Key IMF activities The IMF supports its membership by providing policy advice to governments and central banks

ks based on analysis of economic trends and cross-country experiences; research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets; loans to help countries overcome economic difficulties; concessional loans to help fight poverty in developing countries; and technical assistance and training to help countries improve the management of their economies.

 The IMF's main business The IMFs job is to promote a stable international monetary system, in which member countries can achieve high rates of employment, low inflation, and sustainable economic growth. The IMF does this by: overseeing the international monetary system by regularly reviewing national, regional, and global economic and financial developments; providing economic monitoring and policy advice to its 187 member countries, encouraging them to adopt policies that foster economic stability, reduce their vulnerability to economic and financial crises, and raise living standards; and analyzing the impact of countries policies on others; applying lessons from cross-country experiences to each countrys unique situation; and providing a forum for international cooperation on global economic and financial issues.

How we do it
Economic and Financial Surveillance Technical Assistance and Training IMF Lending Research and Data

Surveillance The IMF promotes economic stability and global growth by encouraging countries to adopt sound economic and financial policies. To do 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 basisusually once each yearthe IMF conducts in depth appraisals of each member countrys economic situation. It discusses with the countrys 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 IMFs assessment of their economies, with the vast majority of countries opting to do 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.

Technical assistance and training

IMF offers technical assistance and training to help member countries strengthen their capacity to design and implement effective policies. Technical assistance is offered in several areas, including fiscal policy, monetary and exchange rate policies, banking and financial system supervision and regulation, and statistics. The IMF provides technical assistance and training mainly in four areas: 1. monetary and financial policies (monetary policy instruments, banking system supervision and restructuring, foreign management and operations, clearing settlement systems for payments, and structural development of central banks); 2. fiscal policy and management (tax and customs policies and administration, budget formulation, expenditure management, design of social safety nets, and management of domestic and foreign debt); 3. compilation, management, dissemination, and improvement of statistical data; and 4. economic and financial legislation.

Lending
IMF financing provides member countries the breathing room they need to correct balance of payments problems. A policy program supported by financing is designed by the national authorities in close cooperation with the IMF. Continued financial support isconditional on the effective implementation of this program. In the most recent reforms, IMF lending instruments were improved further to provideflexible crisis prevention tools to a broad range of members with sound fundamentals, policies, and institutional policy frameworks. In low-income countries, the IMF has doubled loan access limits and is boosting its lending to the worlds poorer countries, with loans at a concessional interest rate.

Research and data

Supporting all three of these activities is the IMFs economic and financial research andstatistics. In recent years, the IMF has applied both its surveillance and technical assistance work to the development of standards and codes of good practice in its areas of responsibility, and to the strengthening of financial sectors. These are part of the IMFs continuing efforts to strengthen national and global financial systems and improve its ability to prevent and resolve crises.

Organization & Finances

The IMF is led by a Managing Director, who is head of the staff and Chairman of the Executive Board. The Managing Director is assisted by a First Deputy Managing Director and three other Deputy Managing Directors. The Management team oversees the work of the staff and maintains high-level contacts with member governments, the media, nongovernmental organizations, think tanks, and other institutions.

Managing Director, Christine Lagarde, a French national, joined the IMF as Managing Director in July 2011. Before coming to the IMF, she was France's Minister for Economy, Finance and Industry.

Quotas
Each member country's quota broadly reflects the size of its economy: the larger a country's economy in terms of output and the larger and more variable its trade, the larger its quota tends to be. For example, the world's biggest economy, the United States, has the largest quota in the IMF. Quotas, together with the equal number of basic votes each member has, determine countries'voting power. They also help determine how much countries can borrow from the IMF and their share in allocations of special drawing rights or SDRs (the reserve currency created by the IMF in 1969). Countries pay 25 percent of their quota subscriptions in SDRs or major currencies, such as U.S. dollars, euros, pounds sterling, or Japanese yen. They pay the remaining 75 percent in their own currencies. The IMF's lending resources come mainly from the money that countries pay as these quota subscriptions when they become members

Special Drawing Rights

The Special Drawing Right (SDR) is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations.

