Objectives of International Monetary Fund
The objectives of international monetary fund can be summarized as to realize international gold standard’s advantages without subjecting countries to internal disadvantages while achieving international paper standard’s advantages and avoiding international disadvantages. The International Monetary Fund or the Fund refers to an organization made of 188 countries that work towards fostering monetary cooperation globally, securing financial stability, facilitating international trade, promoting high employment, reducing poverty and enhancing sustainable growth economically across the world. An objective refers to a specific outcome or result that a system or a person aims at achieving within a set time-frame and using the available resources.
Since the establishment of the international monetary fund, its objectives or purpose has not been changed. However, its operations which include surveillance, technical assistance and financial assistance have developed over the years to meet the needs of the member countries which are always changing in the evolving global economy.
Why and when the objectives of international monetary fund were set
The origin of this organization dates back to the time of international chaos in the 1930s. This was the time of World War II when countries agreed to establish an international institution that would ensure monetary order. This organization was conceived during a conference of the United Nations in Breton Woods, in July 1944. The objectives of IMF are as old as the organization itself. They were set to ensure that the organization accomplishes its purpose as an economic cooperation framework in order to avoid a recurrence of competitive devaluation that led to the 1930s’ Great Depression.
The primary purpose of the International Monetary Fund is to ensure that the international monetary system is stable. This is the system of international payments and exchange rates that makes transactions among countries and citizens possible. In 2012, the mandate of the IMF was updated to include the issues of the financial sector and macroeconomic which affect the global stability.
The objectives of the IMF are as follows:
- To promote monetary cooperation globally via a permanent institution that provides a collaboration and consolation machinery on monetary problems internationally.
- To facilitate balanced growth and expansion of the international trade while contributing to the maintenance and promotion of high employment levels and real income as well as the development of productive resources for all members as the economic policy’s primary objective.
- To help in the development of multilateral payments’ system in regards to the current transactions among members while eliminating the restrictions of foreign exchange that hinder the growth of the global trade.
- To instill confidence among members by making its funds available to member countries temporarily under enough safeguards, thereby providing an opportunity for correcting maladjustments in payments balance without using measures that are destructive to international or national prosperity.
- According to the above objectives, to shorten duration while lessening the disequilibrium degree in international payments balance of members.
How the objectives of international monetary fund are to be achieved
To achieve its objectives, the Fund plays a supervisory role for the international monetary system. This entails performing several functions. These are; availing credit to its member countries on the basis of temporary payments’ deficits, giving policy recommendations, surveillance over exchange rate and monetary policy of the member countries.
As such, to achieve its objectives, the IMF performs regulatory, consultative and financial functions. The IMF capital is contributed via subscription totality of the member states, also called “Quotas.” The determination of these quotas is based on the economic importance that each country reflects on the basis of various factors including exports and income among others. Its daily work is overseen by an Executive Board that comprises of 24 members.
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