Owned by its member states, fund is lender of last resort
Published 22/11/2010 | 05:00
THE International Monetary Fund (IMF) is widely known as the lender of last resort.
It is an organisation made up of 187 countries which works to secure financial stability and facilitate international trade.
A specialist agency of the United Nations, it keeps track of the economic health of its member countries, alerts them to risks and provides policy advice.
But it is best known for providing financial assistance to countries that experience serious economic difficulties.
Funds deposited with the IMF from its member countries are used to bail out nations.
The IMF is owned by the governments of its member states and channels loans and grants and advises low and middle-income countries. It is funded by a charge, known as a quota, paid by members.
The quota is based on a country's wealth and it determines voting power within the organisation -- those making higher contributions have greater voting rights.
In October 2008 it activated an emergency funding scheme for countries facing economic distress arising from the global financial crisis.
It has also provided funding to countries caught up in the Asian financial crisis in the 1990s, and helped Argentina in 2001.
The IMF was conceived in July 1944, when representatives of 45 countries meeting in the town of Bretton Woods, New Hampshire, agreed on a framework for international economic co-operation to be established after World War Two to avoid a repeat of the disastrous economic policies that fuelled the Great Depression.
It came into formal existence in December 1945, when its first 29 member countries signed its Articles of Agreement. It began operations in March 1947.
Later that year, France became the first country to borrow from the IMF.
Financial aid from the IMF is always accompanied by conditions, which can include advocating austerity programmes and increasing taxes.