SDR allocations to IMF members

Under its Articles of Agreement, the IMF may allocate SDRs to members in proportion to their IMF quotas, providing each member with a costless asset. However, if a members SDR holdings rise above its allocation, it earns interest on the excess; conversely, if it holds fewer SDRs than allocated, it pays interest on the shortfall. There are two kinds of allocations: General allocations of SDRs. General allocations have to be based on a long-term global need to supplement existing reserve assets. Decisions to allocate SDRs have been made three times: in 1970-72, for SDR 9.3 billion; in 197981, for SDR 12.1 billion; and in August 2009, for an amount of SDR 161.2 billion. Special allocations of SDRs. A special one-time allocation of SDRs through the Fourth Amendment of the Articles of Agreement was implemented in September 2009. The purpose of this special allocation was to enable all members of the IMF to participate in the SDR system on an equitable basis and correct for the fact that countries that joined the Fund after 1981more than one-fifth of the current IMF membershiphad never received an SDR allocation. With the general SDR allocation of August 2009 and the special allocation of Setember 2009, the amount of SDRs increased from SDR 21.4 billion to SDR 204.1 billion (currently equivalent to about $317 billion).

SDRs value
The value of the SDR is based on a basket of key international currenciesthe euro, Japanese yen, pound sterling, and U.S. dollar. The U.S. dollar-value of the SDR is posted daily on the IMFs website. The basket composition is reviewed every five years by the Executive Board to ensure that it reflects the relative importance of currencies in the worlds trading and financial systems. The SDR interest rate provides the basis for calculating the interest charged to members on regular (nonconcessional) IMF loans, the interest paid and charged to members on their SDR holdings, and the interest paid to members on a portion of their quota subscriptions. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term debt in the money markets of the SDR basket currencies.

Gold

The IMF holds a relatively large amount of gold among its assets, not only for reasons of financial soundness, but also to meet unforeseen contingencies. The IMF holds about 90.5 million ounces, or 2,814.1 metric tons, of gold at designated depositories. The IMF's total gold holdings are valued on its balance sheet at about $4.9 billion (SDR 3.2 billion) on the basis of historical cost. The IMF's holdings amount to about $160 billion (as determined by end-February 2012 market prices). Gold and the international monetary system Gold played a central role in the international monetary system after World War II. The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates pegged in terms of the dollar and, in the case of the United States, the value of the dollar in terms of gold. This "par value system" ceased to work after 1971 Until the late 1970s, 25 percent of member countries' initial quota subscriptions and subsequent quota increases had to be paid for with gold. Payment of charges and repayments to the IMF by its members constituted other sources of gold.

Borrowing Arrangements
If the IMF believes that its resources might fall short of members' needsfor example, in the event of a major financial crisisit can supplement its own resources by borrowing. It has had a range of bilateral borrowing arrangements in the 1970s and 1980s. Currently it has two standing multilateral borrowing arrangements and one bilateral borrowing agreement. Through the New Arrangements to Borrow (NAB)and the General Arrangements to Borrow (GAB), a number of member countries and institutions stand ready to lend additional funds to the IMF. The GAB and NAB are credit arrangements between the IMF and a group of members and institutions to provide supplementary resources of up to SDR 34 billion (about US$50 billion) to the IMF to forestall or cope with an impairment of the international monetary system or to deal with an exceptional situation that poses a threat to the stability of that system. In April 2009, the Group of Twenty industrialized and emerging market economies agreed to triple the Funds lending capacity to $750 billion, enabling it to inject extra liquidity into the world economy during this time of crisis. The additional support will come from several sources, including contributions from member countries that have pledged to help boost the Funds lending capacity.

Our Work
The IMF's fundamental mission is to help ensure stability in the international system. It does so in three ways: keeping track of the global economy and the economies of member countries; lending to countries with balance of payments difficulties; and giving practical help to members. 1. Surveillance

2. Technical Assistance
3. Lending

Surveillance
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 Regional Surveillance Global Surveillance

