oversight of the world economy The IMF also monitors global and regional economic trends, and analyzes spillovers from members’ policies onto the global economy The key instruments of multilateral surveillance are the regular publications World Economic Outlook (WEO), Global Financial Stability Report (GFSR), and Fiscal Monitor The WEO provides detailed analysis of the world economy and its growth prospects, addressing issues such as the macroeconomic effects of global financial turmoil It also assesses key potential global spillovers with a particular focus on the cross-border impact of economic and financial policies in systemic economies The GFSR assesses global capital market developments and financial imbalances and vulnerabilities that pose risks to financial stability The Fiscal Monitor updates medium-term fiscal projections and assesses developments in public finances The IMF also publishes Regional Economic Outlook reports, providing more detailed analysis for major regions of the world It cooperates closely with other groups such as the Group of Twenty (G20) industrialized and emerging market economies, since 2009 supporting the G20’s efforts to sustain international economic cooperation through its mutual assessment process The IMF provides analysis of whether policies pursued by member countries are consistent with sustained and balanced global growth Since 2012, it has prepared Pilot External Sector Reports, which analyze the external positions of systemically large economies in a globally consistent manner Twice a year, the IMF also prepares a Global Policy Agenda that pulls together the key findings and policy advice from multilateral reports and defines a future agenda for the Fund and its members These actions help ensure that the IMF is in a better position to address spillovers from members’ policies on global stability; monitor members’ external sectors in a more comprehensive manner; more effectively engage members in a constructive dialogue; better safeguard the effective operation of the international monetary system; and support global economic and financial stability  ... still listed in the official IMF indices 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... turns to the IMF for financial help The country needs to submit a request to the IMF stating their current scenario, the consequences etc IMF decides - On receiving the country''s request, IMF'' s help... 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