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International Trade and Finance

Notes Such a policy of drift could not be allowed to continue and an important amendment to the IMF
Charter came about in 1978, bringing about sweeping changes. The role of gold was drastically diluted,
special drawing rights (SDRs) of member countries became decisively important to currency
arrangements, and finally the surveillance of the Fund was established in a big way.
There could no longer be a devaluation without prior approval of the Fund. Finally, the IMF introduced
the conditionality arrangement, generating much controversy and apprehension in the Third World.
Meanwhile the IBRD first engaged itself in financing the reconstruction of the war-ravaged economies
of the world, particularly in Europe. Thereafter, as it became the World Bank, it has performed yeoman
service in financing growth particularly in the developing economies of the world including the
Third World.
30.2 International Monetary Fund

The International Monetary Fund—also known as the “IMF” or the “Fund”—was conceived at a
United Nations conference convened in Bretton Woods, New Hampshire, U.S. in July 1944. The 45
governments represented at that conference sought to build a framework for economic cooperation
that would avoid a repetition of the disastrous economic policies that had contributed to the Great
Depression of the 1930s.
The IMF is an international organization of 184 member countries. It was established to promote
international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster
economic growth and high levels of employment; and to provide temporary financial assistance to
countries to help ease balance of payments adjustment (Figure 30.1).

(Number of countries)
200

150

100
50

1945 1955 1965 1975 1985 1995 2003
Figure 30.1 : Growth in IMF Membership, 1945-2003.
Since the IMF was established its purposes have remained unchanged but its operations—which
involve surveillance, financial assistance, and technical assistance—have developed to meet the
changing needs of its member countries in an evolving world economy.
Fast Facts
1. Current membership : 184 countries
2. Staff : approximately 2,700 from 141 countries
3. Total Quotas : $ 327 billion (as of 28/2/05)
4. Loans outstanding : $ 90 billion to 82 countries, of which $ 10 billion to 59 on concessional terms
(as of 28/2/05)
5. Technical Assistance provided : 367 person years during FY2004
6. Surveillance consultations concluded : 115 countries during FY2004, of which 92 voluntarily
published their staff reports
Responsibilities

1. Promoting international monetary cooperation
2. Facilitating the expansion and balanced growth of international trade

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