International Monetary Fund IMF

IMF Definition and Meaning

International Monetary Fund, abbreviated as IMF on AbbreviationFinder,  is an autonomous specialized agency of the UN for monitoring of the international monetary system, established on December 27, 1945 on the basis of the Bretton Woods Agreement, seat: Washington (DC); June 2018: 189 members.


Promotion of international cooperation in the field of monetary policy, support of balanced economic growth and a high level of employment, promotion of the stability of currencies by securing orderly currency relations, establishment of a multilateral payment system and removal of restrictions on foreign exchange transactions, granting of credit to member countries to facilitate balance of payments adjustments, reduction of the Imbalances in international balance of payments. The original IMF agreement, which was based on the reserve media of gold and US dollars as well as on fixed exchange rates, was substantially changed twice: 1969 was with the special drawing rights (SDR) created a new reserve medium that serves as a means of payment between the monetary authorities. Since 1978, the member states have been free to choose their exchange rate system.


Each member state sends a governor (usually the minister responsible for monetary policy or the president of the central bank) to the highest decision-making body of the IMF, the Board of Governors. The Executive Board (Board of Executive Directors) conducts day-to-day business. Of the 24 directors, five are currently appointed by the countries with the highest quotas (USA, Japan, Germany, France, Great Britain) and 19 are elected by the other countries or groups of countries. The executive board is chaired by the managing director. The two advisory bodies of the IMF, the International Monetary and Financial Committee (IMFC) and the Development Committee, each have 24 members. World Bank and International Monetary Fund.

Each IMF member is assigned a quota, according to which, among other things, his share in the fund (subscription), his voting rights, the amount of his permanent cash deposits and the limit on his use of the fund (drawing rights) dimensioned. The quota itself is based on the relative size of a state’s economy. In a reform process that began in 2006, the quotas of the member states were redefined and approved by the Executive Board in March 2008. The reform is intended to take account of changes in the global economy (greater weight in emerging and developing countries). In future, the quotas will be adjusted to the existing conditions every five years. Japan and Germany have z. B. (2015) on voting rights of 6.23% and 5.81% respectively, France and Great Britain’s share is 4.29% each, China’s share is 3.81%, Italy’s share 3.16%; the USA has a blocking minority with 16.74% of the vote, as important decisions require a majority of 85%. By amendment of the statutes of 11.11. In 1992 a member state that fails to meet its obligations to the IMF can, among other things, the right to vote will be withdrawn.


The IMF began its activities on March 1, 1947. The currency parities were fixed as fixed exchange rates with respect to gold or the US dollar with fluctuations of 1% upwards and downwards. The national central banks were obliged to support the exchange rate if these ranges (intervention points) were exceeded. Parity changes (revaluations and devaluations) of more than 10% had to be approved by the IMF in advance, and minor changes had to be reported to it.

The members provide the necessary financial resources through contributions (subscriptions according to the quotas). The quotas, which are calculated according to certain economic variables (e.g. national income, currency reserves), must be paid 75% in the currency of the member state and 25% in special drawing rights (until 1978 in gold). Temporary borrowings by the IMF from individual member states also play a role in raising funds. B. under the general credit agreements (Abbreviation AKV), a credit line with the Group of Ten and Saudi Arabia, and from 1997 – after ratification in the individual countries – within the framework of the new credit agreements (abbreviation NKV), a credit line with the AKV states and 15 other financially strong countries in total (GAB and NAB) of US $ 51 billion.

Member countries receive financial bridging options from the IMF in the event of balance of payments difficulties. This is done through drawings (purchase of foreign currencies from the IMF within specified limits and for a certain period of time against one’s own currency). Since 1986 the drawing possibilities have been 90% to 110% of the quota per year and 270% to 330% of the quota in a three-year period with a cumulative upper limit of 400% to 440% of the quota. The foreign currencies acquired for a fee must be repaid as soon as possible. The buyback of the own currency takes place against convertible currencies. The borrowing is carried out as part of reserve tranches (which correspond to the member’s own financial contributions) and credit facilities (Facility) made from the IMF’s own resources. Certain loan tranches and special facilities are available for this, as well as temporary facilities. There are, for example, facilities to finance losses in export revenue (especially in the event of a loss of revenue in raw material exporting countries through no fault of their own; compensatory financing), unexpected additional expenditure on grain imports (especially for developing countries with low incomes) and raw material compensation stocks (buffer stocks). In 1993 a system transformation facility (abbreviation STF) was created for the reform states of Eastern Europe and the successor states of the Soviet Union, and in 1995 a new crisis financing mechanism for countries with extreme economic and currency crises. In 1996 the Executive Board decided Establish the Extended Structural Adjustment Facility (ESAF or ESAF) to relieve the heavily indebted poorest countries over the long term. It was replaced in 2000 by the Poverty Reduction and Growth Facility (PRGF), which is financed from special funds of the IMF and bilateral contributions.

Often, the IMF loans are only granted subject to conditions (e.g. cuts in government spending, anti-inflation policy), i. that is, the borrowing countries must implement programs to correct their balance of payments difficulties. Private banks also make compliance with the IMF conditions a condition of their lending.

International Monetary Fund IMF

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