Surveillance covers a range of economic policies, with the emphasis varying in accordance with a country's individual circumstances. Exchange rate, monetary, and fiscal policies. The IMF provides advice on issues such as the choice of exchange rate policies and ensuring consistency between the regime and fiscal and monetary policies. Financial sector issues are receiving elevated coverage in surveillance reports, building on the achievements under theFinancial Sector Assessment Program (FSAP), which enables the IMF and the World Bank to gauge the strengths and weaknesses of countries' financial sectors. Assessment of risks andvulnerabilities stemming from large and sometimes volatile capital flows has become more central to IMF surveillance in recent years. Institutional and structural issues have also gained importance in the wake of financial crises and in the context of some countries' transition from planned to market economies. The IMF and the World Bank play a central role in developing, implementing, and assessing internationally recognizedstandards and codes in areas crucial to the efficient functioning of a modern economy such as central bank independence, financial sector regulation, and policy transparency and accountability.

Technical Assistance
The IMF shares its expertise with member countries by providing technical assistance and training in a wide range of areas, such as central banking, monetary and exchange rate policy, tax policy and administration, and official statistics. The objective is to help improve the design and implementation of members' economic policies, including by strengthening skills in institutions such as finance ministries, central banks, and statistical agencies. The IMF has also given advice to countries that have had to reestablish government institutions following severe civil unrest or war. The IMF provides technical assistance and training mainly in four areas: monetary and financial policies (monetary policy instruments, banking system supervision and restructuring, foreign management and operations, clearing settlement systems for payments, and structure development of central banks); fiscal policy and management (tax and customs policies and administration, budget formulation, expenditure management, design of social safety nets, and management of domestic and foreign debt); compilation, management, dissemination, and improvement of statistical data; and advising on economic and financial legislation.

1. 2. 3. 4.

Lending by the IMF

IMF loans are meant to help member countries tackle balance of payments problems, stabilize their economies, and restore sustainable economic growth. This crisis resolution role is at the core of IMF lending. At the same time, the global financial crisis has highlighted the need for effective global financial safety nets to help countries cope with adverse shocks. A key objective of recent lending reforms has therefore been to complement the traditional crisis resolution role of the IMF with more effective tools for crisis prevention. The IMF is not a development bank and, unlike the World Bank and other development agencies, it does not finance projects.

Main lending facilities

In an economic crisis, countries often need financing to help them overcome their balance of payments problems. Since its creation in June 1952, the IMFs Stand-By Arrangement (SBA) has been used time and again by member countries, it is the IMFs workhorse lending instrument for emerging market countries. Rates are nonconcessional, although they are almost always lower than what countries would pay to raise financing from private markets. Flexible Credit Line (FCL)- When a country faces the global effects of an economic crisis and there is a risk that it could have trouble accessing funds in the capital markets, it often needs short-term funding to weather the crisis and reassure financial markets and investors. Even before the recent global economic crisis emerged, the IMF was in the process of reforming how it lends money to countries that find themselves in a cash crunch. The idea was to create different kinds of loans for the very different needs of our 187 member countries. The Flexible Credit Line (FCL) was designed to meet the increased demand for crisis-prevention and crisis-mitigation lending from countries with robust policy frameworks and very strong track records in economic performance. To date, three countries, Poland, Mexico and Colombia, have accessed the FCL: due in part to the favorable market reaction, all three countries have so far not drawn FCL resources.

Precautionary and Liquidity Line (PLL)

The Precautionary and Liquidity Line (PLL) builds on the strengths and broadens the scope of the Precautionary Credit Line (PCL). The PLL provides financing to meet actual or potential balance of payments needs of countries with sound policies, and is intended to serve as insurance and help resolve crises. The PLL is designed to provide liquidity to countries with sound policies under broad circumstances, including countries affected by regional or global economic and financial stress. PLL arrangements can have a duration of either six months or 1-2 years with the six-month duration available for countries with actual or potential short-term balance of payments needs.

The Rapid Financing Instrument (RFI) provides rapid and low-access financial assistance to member countries facing an urgent balance of payments need, without the need for a full-fledged program. It can provide support to meet a broad range of urgent needs, including those arising from commodity price shocks, natural disasters, post-conflict situations and emergencies resulting from fragility. The Extended Fund Facility is used to help countries address balance of payments difficulties related partly to structural problems that may take longer to correct than macroeconomic imbalances. A program supported by an extended arrangement usually includes measures to improve the way markets and institutions function, such as tax and financial sector reforms, privatization of public enterprises. The Trade Integration Mechanism allows the IMF to provide loans under one of its facilities to a developing country whose balance of payments is suffering because of multilateral trade liberalization, either because its export earnings decline when it loses preferential access to certain markets or because prices for food imports go up when agricultural subsidies are eliminated.

