The IMF also called the Fund is an International monetary institution/ supranational financial institution established by 45 nations under the Bretton Woods Agreement of 1944. Such an institution was necessary to avoid repetition of the disastrous economic policies that had contributed to Great depression of 1930’s. The principal aim was to avoid the economic mistakes of the 1920s and 1930s. It started functioning from March 1, 1947. In June, 1996, the Fund had 181 members. The IMF was established to promote economic and financial co-operation among its members in order to facilitate the expansion and balanced growth of world trade. It performs the activities like monitoring national, global and regional economic developments and advising member countries on their economic policies (surveillance); lending member hard currencies to support policy programmes designed to correct BOP problems; offering technical assistance in its areas of expertise as well as training for government and central bank officials.
The fundamental purposes & objectives of the Fund had been laid down in Article 1 of the original Articles of Agreement and they have been upheld in the two amendments that were made in 1969 & 1978 to its basic charter. They are as under:
- To promote international monetary co-operation through a permanent institution which provides the machinery for consumption & collaboration in international monetary problems.
- To facilitate the expansion and balanced growth of international trade.
- To promote exchange stability, to maintain orderly exchange arrangements among members, and to provide competitive exchange depreciation.
- To assist in the establishment of a multilateral system of payments in respect of current transactions between member and in the elimination of foreign exchange restrictions which hamper the growth in the world trade.