 IMF headquarters in Washington D |
The International Monetary Fund, or IMF, and the World Bank's forerunner were set up to manage the post-World War II global economy.
They were conceived in 1944 at a conference in Bretton Woods, in the US state of New Hampshire.
By fostering economic cooperation and helping countries with balance of payments problems the founders hoped to avoid a repeat of the 1930s Great Depression.
They were conceived in 1944 at a conference in Bretton Woods, in the US state of New Hampshire.
By fostering economic cooperation and helping countries with balance of payments problems the founders hoped to avoid a repeat of the 1930s Great Depression.
OVERVIEW |
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 |  IMF's role in the developing world has been scrutinised  |
Owned by the governments of its 185 member states, the Bank channels loans and grants and advises low and middle-income countries.
The IMF is funded by a charge - known as a "quota" - paid by member nations. 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.
The Fund acts as a lender of last resort, disbursing its foreign exchange reserves for short periods to any member in difficulties.
Crisis response
The IMF and World Bank attempt to help countries or regions in economic turmoil.
In October 2008 the IMF activated an emergency funding scheme for countries facing economic distress resulting from the ongoing global financial crisis. As of February 2009, it had committed around $50 billion in lending to a number of economies affected by the crisis, including Belarus, Hungary, Iceland, Latvia, Pakistan, Serbia, and Ukraine. A number of other countries were in talks with the Fund.
Past interventions by the IMF have included providing funds for countries caught up in the 1997 Asian financial crisis.
After Argentina's financial crisis, and its record debt default in 2001, the IMF negotiated a new loan package. The Fund extended a record $30bn loan to Brazil to stave off a debt default.
The IMF can also grant emergency loans following natural disasters; these have included the 2004 Asian tsunami.
Developing countries
The IMF and World Bank set up the Poverty Reduction and Growth Facility in 1999. The scheme grants loans with conditions attached.
A strategy paper - called a Letter of Intent - specifies the elements of a country's recovery plan. In return, loans are agreed as and when the targets laid down in the letter are met.
The IMF may demand reforms to promote good governance and to tackle corruption. The Fund maintains that a good climate for business is essential for growth and poverty reduction.
The World Bank funds specific infrastructure projects. One of its agencies, the International Development Association, focuses on the world's poorest nations. The Bank is pledged to UN-backed Millenium Development Goals to reduce key indicators of poverty by 2015.
Debt relief
The Highly Indebted Poor Countries Initiative (HIPC), launched by the IMF and the World Bank in 1996, aims to reduce the debt owed by the world's poorest countries in return for economic reform.
States are eligible if their debt is unsustainable and cannot be tackled by traditional methods. The reforms they have to undertake often include privatisations.
By 2005 nearly 40 countries had started programmes under the HIPC. Debt relief kicks in when a country meets what is called the "decision point". Around half of the HIPC countries have reached the end of the process, known as the "completion point".
These states stand to have their debts written off under a proposals drawn up in 2005 by the finance ministers of the G8 group.
FACTS |
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- Conceived: Bretton Woods, New Hampshire, USA in 1944
- Headquarters: Washington DC
- IMF-World Bank membership: 185 countries
- World Bank staff: 9,300
- IMF staff: 2,700
LEADERS |
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IMF managing director: Dominique Strauss-Kahn
Dominique Strauss-Kahn became head of the Fund in November 2007, taking over from Spain's Rodrigo Rato.
 Dominique Strauss-Kahn |
During his time in government, Mr Strauss-Kahn cut the public deficit to qualify France for the euro and took steps that paved the way for the privatization of a number of state-owned firms. In 2006, he sought the Socialist Party's nomination for the French presidential election, but was not successful.
He has pledged to pursue reforms to make the IMF more relevant to developing countries.
Day-to-day, the IMF is overseen by a board of 24 executive directors. These are appointed or elected by member governments, or groups of member governments.
The board is headed by the managing director, assisted by three deputies.
World Bank president: Robert Zoellick
 Robert Zoellick |
ISSUES |
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Protesters and critics are largely united in their distaste for globalisation; broadly speaking, the integration of world economies. They cite the exploitation of the poor and the environment and argue that freer trade threatens the livelihoods of millions of people.
 IMF and World Bank policies have stoked opposition |
Its former managing director Horst Koehler said in 2002 that the benefits of globalisation had not been equally shared. But he added that "the objective should not be less globalisation but more and better globalisation."
Campaigners also argue that loans and long-term agreements can lock countries into aid dependency.
Representation
Developing countries - as well as some of Asia's rapidly-growing economies - have voiced dissatisfaction with what they say is their lack of influence in the IMF and World Bank.
They have called for changes to the system in which votes in the IMF are weighted in line with member nations' financial contributions.
Under the system the US has 17% of the vote in the Fund, whereas India, with more than three times the population of the US, has less than one third. And because constitutional changes in the IMF require 85% of the vote, the US has a veto.
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