Lending to low-income countries

To help low-income countries weather the severe impact of the global financial crisis, the IMF has revamped its concessional lending facilities to make them more flexible and meet increasing demand for financial assistance from countries in need. These changes became effective in January 2010. Once additional loan and subsidy resources are mobilized, these changes will boost available resources for lowincome countries to US$17 billion through 2014. Three types of loans were created under the new Poverty Reduction and Growth Trust (PRGT) as part of this broader reform: the Extended Credit Facility, the Rapid Credit Facility and the Standby Credit Facility.

 The Extended Credit Facility (ECF) provides financial assistance to countries with protracted balance of payments problems. The ECF succeeds the Poverty Reduction and Growth Facility (PRGF) as the Funds main tool for providing medium-term support LICs, with higher levels of access, more concessional financing terms, more flexible program design features, as well as streamlined and more focused conditionality. The Rapid Credit Facility (RCF) provides rapid financial assistance with limited conditionality to low-income countries (LICs) facing an urgent balance of payments need. The RCF streamlines the Funds emergency assistance, provides significantly higher levels of concessionality, can be used flexibly in a wide range of circumstances, and places greater emphasis on the countrys poverty reduction and growth objectives.

 The Standby Credit Facility (SCF) provides financial assistance to low-income countries (LICs) with short-term balance of payments needs. It provides support under a wide range of circumstances, allows for high access, carries a low interest rate, can be used on a precautionary basis, and places emphasis on countries poverty reduction and growth objectives. Several low-income countries have made significant progress in recent years toward economic stability and no longer require IMF financial assistance. But many of these countries still seek the IMF's advice, and the monitoring and endorsement of their economic policies that comes with it. To help these countries, the IMF has created a program for policy support and signaling, called the Policy Support Instrument.

Debt relief
In addition to concessional loans, some low-income countries are also eligible for debts to be written off under two key initiatives. The Heavily Indebted Poor Countries (HIPC) Initiative, introduced in 1996 and enhanced in 1999, whereby creditors provide debt relief, in a coordinated manner, with a view to restoring debt sustainability; and The Multilateral Debt Relief Initiative (MDRI), under which the IMF, the International Development Association (IDA) of the World Bank, and the African Development Fund (AfDF) canceled 100 percent of their debt claims on certain countries to help them advance toward the Millennium Development Goals.

Membership
The IMF currently has a near-global membership of 187 countries. To become a member, a country must apply and then be accepted by a majority of the existing members. In June 2010, Tuvalu joined the IMF, becoming the institution's 187th member. Upon joining, each member country of the IMF is assigned a quota, based broadly on its relative size in the world economy. The IMF's membership agreed in November 2010 on a major overhaul of its quota system to reflect the changing global economic realities, especially the increased weight of major emerging markets in the global economy.

 Subscriptions A member country's quota subscription determines the maximum amount of financial resources the country is obliged to provide to the IMF. A country must pay its subscription in full upon joining the IMF: up to 25 percent must be paid in the IMF's own currency, called Special Drawing Rights (SDRs) or widely accepted currencies (such as the dollar, the euro, the yen, or pound sterling), while the rest is paid in the member's own currency. Voting power The quota largely determines a member's voting power in IMF decisions. Each IMF member's votes are comprised of basic votes plus one additional vote for each SDR 100,000 of quota. The number of basic votes attributed to each member is calculated as 5.502 percent of total votes. Accordingly, the United States has 421,965 votes (16.76 percent of the total), and Tuvalu has 759 votes (0.03 percent of the total).

 Access to financing The amount of financing a member country can obtain from the IMF is based on its quota. For instance, under Stand-By and Extended Arrangements, which are types of loans, a member country can borrow up to 200 percent of its quota annually and 600 percent cumulatively. SDR allocations SDRs are used as an international reserve asset. A member's share of general SDR allocations is established in proportion to its quota. The most recent general allocation of SDRs took place in 2009.