The International Monetary Fund, more commonly known as the IMF is a international financial institution that is headquartered in Washington D.C . The organization consists of 190 member countries who have decided to work together in order to foster global monetary cooperation and better economical stability. The organization is dedicated to the economic growth and development of its member countries.
The organization was formed in 1944 at the Bretton Woods conference and was the brain child of Harry Dexter White and Maynard Keynes . The International Monetary Fund came into formal existence in 1945 with 29 member states and the goal of constructing a new monetary system from what was then an ineffective one . The main role of the IMF today is to help with the management of balance of payments and provide aid in international financial crises.
How to qualify to become a member of the International Monetary Fund
The IMF has no requirements for the kinds of countries that may join the organization. There are no geographical or economical requirements to join in contrast to the European Union which only allows countries from Europe to join or CARICOM which only allows countries from the Caribbean to join. In the post war era the requirements of the IMF was left relatively loose . The organization only required that countries make periodic payments towards its quota, refrain from currency restrictions unless approved by the IMF and to adhere to the code of conduct under IMF’s articles of agreement.
Benefits of Being a member
Members have many beneficial opportunities including:
- Information on the economic policies of all member countries
- The opportunity to influence the financial policies of other member countries
- exchange matters
- technical assistance in banking
- financial support in times of payment difficulties
the International Monetary Fund and its Functions
The organization has proclaimed itself to be an organization with the goal of working to foster global growth an economic stability by providing policy advice and financing by working with developing countries to help them achieve microeconomic stability and reduce poverty. They believe the rational for this is that private international capital markets function too imperfectly and many countries have limited access to financial markets. The IMF provides alternatives to other agencies or other forms of financing.
Apart of the function of the International monetary fund is to provide advice as it relates to the development of financial policies to countries. The advice they provide ranges from how to consolidate debt to how countries set their economy on the path to steady growth. The agency loans money to countries with the expectation that they pay back their debt overtime.
After the IMF was founded one of its primary functions was to help national governments manage their exchange rate along with other functions. The purpose for these functions that the International Monetary are providing is to foster economical growth and potentially prevent wide spread economical crises. the IMF was also founded with the intention of mending pieces of the international economy following the great depression and World War II. They aimed to provide capital investments for economical growth and projects like infrastructure creation and development.
Lending and loans
The IMF negotiates the conditions of loans and lending under their policy of conditionality. The policy of conditionality was established in the 1950s and it allows low income countries the opportunity to borrow on concessional terms which simply means that there is a period of time where there is no interest rate to be paid by the borrower. The IMF provides emergency assistance via the Rapid Financial Instrument to members facing urgent balance of payment needs.
IMF’s relationship with Jamaica
Ever since Jamaica joined the IMF they have consistently used the resources of the organization, particularly involving taking advantage of the loans that the IMF has made accessible to them. Jamaica uses these loans to strengthen economical stability and increase cost of living. Jamaica has entered into a total of sixteen arrangements with the IMF. 1963 was the year that the IMF approved the first standby agreement with Jamaica. The IMF dispersed a total of around 10 million SDR’s , Jamaica could use these funds if they needed to but they did not use any of the money provided by the loan and it expired in 1964.
It is stated that Jamaica has entered into additional 2 standby agreements with the IMF with the first being in 1973 and the second being in 1977. Under the two term leadership of then Prime Minister Michael Norman Manley which served from 1972 to 1980 and from 1989 to 1992 , Jamaica would complete these standby agreements. The amount which was approved for the 1973 standby agreement was 26,000 SDR’s and the amount approved in 1977 was 64 million SDR’s of which Jamaica only withdrew a total of 13.25 million SDR’s and 19.2 million SDR’s respectively.
Jamaica would enter into a total of 3 Extended Fund Facility agreements in June of the following year and the other 2 years that followed. These loans permitted Jamaica to pay its outstanding loans over a longer period of time , which was due to economic factors that prevented the country from following the payment plan that was originally set. Slow economical growth and balance of payment imbalances were among the economical factors which prevented Jamaica from paying their loan as it was originally planned. EFF’s allows countries to continue the development of their internal structural integrity in order the strengthen economical growth without being too burdened by the strains and costs associated with repayment.
Jamaica agreed to a new standby arrangement in 1984 under the leadership of the Prime Minister , who was then Edward George Seaga. He was the leader of the Jamaica Labour Party and won the election to become Jamaica’s fifth Prime Minister. Jamaica continues to foster a strong financial relationship with the IMF and as of 2018 Jamaica owes an outstanding loan amount of around 528.78 SDR’s . The country is on a path of slow but steady growth and is currently growing as a economic powerhouse in the Caribbean.
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