Since its foundation at the end of World War II, the International Monetary Fund (IMF, or Fund) has been one of the world’s most powerful and controversial multilateral economic institutions. Debates on the role of the IMF in the global economy have intensified in recent decades, especially from the 1990s. Like its “sister institution,” the World Bank, the IMF was conceived at the Bretton Woods Conference of 1944 and formally established the following year, its official mandate “to promote international monetary cooperation . . . to facilitate the expansion and balanced growth of international trade . . . to promote exchange stability . . . to assist in . . . the elimination of foreign exchange restrictions which hamper the growth of world trade . . . to give confidence to members by making the general resources of the Fund temporarily available to them . . . ” (Article I, Purposes, Articles of Agreement of the IMF).
Headquartered in Washington, D.C., since its foundation, in 2007 it had 184 member countries, with a staff of 2,716 in 165 countries. In pursuit of its mandate, the IMF purports to engage in three principal activities: (1) surveillance through the “monitoring of economic and financial developments”; (2) providing loans; and (3) providing technical assistance. It is governed by its Board of Governors, one from each member country. The Executive Board, comprised of 24 directors, is responsible for its daily operation.
Eight of these 24 Executive Board members are appointed by the IMF’s largest “quota holders” (the United States, Japan, Germany, France, and the United Kingdom). A member’s quota “is broadly determined by its economic position relative to other members.” In 2007 the United States had the largest quota, based on “special drawing rights” (SDRs), with SDR 37.1 billion (equivalent to $55.1 billion). In essence, the IMF’s largest contributors wield the most power within the institution.
Critics charge that the IMF and the “neoliberal” economic paradigm that it promotes locks underdeveloped countries into positions of structural subordination within the global capitalist system. Especially controversial are IMF policy prescriptions for “austerity measures” and “structural adjustment” that include privatization of state-run entities, reduced public expenditures, and radically curtailed intervention of national governments in their national economies. Opposition to IMF policies and their underlying rationales has intensified in recent decades, as evidenced in part by the rise of left-leaning neo-populist regimes in Venezuela, Brazil, Argentina, Chile, Peru, and elsewhere in Latin America from the 1990s. Denouncing IMF policies as unjust, immoral, corporate welfare, and a major contributor to poverty, unemployment, and human misery worldwide, critics characterize the IMF and associated multilateral institutions and treaties (the World Bank, the G-7, the World Trade Organization [WTO], NAFTA, and many others) as instruments of the wealthy and powerful and major obstacles to social justice, economic well-being, and political rights among the world’s poor. As economic globalization accelerates in the 21st century, debates on the role of the IMF are likely to intensify.